LOSS OF POLICY DOCUMENT

The term of my life policy is over but my policy bond seems to have been lost. What is the procedure of making a claim under such circumstances?
First of all you need to inform your policy issuing office about the loss of bond. You have to fill a form and return it to them along with some documents. If the claim amount is less than Rs 5,000, you will have to submit a simple indemnity letter along with the discharge form and a Declaration of ‘No Assignment’ of the policy. However, if the claim amount is more than Rs 5,000, you will have to submit the documents mentioned above as well as a surety having sound financial status to get your claim released.

POLICY PREMIUM

Can an insurance company increase the amount of premium after the commencement of the policy?
Typically, when you buy an insurance policy, you enter into an agreement with the insurance company. It is a fixed price (premium amount) that you agree to pay in order to remain insured for the term of the policy. Thus, such a price (or the premium amount) is pre-fixed through an agreement and the insurance company cannot increase the same later. However, although once fixed the premium on a policy cannot be changed, the amount payable by you can increase with the levy of taxes by the government; for instance, due to the introduction of service tax on life insurance policies.

UNFORGETFUL

I took a life insurance policy last year. Since there was no reminder from the company or the agent, I forgot to pay the premium this year that was due in October. Will my policy be cancelled or will they take a late fee and let my policy continue?
It actually depends on the terms of the issue of the policy. Generally speaking, any insurance policy lapses if the due premium is not paid within six months of the date when the premium became due. In your case the premium is late by about three months. You should approach the policy issuing office and get the figure of total amount due as on date along with the interest. On payment of the dues, your policy will be regularised.

INSURANCE POLICY

I am 28 and I want to take an insurance policy, which can also give me tax benefits?

Which one should I go for? If you want adequate insurance cover along with income tax benefits, the best option for you is to go for a term insurance policy. Since the premium in a term policy is quite low as compared to endowment covers, one is able to get adequate coverage. The premium paid on these policies also qualifies for deduction under Section 80C of the Income Tax Act, 1961. You may go for term insurance policy offered by any of the life insurance companies. Since they are covering pure risk only, their premiums and terms are similar.

MONEY BACK POLICY

Four years back, I bought a money-back endowment plan. The first money-back instalment is due next year. Now, I am finding the annual premium of Rs 10,000 too expensive, and don’t want to continue with the policy. Should I surrender the policy at this stage and switch to a term insurance policy, which is cheaper?
If you surrender the policy at this stage, you will get only the surrender value, which will be just about 50 per cent of what you have already paid. Therefore, in my view it is not advisable to surrender the policy at this stage. It would be best to continue. You can meet some of your premium obligations from the periodic money-back installments that you will get under the present plan.

MY PENSION

My pension plan is maturing next month, but I am already getting a government pension. Is it possible to get the returns in bulk so that I can invest the amount somewhere else?
To get a lump sum amount you can always withdraw a portion, though not the whole amount, of your pension receivable under the policy. This type of withdrawal is called commutation. This amount would be tax-free and can be invested elsewhere by you. Normally, it is possible to commute up to one third of your pension amount. You can receive a lump sum amount against the commuted portion and the balance amount will come in the form of monthly pension. The exact amount available for commutation, however, depends on the terms and conditions of your pension plan.

PROFIT

What are ‘with profit’ and ‘without profit’ insurance plans?
Policies that participate in the profit of an insurance company are called ‘with profit’ policies, while the policies on which the amount of bonus is fixed at the time of issue itself are called ‘without profit’ policies. This means that irrespective of the profit earned by the insurers, the policyholders of without-profit policies will get fixed returns on the amount they have invested. Whereas, in the case of with-profit policies the amount of bonus payable is based on the net surplus earned by the insurers. Therefore, returns on these varies from year to year and can be more or less than the returns on without-profit policies.