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Home > Services > FAQs > About Life Insurance Policies

Frequently Asked Questions

 
I have not paid premium for some time. I want to discontinue my policy. Do I get anything back from the insurance company?
I have not paid premium for some time. Can I revive my policy?
What do I do if I lose/misplace my insurance policy?
Will my premium amount increase after I have bought a policy?
What is a medical examination when buying insurance?
Should I buy a life insurance policy even if my employer has insured me in a group insurance scheme?
What is vesting age?
What is "Waiver of Premium"?
How do I understand a life insurance Policy?
What should be the duration (term ) of my insurance policy?
What are the guaranteed Savings/bonus applicable under a Life Insurance Policy?
What is a Guaranteed Surrender Value?
What is Fund Value and how it is determined?
What is Switching?
What is Redirection?
What is Grace Period?
What is Deferment Period?
What is the difference between "Nomination" & "Assignment"?
 

1.

I have not paid premium for some time. I want to discontinue my policy. Do I get anything back from the insurance company?
The insurance company provides a grace period during which you can pay the premium and keep the policy in force. For a regular premium paying policy, premium has to be paid within 30 days of the due date (15 days if the mode selected is monthly).
 
 
If it has been less than 3 years since you purchased your policy and not paid premium, you may not receive any money back from the insurance company.
 
 
If you have paid premium for more than 3 consecutive years, you will receive a proportion of the premium paid; depending upon the sum assured, the bonus accrued; if any, the number of premiums paid and the term of the policy. (The amount receivable is known as the surrender value.)
However, please note that the surrender value will vary by company and policy.
 
  The surrender value depends on
  - Type of policy
  - Amount of premium
  - Policy term
  - Number of years for which the premium has been paid and
  - Accumulated bonus, if any.
 
2.
I have not paid premium for some time. Can I revive my policy?
For a regular premium paying policy, premium has to be paid within 30 days of the due date (15 days if the mode selected is monthly). The insurance company provides a grace period during which you can pay the premium and keep the policy in force. If the premium has not been paid within the grace period, the policy is considered lapsed.

Insurance companies offer various schemes that facilitate the process of reviving lapsed policies. A few are mentioned below -
 
 
Paying all the arrears of premium and the interest for the same period can revive the policy. In certain cases, the company may offer installment revival schemes, where you pay a part of the arrear along with the regular premium, and the balance of the revival amount is paid in instalments spread over a year of two years.
 
 
Under another scheme, a money-back policy can be revived by using the survival benefit under the policy (the money receivable from the insurance company at regular intervals) to pay premium plus interest. (If the survival benefit amount is lower than the revival value, you have to pay the shortfall. If it is higher, you receive the excess amount.)
 
3.
What do I do if I lose/misplace my insurance policy?
You could apply for a duplicate document from the insurance company. You will receive a duplicate policy after paying the necessary fees and executing an indemnity bond.

You could facilitate the process of verification by carrying a premium receipt and an identification card at least.
 
4.
Will my premium amount increase after I have bought a policy?
Typically, when you buy an insurance policy, it is a contract or an agreement that you are entering into with the insurance company. It is a fixed price (premium) that you are willing to pay in order to remain insured for the term of the policy. Thus, such a price (or the premium amount) is pre-fixed and the insurance company cannot increase the same later. However, as the Finance Ministry levied a service tax on insurance companies in 2002-03, premiums payable by the insured may increase!!!
 
5.
What is a medical examination when buying insurance?
This is the part most agents dislike telling their clients or prospective clients about. Usually, an individual buying insurance for a sum of Rs 600,000 and above has to undergo a medical examination. However time-consuming and cumbersome such a process may appear, an insurance company needs to ensure that the prospective client is healthy. (An insurance company needs to ensure that the prospect’s objective to buy a policy is to genuinely insure against a risk and not a plan to deceive the company.
 
6.
Should I buy a life insurance policy even if my employer has insured me in a group insurance scheme?
It is always prudent to buy an individual life insurance policy because
  a.
The amount of insurance you are covered for may not be a very large sum
  b.
If your employer decides on cost-cutting, you may no longer be insured
  c.
If you decide to leave your employer, you may no longer be covered
  d.
The older you are when you buy insurance, the higher is the premium you have to pay for the same insurance.
  
7. What is vesting age?
The age at which the receipt of pension starts in an insurance-cum-pension plan.
 
8.
What is "Waiver of Premium"?
Most insurance companies offer an optional feature called "waiver of premium". This typically states that in the event you become totally disabled for a period of six months or longer, the insurance company will pay your premium until you are no longer disabled. This feature is optional (available at an extra cost) and must be chosen at the time of your application.
 
9.
How do I understand a life insurance Policy?
It is necessary to know the following terms in order to understand a life insurance policy:

Premium - the amount of money you have to pay to continue your insurance coverage.
The premium amount depends upon
  Your age
  Policy selected
  Mode of premium payment
  Term of premium payment
  Term of the policy
 
 
You could choose to pay premium monthly (as a deduction from your salary), quarterly, half yearly or annually. However, there are Single premium policies where you pay premium once only (hence you do not have the facility to make the effort of paying premium regularly).

Term - the number of years you choose to insure yourself.
The longer the term the lower the premium. Policy terms vary from a single year to a maximum of 55 years. Not all policies offer you a range of terms.

