Life Insurance: Deepak Sood

Recently, a friend (33) committed suicide. His life cover is worth Rs 50 lakh, with no premium default, and the policy is six years old. As far as I know, no claim is given in suicide cases. But he is survived by his mother (62) and a mentally challenged sister (40). Are there any exceptional clauses under which suicide cases can be considered for claims?
Suicide cases are not always denied claims. Normally, a suicide exclusion clause is applicable for 12 months from the date of the first premium receipt. In case the policy lapses and is revived, the exclusion clause of 12 months is sometimes applicable (not in all policies) from the date of revival.

As the policy concerned has been in force for six years without any premium default, the claim will most likely be paid for the full insured sum. However, if policy benefits include an accidental death benefit rider, except this additional benefit, only the base insured sum assured will be payable.

I am 58, two years away from my retirement. I am planning to apply for a home loan of Rs 20-25 lakh. Considering my age, most banks will deny the loan. But will my life insurance policies (worth Rs 2 lakh, Rs 3 lakh and Rs 5 lakh) increase my chances and/or eligibility?
Although getting a housing loan and the quantum of the loan depend on the repaying capacity of the borrower, having these policies may increase your chances. Life insurance proceeds can be used to repay the loan in case of unfortunate death of the life assured during the term of the policy. Further, if life insurance policies are of endowment type, the maturity proceeds can be used to repay the loan. You have three policies of Rs 10 lakh sum assured, and if all these three are endowment policies with terms of 15 years or more, they may be worth Rs 20 lakh assuming they are with-profit and about to mature in the near future. Banks and housing finance companies consider the paid-up/surrender value of such policies while arriving at the loan amount.

In the past two years, I have been travelling extensively. In the process, I forgot about a life cover for which I had paid premiums for four years. Now, the policy has lapsed as I failed to pay the last two premiums. How can I revive it?
Although the revival period varies from company to company, and within a company, from product to product, most life insurance companies usually give three to five years for reviving a lapsed policy. You may, thus, revive the policy by paying the premiums due along with interest, if any. Depending on the total term and the duration for which the policy has run, the age at the time of revival and the sum assured, the insurer may call for declaration of good health, medical evidence, etc, for reviving the policy.

The writer is CEO and MD of Future Generali India Life Insurance. Send your queries at yourmoney@bsmail.com