Life Insurance: Deepak Sood

Will health covers by life insurers be portable? If no, why?
The Insurance Regulatory and Development Authority has allowed portability. However, these aren’t portable, as they are long-term (3-15 years). They carry assured benefits which vary. The long-term nature of benefits requires the insurer to create a reserve for such payments, based on actuarial assumptions. The products vary from company to company, making portability benefits complex.

If the nominee of a policy is different from the legal heir, who gets the life insurance proceeds?
According to section 39 of the Insurance Act, 1938, a nominee is a person who can provide a valid discharge to the insurer and receive proceeds if the insured dies during the term of the policy. However, the nominee holds the proceeds as a trustee on behalf of the legal heir(s) of the insured. If the nominee is also one of the legal heirs, he is entitled to the proportionate benefit.

If the legal heir(s) do not have faith in the nominee, they can approach the insurer for stopping the payment to the nominee.

I read that NAV guarantee products are to get scrapped. What are the risks and disadvantages of these? I was planning to buy one.
These provide exposure to equity, while protecting from the downside of a market. Further, the ratio of investments between equity and bond is adjusted regularly, depending on the equity or interest rate. So, the return would be a weighted average of the returns expected from the equity and bonds.

It should be noted that the highest NAV achieved during the stipulated term is guaranteed, but neither are the returns guaranteed, nor may they provide the highest returns. Further, to maintain and guarantee the highest NAV on maturity, these products, generally, have an additional charge built-in to cover the investment risk. Also, there is only one fund and so the customer will not have the flexibility of switching the invested funds to a different fund according to his choice. Another point is the benefit of the highest NAV is not applicable in case of a policy surrender.

The writer is the managing director and CEO of Future Generali Life Insurance. The views expressed are his own. Send your queries to yourmoney@bsmail.in