LIFE INSURANCE: Deepak Sood

I used my life insurance policy as a collateral for my home loan and had to assign my policy in favour of the bank. When will I get my policy papers back? What happens to the insurance money if I were to expire in the interim?
The policy papers will be returned by the bank once you have fulfilled all financial obligations (according to the loan repayment schedule) to the bank. On fulfillment, the bank will first need to give a confirmation that the entire loan has been repaid. The bank then has to write to the life insurance company to reassign (transfer the ownership) back to you.

In case of your demise before the settlement of the loan and reassignment to you, the total claim settlement process will follow one of the two options given below: 1) The home loan company advises the insurance company about the total loan outstanding, requesting the insurance company to remit the entire amount due to it & advising the insurance company to pay the balance.

2) The home loan company receives the full amount from the insurance company and the balance after adjusting the paid outstanding loan.

In both the scenarios, it is important to note that since the nomination is no longer valid, the legal advisor has to take care that the legal heirs are clearly identified or a will has to be put in place so that the monies can be paid out by the institution.

I am 35, divorced and earn Rs 3 lakh a year. I have a five-year-old son. What kind of an insurance plan should I go for?
You must immediately go in for a term insurance plan — that will not be expensive. Since you have not indicated the sum that you can set aside for insurance purposes, I suggest you look at a sum assured that is 10 times your current annual income. As you progress in your career, you can look at enhancing the sum assured. I strongly advise you to evaluate attaching riders that are cost-effective and provide higher value.

Going forward, as your income goes up, you can look at options such as child plans that can take care of your son’s education, etc, and also pension plans that will take care of your post-retirement needs.

The premiums of my two life insurance policies are due in September every year. But September is a festival season and I often forget to pay the premium on time. Can I shift the due date? What is the procedure?
The due dates cannot be shifted once the policy is issued. My suggestion would be to opt for a payment mode from the options available that is the most convenient/hassle-free for you. The options available (with most private insurers) include: (a) Standing instruction to your bank; (b) Standing instruction on your credit card; (c) An ECS facility.

These options are useful for customers like you, as they remove the trouble associated with remembering premium renewal/due dates. The only thing that you as a customer needs to ensure is that there is sufficient balance/credit available in your bank account/credit card.

The author is MD & CEO of Future Generali Life Insurance. The counselor’s views expressed here are his own. Send your queries at yourmoney@bsmail.in