In case of some policies, the Life Insurance Corporation provides the policyholder with the bonus or the profits declared as a certain amount per thousand of sum assured. This assured bonus will be given to the policyholder whatever be the performance of the corporation for the period in question. These are Guaranteed Additions and are paid at the end of the term of the policy or in case of the early death of the policyholder.

What are Loyalty Additions ?

In addition to the Guaranteed Additions for certain policies the Life Insurance Corporation declares further additions, which benefits the policyholder. This is usually an amount declared per thousand of sum assured every five years, depending on the corporation’s performance. This is known as Loyalty Addition.

What is Surrender Value ?

When a policyholder wishes to encash his policy due to urgent need of cash he returns back the policy to the insurer for which is entitled to an amount. This is called surrender of policy or termination of the policy before the stipulated period. Policies can be surrendered provided it is kept in force for at least 3 years. If it has been in force for five years the bonus is also added to the surrender value.

How do I revive a lapsed policy ?

A lapsed policy can be revived during the lifetime of the assured, but within a period of 5 years from the due date of the first unpaid premium and before the date of maturity. Revival of a lapsed policy is considered either on non-medical or medical basis depending upon the age of the life assured at the time of revival and the sum to be revived. If the revival of the policy is completed by payment of over-due premium within 14 days from the expiry of the grace period, only the late fee for one month has to be paid.

When does a policy lapse ?

If the policyholder fails to pay his premium within the days of grace provided after the due date, the policy lapses. The grace period in case of yearly, half-yearly and quarterly modes of payment is one month and in case of the monthly mode of payment, the grace period is 15 days.

Is there a difference between an Agent and a Broker ?

Yes, there is a difference. An agent is the representative of the insurance company but the broker is the representative of the consumer or policyholder.

Is there any other benefit of buying insurance other than the risk cover ?

There are several benefits of buying insurance. Other than the risk cover the most important you receive Income Tax Relief under Section 88 of the Income Tax Act, which means premiums paid by you, reduces your tax liability. Such exemptions are also available for premiums paid on health covers.

Besides it helps you build up compulsory savings.

Also through a valid assignment the beneficiaries of the policy are protected from claims of creditors. Life insurance policies can also be a great source of help as a security while availing of loans. One could also surrender his policy in case of emergencies.

For a policy taken under the MWP Act 1874, (Married Women's Property Act), a trust is created for wife and children as beneficiaries.

Who are Insurance Brokers ?

An insurance broker would provide the following:

• Pre sales and after sales service to the customers.
• Provisions of relevant information to the underwriters to assess the risk and decide the premium.
• Design covers that meet the client requirements.
• Recommend risk improvement and loss minimisation measures.
• Provide risk management and insurance education. Collection of premiums.
  

Which policy qualifies for Bonus eligibility ?

• Bonus is payable on all profits' policies of LIC
• The amount of bonus for each Rs.1000/- sum assured in respect of Whole Life with Profits' policies is 125 percent of corresponding bonus amount for Endowment with Profits' Assurance policies
• Bonus is payable once a policy has been in force for the full sum assured for a period of 5 years from the date of commencement of the policy

However, in case of a death claim within 5 years bonus is payable if the policy is in force for the full sum assured. Basically, a policy must be kept in full force for at least 5 years for it to be eligible for bonus unless a death claim were to arise within this period as a result of the death of a policyholder.

What is the Double Accident Benefit (DAB) ?

Upon payment of an additional premium of only Re.1/- per annum against a sum assured of Rs.1000/-, you could opt for a very attractive Double Accident Benefit.

The benefit provides for the payment of an additional amount equal to the sum assured in the case of death of a policyholder owing to any accident. The death claim under Double Accident Benefit becomes double of the normal claim.

If owing to an accident, a permanent and total disability occurs to the life assured, all the subsequent premiums are waived off and the policy is still kept in full force. Additionally, LIC will pay the policyholder an amount equal to the original sum assured through monthly installments spread over 10 years. Upon maturity of the policy, the sum assured and the accumulated bonus amount is payable as well.

