What is the difference between a term plan and a return-of-premium (RoP) term plan? Is it beneficial to go for an RoP term plan?
Term plan is a pure protection plan and does not give any maturity benefit in case the insured survives the entire policy term. The sum insured is payable only on demise. In the RoP term plan, the total of all the premiums paid (excluding for riders and extra ones) is returned to the policyholder on his survival at the end of the term. The premiums for RoP term plans are higher. Hence, the selection of the plan will depend on the returns the customer expects at the end of the term.
Under which section are unit-linked insurance plans (Ulips) of institutions, other than LIC and UTI, entitled for deduction?
Premiums paid towards any life insurance policy (including a Ulip) on self and/or immediate family member are eligible for deductions under Section 80C, according to the current applicable tax laws.
I have assigned my life insurance policy in favour of my bank. What will happen to the existing nomination in the policy, which is in my wife s name?
When a policyholder assigns his/her policy in favour of a bank, the bank becomes the owner of the policy and the existing nomination, if any, is automatically cancelled. So, if you have assigned the policy in favour of a bank, the nomination in favour of your wife will be cancelled. You have to make a new nomination whenever the bank makes a reassignment in your favour.
I am 43 years old. I bought a term policy recently, but failed to disclose that I am diabetic for the past 10-15 years and have high blood pressure. Will this impact policy proceeds in the event of a claim? How?
Yes, such non-disclosures about your health may affect policy proceeds in the event of a claim. According to Section 45 of the Insurance Act, 1938, a life insurer can question the policy within two years on the basis of any inaccurate or false statement made in any document leading to the issue of the policy. Life insurance is a contract of utmost good faith and requires both the parties - the insurer and the insured - to disclose all material facts related to the contract.
The insurer should disclose all necessary details about the insurance plan and the insured needs to disclose his/her current and past health condition, habits, occupation, financial condition, etc. Such disclosure is necessary for assessment of risk by the insurer. Moreover, these are personal details and only the life assured can know about them.
Hence, he is in the best position to disclose them.
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In your case, had you made true disclosures about your present and past health details, the insurance company would have sought some medical reports and would have either allowed the cover by charging some extra premium or declined it altogether.
You can still contact your life insurer and disclose the details. The the insurer might re-assess the risk on your life and suggest suitably whether you can continue on existing terms or if new terms or a new plan is required.
The author is the MD and CEO of Future Generali India Life Insurance. You can send your queries to yourmoney@bsmail.in