Life insurance: Deepak Sood

What is a double accident life insurance policy? How can one get its benefits in an existing life insurance policy?
A double accident life insurance policy provides for the payment of an additional amount equal to the sum assured, in case of death of the policyholder due to an accident. The death claim under the double accident benefit, thus, becomes twice the normal sum insured. Such a cover is provided either as an optional rider or as an inbuilt benefit. If it is a rider, the policyholder has to pay a small additional premium. If it is an inbuilt benefit, the premium for the base policy also includes the premium for accident benefit. Such policies also provide cover for disabilities, though sometimes an additional disability rider is required. If due to an accident, a permanent and total disability occurs to the life assured, all subsequent premium are waived and the policy is still kept in full force. Some additional benefits are also given in case of partial and total disability, and vary for different life insurers.

 

I took an endowment plan two years before. When can I surrender the policy without losing my money?
A traditional endowment policy can be surrendered for value after completion of three policy years. Section 113 of the Insurance Act provides for a guaranteed surrender value (GSV) after completion of at least three years. Insurers generally offer special surrender values, which are higher than or equal to GSV. In case of unit-linked insurance plans (Ulips), insurers offer surrender values before three years, and some after one policy year. Surrender value in case of traditional plans depends on premiums paid, premiums payable, sum assured, outstanding term and the accrued bonuses. In case of Ulips, it depends on the fund value and surrender charges. Generally, the surrender value is less than the benefits payable otherwise. However, in case of Ulips, one can surrender the policy without any loss once the charges become nil.

What is a mortgage redemption plan? When is one advised to take the plan?
People take loans from financial institutions for purchasing assets. The asset is mortgaged with the institution, though it stays with the borrower and the family for use. If the borrower dies before the repayment of the entire loan amount, the lender takes possession of the mortgaged asset. He then sells it off if the family is unable to repay the balance loan and outstanding interest, if any. Such a situation may even arise when the borrower is disabled or critically ill, and is not able to service the loan. Mortgage redemption plan helps to repay the outstanding loan in such cases. Here the loan is repaid via equated periodical instalments as the loan amount reduces over a period of time. A decreasing term life insurance plan, with disability and critical illness covers, is ideal in such a case.

The writer is the managing director and CEO of Future Generali India Life Insurance. Send your queries to yourmoney@bsmail.in