To be eligible for this benefit, the policy should be in full force for the full sum assured before the policy anniversary and the life assured must not be over 70 years of age either.

What is Nomination ?

When you make a nomination within your life insurance policy, as the policyholder you still continue to be the owner. However after your death, the nominee who did not have any right under the policy while you were alive becomes the rightful recipient who will receive the policy monies. He or she may not be the rightful heir in which case the legal heir can implement his rights and claim the monies from the nominee.

What is Assignment of a policy ?

If your intention is that your policy monies should go to a particular person only then you need to assign the policy in that person's favour. Thereafter the insurer will pay the policy monies ONLY to the assignee who becomes its owner, irrespective of whether he or she is your legal heir.

Thanks to assignments, the proceeds of a policy can be protected against the claims of any of the policyholder's creditors. Assignment is a legal instrument and the insurer cannot be held responsible for its legal liability. The insurer will nevertheless register the assignment in its books.

What is a Paid-up policy ?

According to LIC rules and regulations, once you pay the premiums on a life insurance policy for 3 full years, the policy does not become wholly void even if no subsequent premiums are paid.

Such policies are known as paid-up policies. In such cases, the sum originally assured is reduced to a sum bearing the same ratio to the full sum assured as the number of premiums actually paid to total number of premiums originally stipulated as payable under the policy.

If 6 out of the originally stipulated 30 premiums are paid, the sum assured under a paid-up policy would still be 20 percent of the original sum assured by the policy.

How is the Paid-up value of policy calculated ?

The paid-up value of a policy is the reduced sum assured calculated on a proportionate basis by using a simple formula

Paid-up Value=(No of premiums paid/Total no of premiums payable) x Sum Assured

What benefits are not accrued to a Paid-up policy ?

A paid-up policy loses all the additional benefits attached to the policy:

• Double Accident benefits
• Survival benefit installments in the case of money-back policies

A paid-up policy may be free from payment of further premium but is subject to the payment of interest on any loan and other charges, if any are applicable. The interest on the loan must be paid regularly or LIC will start write off the policy towards the repayment of loan amount and the interest in terms of the conditions governing the grant of the loan.

Should you allow your policy to become a Paid-up one ?

NO. Once a policy becomes a paid-up one, the sum assured is reduced to such a pitiful figure that it cannot provide any cover to the policyholder or his dependants. Besides, you should also consider the facts that

• The cost of insurance goes up with advancing age. The next time you obtain a policy, the terms will not be as advantageous as available earlier.
• The chances of insurability also diminish with the advancement of age despite the fact that insurance is needed more along with increasing age and growing responsibilities
• The reinstatement of a policy once converted into a paid-up policy requires numerous cumbersome formalities to be completed
• A paid-up policy cannot participate in the bonus declared by LIC
• LIC will not issue a fresh policy for at least 3 years in case an earlier policy of yours stands lapsed or was converted into a paid-up one.

It is strongly advised that you should NOT allow any of your policies to become paid-up policies.

Child Insurance Life FAQs

What is the scope of cover under Raj Rajesheshwari Mahila Kalyan insurance ?

Under Raj Rajesheshwari Mahila Kalyan insurance, the cover includes all types of accidents arising at home or at any public place while engaged in any occupation or while traveling by any mode. Death or disablement arising out of or traceable to following would also be treated as accidents for claim:

• Slipping or falling from the mountain terrain
• Biting by insects, snakes, wild animals
• Sterilization or complications arising out of such operations
• Childbirth and due to other pregnancy/ Delivery related problems or complications
• Caesarean operations
• While undergoing surgical operations like hysterectomy (removal of uterus)
• Removal of breast resulting from incurable disease including cancer
• Racing on wheels, big game, hunting, mountaineering whilst engaged in winter sports

Provided death or disablement from accident should result within 12 months from the date of occurrence/ accident.

What are the benefits available under Raj Rajesheshwari Mahila Kalyan insurance ?

