POLICY AS A COLLATERAL

Can I use my life insurance policies as collateral when taking a personal loan from a bank?
Yes, you can use your life insurance policies as a collateral security for the loan liability. Banks usually insist on having a collateral security in addition to the primary security provided by the loan applicant. These can be in the form of certain financial assets such as National Savings Certificates (NSCs) or life insurance policies. Generally, this is done through the assignment of the policy.
Assignment of a policy means that the title, rights and benefits under the policy get legally transferred to another person or entity.
In this case, you can assign the policy in the name of the bank which is giving you the loan, thereby pledging the policy with the loan provider as collateral security.

TAX DEDUCTIONS

What tax deductions can I get for repayment of home loan?
Primarily, you can get two types of deductions for a home loan, one on repayment of the principal amount of the loan and the other on the interest on the loan. Whether you reside in your house or give it out on rent, the repayment of principal amount of loan will qualify for deduction under Section 80C. The maximum amount of deduction available for repayment of principal amount is Rs 1 lakh. Under Section 24(b), up to Rs 1.5 lakh can be claimed as deduction under the head ‘Income from House Property’ for the interest component of a loan in case of a self-occupied house. However, the full amount of interest can be claimed as deduction in case the house is given on rent.

APPLICATION DECLINED

I had applied for a credit card two months back. I submitted all the necessary papers. The bank executive assured me that I would be getting the card soon as I fulfilled the necessary criteria. However, a few days back my application was rejected. Is the bank within its rights to do so?
A credit card is like a non-secured loan. Therefore, the amount of risk associated while giving a card is higher for the bank compared to giving a secured loan like a home loan. Banks take many factors into account while evaluating an individual’s creditworthiness through the credit card application that you fill. Some of these factors include your income and job stability. Another major determinant is your residential address. Most banks have a list of negative areas. If you happen to live in any of these areas, your application may not be approved even if you qualify on other factors.
Recently, credit scores were introduced in India in which a person’s credit history is reflected in numbers. Banks and financial institutions have already started using these scores. They use this score as a major input while deciding your creditworthiness before extending any fresh line of credit, including a credit card.
Therefore, the bank is within its rights to reject your application.!!

CLASSES FOR ATM AND DEBIT CARD TRAINING

How can one learn how to use an ATM/ debit card? Do banks give such information?
W hen you open a savings or a no-frills account with a bank, apart from the cheque book and the ATM-cum-debit card, you also get an instruction manual that explains how to use your card. The manual talks about, among other things, the precautions that you should take while using the card, like keeping the PIN number in a secure place or making sure no one is watching when you enter the PIN while using the ATM.
If you go the bank’s website you can get a list of things you should keep in mind while using a debit card.

CRITICAL ILLNESS INSURANCE

I want to get a critical illness insurance cover. What conditions have to be fulfilled to get this cover?
A critical illness policy is available for specific critical illnesses named under the policy that you opt for. Such policies invariably include diseases like coronary artery surgery, cancer, stroke, renal failure, and many others.
Normally, such a cover is granted to the proposer whose minimum income from gainful employment is Rs 2 lakh or more (income tax return form to be submitted as proof). The pre-existing disease exclusion condition applies to this policy. No claims are allowed within 90 days of taking the policy and the insured person needs to survive for 30 successive days after the diagnosis of the critical illness in order to make his claim.

PAY PREMIUM THROUGH CREDIT CARD

Can I pay my insurance premium through a credit card? Do they charge any extra interest?
Yes, you can pay the premium of your life insurance policy through a credit card, provided your insurers have an arrangement to accept payment through credit cards. Nowadays, most insurance companies do have this option. Deduction of extra charges would depend on whether your credit card company has a tie-up with your insurance company. If they do have such an arrangement, then there will be no extra charge as long as you pay off the full amount due on the credit card by the due date.

POLICY DOCUMENT LOSS

I recently lost my life insurance policy papers in a fire. How can I get a duplicate copy?
You can always get a duplicate policy bond from your insurance company. For this you need to apply to your insurers in a prescribed form. In order to facilitate the verification process, give the company the premium receipt and other identification proofs.
Further, you may be required to submit an indemnity bond and pay the necessary fees for obtaining duplicate policy papers. Also, in cases where the policy documents have been partially destroyed due to natural causes like fire, flood, earthquake, or other such reasons, the physical remains of the half burnt or destroyed documents may be returned to the insurance company as evidence of loss of policy.