Premium paying term - the number of years you pay premium on your policy.
The longer the premium paying term, the lower the premium. Usually the premium paying term is the same as the policy term. However, some policies offer you the option of selecting a premium paying term that is lower than the policy term.

Sum Assured / Face amount - the amount of insurance cover you have or the minimum amount your family receives in the event of your demise.
Your family could get more than this amount based on the type of policy or riders that you select.

Bonus / Participating profit - is declared by the insurance company each year as a proportion of the sum assured. This amount could vary; it could be different for different policies and terms.
Although declared each year, the bonus is a lump sum payment made to the insured person upon maturity or to his family upon death, in addition to the sum assured.

Bonus is based on an insurance company’s assumptions about the future performance. Like any other assumption, actual results will be more or less favourable. The longer the time being projected, the greater the likelihood of variance from the predicted values. Not all companies guarantee the amount of bonus on each policy.

Guaranteed Addition - is a declaration made by the insurance company; it states that irrespective of the financial results of the company, the company will pay the guaranteed amount of money, to the insured or his nominee.
Like the bonus amount, this is a lump sum payment made to the insured upon maturity or to his family upon death, in addition to the sum assured.

Survival Benefit
- is the amount of money received at pre-fixed, regular intervals by the insured person, upon survival of the term of the policy.
Often, money received upon maturity or at the end of the term of the policy is also referred to as Survival benefit.

Maturity Benefit - is the amount of money received by the insured, upon survival of the term of the policy.
In case of policies that offer a bonus, the sum assured plus the bonus for the term of the policy is paid to the insured upon maturity. In addition, some policies offer a loyalty addition, which is paid as a proportion of the sum assured and is based on the term of the policy.
In case of policies that offer no bonus, upon maturity, the sum assured or a refund of the premium or no money is receivable by the insured (depending on the type of policy selected).

Cover or Death Benefit - is the amount of money the nominee receives from the insurance company upon the insured’s death. In addition to the sum assured, this would include the bonus, if any.
If additional riders such as Accident Death Benefit or Additional Sum Assured have been selected, the amount of money receivable by the nominee could be higher.

Returns or Pre-tax yields - Interest earned on the premium, on a compounded basis, is the pre-tax yield.

Post-tax yields - If the premium paid for a life insurance policy is used as a tax deduction under section 80C, then the effective premium paid by the insured is lower. Interest earned on the effective premium, on a compounded basis, is known as the post-tax yield.
 
 
10.
What should be the duration (term ) of my insurance policy?
Ideally, the term of your policy should be equal to the number of years your family will be dependent on you financially. However, ensure that your insurance payment period is also equal to the number of years you plan to work (and hence is not a burden for you).
If you are one of those gentlemen who have been lucky to have a wife that has always been a homemaker, please ensure that you have a pension policy or a whole life policy that takes care of your wife’s needs, in your absence as well.
 
11.
What are the guaranteed Savings/bonus applicable under a Life Insurance Policy?
Some insurance policies guarantee the amount of money that you would receive upon maturity or the minimum amount that you would receive upon maturity.
 Usually, this amount is a proportion of the sum assured such as a bonus or a guaranteed addition of say Rs 70 per Rs 1,000 of the sum assured. This means if you have an insurance policy for a sum assured of Rs 100,000 then you earn a bonus of Rs 7,000 each year on the sum assured.

Other policies may offer you a guaranteed bonus as a percentage such as a guaranteed addition of 3.5% per annum on a compounded basis. This means you earn Rs 3,500 on a sum assured of Rs 100,000 in the first year while in the second year you earn Rs 3,623 (3.5% of Rs 103,500).
 
12.
What is a Guaranteed Surrender Value?
The policy can be surrendered for cash only after the premiums have been paid for at least three years. The minimum surrender value allowed is equal to a certain percentage of the total amount of premiums paid excluding the premiums for the first year and all extra premiums or additional premiums for accident benefits that may have been paid.
 
13.
What is Fund Value and how it is determined?
Your Policy value is the Fund value. It is the total value of units that you hold in funds.
Fund Value = (Nos. of Equity Fund units x NAV of Equity fund) + (Nos. of Bond Fund units x NAV of Bond fund) + (Nos. of Money Market Fund units x NAV of Money Market fund)
For getting the latest NAV, Please select the product in the right hand panel or call our toll free number 1800-22-9090. At each Policy Anniversary and for any payments/ withdrawals, you will receive a Fund value statement of your Policy. 
 
14.
What is Switching?
The disinvestment of unit funds and reinvestment into others is called switching. It does not impact the investment allocation of your future contributions
 
15.
What is Redirection?
It implies changing of your current contribution allocation percentage into various funds from now onwards. It does not affect the allocation percentage of the contribution already invested.
 
16.
What is Grace Period?
Policy holders are expected to pay premium on due dates. A period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace or grace period.
 
17.
What is Deferment Period?
Period between the date of subscription to an insurance-cum-pension policy and the time at which the first installment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.
 
18. What is the difference between "Nomination" & "Assignment"?
Nomination: An act by which the policy holders authorizes another person to receive the policy moneys. The person so authorized is called Nominee. 

Assignment: Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a separate deed. Assignment can be of two types Conditional & Absolute 
 
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