Insurance Bytes

Life insurance is filled with many terminologies which though simple for those in the profession to understand but may pose a challenge for the layman policyholder. Compiled below is a list of common life insurance terminologies with their simple interpretations. Policy owner/Policyholder – Policyholder owns the policy. He is responsible to pay the premiums and all benefits (maturity, survival, surrender) are payable to him only. The insurance company communicates with the policyholder only. He alone can request for any changes/modifications to the policy. The policyholder appoints the nominee. Life insured – He is the person on whose life the insurance coverage is provided. The life insured and policyholder can be the same or different persons. For eg: Ajay is the policyholder and life insured under a term policy. Ajay also has an endowment plan where he is the policyholder and his son Sai is the life insured. Nominee/Beneficiary – The nominee’s role is to receive the...

Life insurance companies have meticulous processes in place to ensure that the various benefits are paid out in a timely and smooth manner. However, have you thought what happens when a benefit cheque/demand draft sent by the company is returned undelivered as the policyholder no longer works/resides at the mailing address available with the company. Or an instance where the insurance company is unable to make a payment because it is not able to contact the policyholder for the required documents (eg: maturity payout) or rather still where the payment is not made as the insurance company has not been intimated about the happening of an insured event (death). You may think that these instances are rare, however you would be surprised to note that as on March 31, 2014, the unclaimed benefits with life insurance companies were approximately Rs 5,848 crores.* Yes, you read it right. Read on to know more. What qualifies as unclaimed benefits? Some common examples are as under: ·...

Assignment of policy means transfer of policy ownership from the policyholder to another person or entity. The person assigning/transferring the policy is called ‘assignor’ and the person/institution to whom it is assigned is called ‘assignee’. There are two types of assignment namely absolute assignment and conditional assignment. Absolute assignment is usually done for valuable consideration, raising a loan or love and affection for family members. The assignor loses all rights over the policy and cannot revoke the assignment. All benefits under the policy are payable to the assignee or his legal heirs if the assignee is not living to receive the benefits.  The assignee can deal with the policy the way he chooses to. He may surrender the policy or further re-assign to another person. The policy can be re-assigned by assignee to the assignor. Usually the assignee is expected to pay the premiums. However, if the purpose of assignment is ‘loan against policy’ then t...