Under Raj Rajesheshwari Mahila Kalyan insurance, the benefits available are:

• On permanent total disablement of the married or unmarried woman - Total sum insured is paid
• On permanent partial disablement of the married or unmarried woman - 50 percent of the Sum insured is paid
• In the event of death of husband of the married woman - Total sum insured is paid to the wife
• In the event of death of unmarried woman - The total sum insured is paid to the Nominee

Additional benefits

• On payment of additional premium, additional benefits are available
• In case of Temporary Total Disablement arising out of accidents resulting in hospitalisation or resulting in total disability Rs.500 per month will be paid subject to maximum of Rs.1500
• A maximum of Rs.2,000/- will be paid towards legal expenses incurred necessarily for legal divorce once in lifetime
• A maximum of Rs.2,000/- is paid towards the loss or damage to household goods and personal effects due to fire and other perils
• Group discounts and Long Term Discounts are available in this policy
  
  

Who are entitled for Bhagyashree Child Welfare Insurance ?

Parents of a girl child can opt for this insurance policy on behalf of their girl child provided the age of the girl child is less than 18 years.

What are the benefits available under Bhagyashree Child Welfare Insurance ?

In the event of death of parents of the girl child due to an accident, then the total sum insured (i.e. Rs.25000 maximum) is deposited with the GIC and paid to the girl child for education at regular intervals as follows:

Age of the girl child	Annual Amount	Amount Payable to
0-5 Years	Rs.1200	To surviving parents/ guardians
6-11 Years	Rs.1200	To surviving parents/ guardians
12-17 Years	Rs.2400	To surviving parents/ guardians for the education of the girl child only
18 Years	Balance amount lying in her credit after adjusting the amount already paid	To the girl herself only

 

What is the Free Disability Benefit ?

The Free Disability Benefit is automatically available to every policyholder without any extra charge. If the life assured is disabled by accident from earning his livelihood, he will be exempted from paying premiums on his policy after the date of his disablement. The benefit is granted only on the first Rs.20000/- of assurance on any one life.

To be eligible for this benefit, the policy has to be in full force for the full sum assured when the disability occurs. Also the disability must arise before the policy anniversary and the age of the life assured must not exceed 70. Also the disability must be total and permanent such that there is no work, occupation or profession that the life assured can do or follow to earn or obtain any wages, compensation or profit.

Loss of eyesight in both eyes, amputation of any two limbs, hands above the wrist and legs above the ankle will be deemed to constitute total and permanent liability. And LIC must be furnished within 90 days of the occurrence of the disability.

What is the date of commencement of risk for LIC policies ?

The risk under which the risk for LIC policies commences is the date of receipt of the first premium in full or the date of acceptance, whichever is later. But if the acceptance of the proposal is conditional upon the proposer's compliance with any requirements, then the risk under the policy will commence on the date on which all requirements are satisfactorily complied with or on the date of receipt of the first premium in full, whichever is later.

What is an Annuity ?

An Annuity is an investment you make, either in a single lump sum or through installments paid over a certain number of years, in return for which you receive a specific sum every year, or every month either for life or a fixed number of years. Upon the death of the annuitant, or at the expiry of the period fixed for annuity payments, the invested annuity fund is refunded usually along with a small bonus.

Annuities differ from all other forms of life insurance in one fundamental way - They do not provide any insurance cover but offer a guaranteed income for a certain period or for life. Typically annuities are bought to generate income during one's retired life, which is why they are also called Pension Plans.

Annuities are an investment that offers you an income that you cannot outlive and provides a solution to the biggest financial insecurity of old age that you will outlive your income.

When do you receive Annuity payments ?

There are two types of Annuities: Immediate annuities and Deferred annuities

Under Immediate annuities, you start receiving annuity payments as soon as you pay the premium usually in a lump sum.

In the case of Deferred annuities, the payments to the annuitant start after a certain deferment period. Typically, the annuitant pays annuity premiums in installments during the deferment period.

