RENEW A LAPSED POLICY

I forgot to pay the premium of my life insurance policy and the policy lapsed. How can I revive my policy?
A policy lapses if the premiums are not paid within the due date or the grace period permitted by the insurance company. However, a policy that has lapsed can be revived within five years from the date of first unpaid premium. In your case, your policy can be revived under the ordinary revival scheme. For this all the arrears of unpaid premiums with interest will have to be paid. Along with this the insurers may ask you to submit a ‘Declaration of Good Health’ (form no. 680).

PARTIAL WITHDRAWAL IN ULIP

I took a unit-linked insurance plan (Ulip). I have paid the premium for six years. I want to withdraw some of this amount. Should I make partial withdrawal or surrender the policy?
The decision to choose between partial withdrawal and surrender should depend on the severity of your need and the returns from the policy. Partial withdrawal is allowed only after the completion of the lock-in period (which varies from three to five years as per the terms of the policy). As you have paid premium for six years, you can make partial withdrawals.
The sum assured as per your policy will be proportionately reduced by the amount of partial withdrawal made. Partial withdrawal is a good option if the Ulip fund is performing very well and you do not want to quit the policy. This way you can get the required amount as well as continue with the policy.
A policy can be surrendered any time after the lock-in period. The insurer will pay as per the prevalent market rate of the net asset value (NAV) of the units on the day of surrender. The decision to quit the policy should be taken only after considering the current and future returns from a policy.

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.