Here are some common life insurance queries that investors from India have. This is part of a series of common doubts investors have on life insurance policies.
Today’s questions relate to how much life insurance a person can take; whether it is valid outside India; will claims be allowed if premium is unpaid; can the premium due date be changed; can a policy be revived. Let’s take a look.
Some Life Insurance Queries are-
Question: What is the maximum amount of life insurance a person can get ?
Answer: Insurance is meant to compensate a person for a loss he has suffered. All losses can be quantified in money terms. That is why the maximum amount of insurance you can take for your car is fixed. But a person’s life cannot be quantified monetarily. Because of this, one can take unlimited life insurance.
However, most of the life insurance companies will want to cap on how much insurance you can take. This is to avoid over insurance and foul play where a person can over insure himself with the intention of leaving behind money for his family.
Question: Will my life insurance be in force even when I travel outside of India ?
Answer: Yes, life insurance is valid irrespective of where you are in the world. If you happen to die outside India, your nominee will still get the Sum Assured. However, it might be prudent to advise your insurance company of the fact.
Question: Can I change the due date of my premium for my life insurance policy ?
Answer: No, this is not possible. The due date or the interval when the premium has to be paid for a life insurance policy is fixed when the policy is first issued. Every year, the premium has to be paid by the same due date so this date cannot be changed after policy issuance. A grace period of 30 days is given by the insurance company to the policy holders.
Question: Will a claim be allowed if a person dies before he has paid the renewal premium ?
Answer: Yes. If the due date of your premium is say, Jan 10th and you have paid by this date, then there will be no issues on claims. However, if you forget to pay by Jan 10th, most of the insurance companies allow a grace period of one month for paying the premium. If a person dies during this grace period, the claim is still admissible. This is allowed by life insurance companies as many people do not default on purpose, some do not pay because of genuine reasons.
However, it must be noted that the grace period is one month for all payment modes except the monthly mode where it is 15 days.
Question: I am 31 years old and I earn 5 lakhs per annum. How much insurance will I get ?
Answer: You can use thumb-rules to find out how much insurance you need. Following is one such method. You can use your annual income and multiply by the lower and upper factor to arrive at the maximum insurance you will need.
So, in this case, the minimum insurance is (15 * 5 lakhs) and maximum insurance the person can get is (20* 5 lakhs).
| Multiplier Factor for annual income | ||
| Age | Lower Factor | Upper Factor |
| 20-30 years | 5 | 10 |
| 30-40 years | 15 | 20 |
| 40-50 years | 10 | 15 |
| 50-60 years | 5 | 10 |
Your ability to pay the premium is obviously a factor that insurance companies check as well.
Question: My policy for which I have paid premium for 3 years has now lapsed as I did not pay the premium for the last 2 years. Can I revive it ?
Answer: You will need to check with your life insurance company whether they will allow you to revive the policy. Remember, they have the right to decline it. Most of the life insurance companies will allow you to revive a policy within a period of 5 years from the date of the first unpaid premium. You will obviously have to pay all the premiums till date with some extra charges before the policy can be revived. Your insurer will explicitly send across a communication to you after the policy has been revived.
Question: When is the payment done if one has a critical illness rider with a life insurance policy ?
Answer: In case of a critical illness rider attached with a policy, payment is made within 30 days of diagnosing the critical illness. One has to survive the critical illness for 30 days after it has been diagnosed in order to be eligible for the payout.
I hope many of your life insurance queries answered here.
If a life insurance policy is taken out on a parent,and the parent dies. Is it usual for the insurance company to insist on other siblings of the person who took out the policy to also sign for the policy to be paid,even though a death certificate was sent,and the policy was took out by one person privately.?
@a hawkins, I think it is. The insurance company just wants to make sure that the other siblings are happy with who the payout is going to. I am not sure on how the intricacies of this work though.
Does Insurance(especially. Term Plan) from LIC covers death in Terror Attacks?
@Pradeep Naik, Yes, most of them have begun doing that now in the new policies.
I have the policy LIC Jeevan Anandh and paid 1 year premium of around 50000. But its too costly and I would like to change it to the term insurance cover Amulya Jeevan. Is it possible to convert?
I started a policy from HDFC Standard Life in October 2008,with a monthly premium frequency for 20 years term.At present actual value is less than what I invested till now.
Do I need to continue for next 15 yrs or closed & take the amount whatever I am getting??
I had taken a ulip linked insurance policy of xyz compony. Yesterday i come to know that one universal account gets generated automatically & all the bonus or agent comision gets added to this account & insurance compony should provide me the card for this account.
But I had not got any such card fro the insurance compony.
I want to know is this information is true?
Hi..i was miss sold a regular life insurance policy as a single premium policy. When i got to know that i told the company but they did not do anything. I filed a case and after many hearings court passed an order to refund my premium with an interest @ 8% per day till the amount is paid and a compensation of rs 20000/-. The company while paying the interest and compensation deducted a tax @20% and gave the balance to me. Should there be tax deducted.
Actually my father bought a Tata aia life subh life plan 3 years ago .
Here are my policy details :
tenure : 15 yrs
annual premium amt : 12k
amount paid : 36k (3 yrs)
I have following doubts as I am unable to pay further premiums :
1. if I surrender now how much return I would get or if I surrender after 5 yrs (i.e without paying next two premiums) how much return I would get.
2.Is there any surrender charge If I surrender after 5 yrs
3.what is the difference in return if I do paid-up now or paid -up after 5 yrs(after paying next two premiums)
please suggest …. Thanks in advance
Dear Sir,
I have ‘Jeevan Saral (Table No.165)’ and have been paying annual premium of Rs.12,010 since January, 2008 towards the Sum Assured of Rs.250,000. I am 31 years old now and the policy term is 35 years (2043). Now, I understand that mixing investments and insurance is not a good idea so I have been thinking of surrendering this policy. My questions are:
(1) How much money will I receive as Guaranteed Surrender Value and Special Surrender Value
(2) Would surrendering/closing be a good idea after having paid already Rs.84,070 through 7 premiums or the plan is not that bad to not to keep in one’s portfolio.
(3) If I have to surrender – when would be the best time to surrender (I have a premium due next month)
(4) or shall I just stop paying the premiums and continue with the policy without surrendering
For your information, I have recently bought an online term insurance (Click2Protect) and am planning to buy a term insurance from LIC – I understand that these two policies would be enough to take care of my insurance needs. Your views.
Thanks!
S J
i have paid hdfc life premium for five years which is more then lock in period for next two years i have not paid the premium . face value of my fund is more than required for it to remain valid. i keep getting mails from hdfc life for reviving the policy as if it is not valid .what to do