Generally, people pay less premium for an annuity that provides future payments because future payments because the deferment period allows the insurance company to invest your premiums at a profit, thereby reducing the cost of the annuity to you.

What is the Unit-Linked Insurance Plan (ULIP) ?

The Unit Trust of India (UTI) operates a Unit-Linked Insurance Plan (ULIP) in collaboration with LIC and the General Insurance Corporation (GIC) of India.

ULIP is a contractual savings-cum-insurance plan that offers the following features:

• High returns
• Maturity bonus
• Life insurance cover
• Free accident cover
• Safety of capital
• Tax rebate

It is open to any resident of India who is above 18 years of age. Individuals less than 55 years and 6 months of age can join the plan for 10 years and those less than 50 years and 6 months for 15 years contributing 1/10th and 1/15th of the target amount every year, respectively.

Who can attest the discharge vouchers for matured or death claims ?

The people who can attest the policyholder's or the assignee's signature on the discharge form are:

• Any agent of the LIC who holds membership of at least the Divisional Manager's club
• A Block Development officer
• Any gazetted officer
• Any magistrate
• Any Class 1 officer or a Development officer with at least 5 years' services
• A principal or headmaster of a local government high school or higher secondary school
• An agent or manager of a nationalised bank
  

Who should sign the Form of Discharge ?

The Form of Discharge (Form 3801) should be signed by:

• The nominee in case a nomination exists in the policy or
• The assignee if the policy was conditionally or absolutely assigned or
• The holder(s) of legal representation obtained if the policy was neither nominated nor assigned or
• All Class 1 heirs of the deceased policyholder according to the relevant personal law applicable if LIC' s Divisional office has waived proof of title
  

How can an NRI pay the premium under the policy ?

The manner of payment of premiums under the policy is
For Rupee Policies on NRI's

• By direct remittance from abroad through Banking Channels in approved manner (preferably by Indian Rupee drafts drawn in favour of LIC of India) or by remittances through postal channels like Foreign Money Order
• By payment out of funds held in Non-Resident (External) Account or Foreign Currency (Non- Resident) Account with a Bank in India
• By cheques drawn by Non- resident policy holder on Bank Accounts held in India in his own name (either solely or jointly with another member of the family) whether or not the account has been designated as non-resident
• By cheque drawn on account maintained by resident parent or spouse of policy holder in their own name or joint names with other close relatives
• By the absolute Assignee in India wherever such policies have been absolutely assigned to a resident in India
• By the employers in respect of policies issued to their employees who have been deputed abroad by them
• Premiums can be paid in cash by a resident parent or spouse of the non-resident policyholder subject to his / her submitting a letter stating the relationship with the policyholder
• Premiums due on policies issued to Indian students who have gone abroad for higher studies may be collected in Rupees out of the Resident Bank Account in India or any of their representatives in India by cash or cheques

Note:
In respect of premiums collected in cash from sources mentioned in the last five instances, it should be noted that the policy moneys cannot be paid abroad in foreign exchange but has to be paid in India only.

For policies held on foreign register of LIC
Premiums on foreign currency / Rupee policies issued by overseas of LIC and held on their foreign register should be collected only in foreign currency.

Can NRIs take Foreign-Currency policies of LIC ?

In India, LIC markets only Indian rupee-currency policies. However, clients residing in U.K, Fiji and Mauritius can take Pound Sterling , Fijian Dollars and Mauritian Rupees denominated policies respectively from LIC branch offices in those countries.

Similarly, LIC (International) E C, Bahrain - a subsidiary of LIC operates among NRIs in Bahrain, Saudi Arabia and Kuwait. Clients can take US Dollars, Bahrain Dinars and Saudi Riyal currency policies from them.

What are the types of schemes offered by LIC to NRIs ?

All individual schemes marketed by LIC in India are available to the temporary NRIs holding Indian Passports. Foreign Nationals of Indian origin can take LIC policies during their stay in India.

However, joint life plans having term insurance element and plans having health insurance are not allowed.