To whom is a death claim payable?
Usually to the nominee, the assignee or the legal successor, as the case may be. If the policyholder did not nominate or assign the policy, or make a will, the claim is payable to the holder of a succession certificate or other evidence of title from a court of law.
What is a bonus?
State Life distributes its profits among its policyholders every year in the form of bonuses. Bonuses are credited to the policyholder’s account and paid at maturity, or on death if earlier. A bonus is declared as a certain amount per thousand of sum assured.
What are the medical and non-medical schemes?
Life insurance is normally offered after a medical examination of the person to be insured. To spread insurance more widely, and as a relaxation, State Life also offers cover without any medical examination, subject to certain conditions. This is called the non-medical scheme.
What is underwriting?
Underwriting means considering the material facts about a risk to decide whether to accept it and, if so, at what rate of premium.
What is surrender value?
The amount State Life pays if the policyholder chooses to end the policy before the end of its term.
Can a life insurance policy be sold?
No, a life insurance policy cannot be sold to raise money. It can, however, be assigned or mortgaged, provided it has been in force for a minimum stipulated period.
How are premiums on life policies calculated?
Mainly from the age of the person to be insured, the type of policy, the sum insured and the term of the policy.
What is the procedure to get a loan?
Apply on State Life’s prescribed loan form and submit it, duly completed, with the policy document.
How do I repay the loan?
The loan can be repaid in part or in full at any time during the term of the policy.
What are the automatic non-forfeiture options?
If the policy has acquired a surrender value and a premium stays unpaid beyond the grace period, the policyholder gets one of two options, depending on the choice made (if any) in the proposal. (A) Automatic paid-up: the policy becomes a paid-up policy, with the paid-up sum insured calculated to clear all of State Life’s outstanding dues against the policy. (B) Automatic premium loan: as long as the net surrender value is at least equal to the unpaid premium, State Life keeps the policy in full force and treats the premium as paid by creating an automatic premium loan against the net surrender value.
What is nomination or assignment of a policy?
When the policy money becomes payable on the policyholder’s death, it can only be paid to the person legally entitled to give State Life a valid discharge. If the policy has a nominee, the claim is settled in the nominee’s favour; if it has been assigned, the assignee receives the claim. Assigning a policy automatically cancels the existing nomination, so when a policy is reassigned to the policyholder, a fresh nomination must be made.
How do I change my address or transfer my policy records?
Give notice of the change to the zonal office that services your policy. Policy records can be transferred from that zonal office to any other zonal office nearest to where you live. A correct address means better service and quicker settlement of claims.
When does a policy lapse?
When the premium is not paid within the days of grace after the due date. The grace period is one month for yearly, half-yearly and quarterly payment modes, and 15 days for the monthly mode.
Can a lapsed policy be revived, and for how long?
Yes. A lapsed policy can be revived during the lifetime of the insured, within 5 years from the due date of the first unpaid premium and before the maturity date. Revival is considered on a non-medical or medical basis, depending on the insured’s age at the time of revival and the sum to be revived.
Can a policy be altered?
The policy document is the evidence of the contract, so it can only be altered if both parties agree. Because insurance is a long-term contract, State Life permits some alterations, keeping in view the basic principles of insurance and administrative convenience. As a rule, no alterations are permitted within the first year from the commencement of the policy.
What happens if the policy document is lost?
Losing or destroying the policy document does not end State Life’s liability to pay. The claim or sum insured is paid after the claimant or policyholder gives an indemnity bond jointly with two sureties, and a policy can be surrendered even if the original document is lost. For a loan or a survival benefit, a duplicate policy is needed: State Life issues it after certain formalities, such as a newspaper advertisement, and a nominal fee.
Is life insurance a saving instrument?
Life insurance is mainly considered a saving instrument rather than an investment avenue, because it promotes compulsory saving while protecting the policyholder’s family against the unforeseen. It is the only saving instrument that covers the life risk, and a loan can be taken against State Life policies.
How is a life insurance policy useful?
Planning for the financial consequences of a premature death is an essential part of every financial plan, because those consequences are usually too large to cover from your own resources. Life insurance is a contract in which the insured pays a premium in exchange for cover against specified losses, protecting the family against the premature death of the earner or their spouse. Planning should consider both short-term needs (such as medical expenses) and long-term needs (such as replacing income). Insurance works as a hedge rather than a true investment: it replaces uncertainty with certainty by transferring the risk from the insured to the insurer.
What loans are available against life insurance policies?
Loans are granted up to 80% of the surrender value for policies whose due premiums are fully paid. The rate of profit charged is 10% a year, compounded half-yearly.
Who is eligible for a policy loan?
Policyholders can take a loan on their policies, subject to State Life’s rules and regulations.
What is the rate of interest on a policy loan?
State Life currently charges 10% interest on policy loans, payable half-yearly.
What happens if the loan is not repaid?
If the loan is not repaid during the term of the policy, or before an early claim, the loan plus any profit is deducted from the claim money and the balance is paid to the claimant.
What is reinsurance?
Insurers spread risk by reinsuring the risks they have insured with other insurers.
