Reader's corner: Life insurance

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My daughter had purchased two money back life insurance policies around 15 years back when she started working in India. Soon she will goto the UK for three years, where her stay might get extended. In that case, how can she pay the insurance premiums?

Your daughter will be able to pay her premiums by directly remitting from abroad through banking channels in an approved manner. The most common way is to provide standing instructions to her bank in India to transfer money through ECS. Alternatively, she can also pay online from anywhere in the world. She should continue with her policies as discontinuing them may lead to loss of insurance cover as well as lesser returns from the policies in which she has remained invested for so long. 

 The nominee of my friend’s life insurance policy is his father. He wants to make his son the nominee now. Does this require taking the existing nominee’s consent or signatures? 

One can appoint anyone as the nominee for his or her life insurance policy. Section 39 of the Insurance Act, 1938, enables the holder of a life insurance policy to nominate a person or persons to whom the money shall be paid in the event of the policyholder’s death, while purchasing the policy or at any time before the policy matures for payment. Your friend will not require his father’s signatures or consent for changing the nomination. The policyholder can revoke or change the existing nomination without the consent of the stated nominee. However, in case your son is a minor, you will have to mention an appointee for the same.

If the nominee passes away before the policyholder, the nomination becomes ineffective and the policyholder will have to make a fresh nomination of another person. In case the claim arises at the same time, the claim amount will be passed on to the legal heir of the policyholder.

I am 37 and want to purchase a term plan of Rs  1.5 crore sum assured. Will a medical test be mandatory to buy the policy? Who will pay the cost of the medical tests? Also, my employer just got some medical examinations done. Will they be considered?

During the purchase of a term plan, the requirement for a medical examination varies for individuals. It depends on the age, risk cover, medical declarations and history, current health conditions and lifestyle of the life to be insured. After evaluating all these factors the insurance company decides if an individual needs to undergo a medical test. Insurance companies usually bear the expenses for such tests and many medical centres are empanelled with the insurers. In some cases, however, it might differ. It is, therefore, prudent to check with the insurance company regarding the payment for such medical tests. Whether to consider the medical examinations done by your employer or not solely depends upon the insurer. 

 I had purchased a unit-linked insurance plan (Ulip) and my wife had bought a traditional life insurance policy five years back from the same insurer. We want to surrender them now. Will the company deduct any charges from the total premium that we have paid?

The deduction on surrendering the insurance depends on the policy and its features. In case you have a Ulip, the surrender charges will be zero after five years, according to the revised guidelines by the insurance regulator effective from September 1, 2010. Do check the surrender value before you surrender the policy.

For your wife’s traditional plan, there will be some surrender charge which will be levied. The charges vary from product to product and are usually mentioned in the policy contract. You should refer to your policy contract to know more about these charges.

The writer is MD & CEO, Aditya Birla Sun Life Insurance. The views expressed are the expert’s own. 
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