AGE & TERM:
While purchasing life insurance policy, age means age at last birthday. It age has four dimensions
Minimum Age at Entry: The completion of 30 days to a child is eligible for taking insurance policy, the parents of the child can purchase. For pension/annuity policy the entry age is 18 years completion.
Maximum Age at Entry: Many life insurers in India extending the maximum age at entry up to 65 years.
Maximum Maturity Age: Some plans of many companies offers 80 years maximum maturity age.
Vesting Age: The age at which the policyholder willing to purchase pension/annuity.
Policy Term: Is the contract period between the policyholder and the insurance company.
Premium Term: It describes the premium payment to the policy term. Single Premium (SP) is one time premium paying option. Limited Premium (LP) restricts the premium payment to 5 or 10 years and so on. Regular Premium (RP) allows paying entire policy term.
The minimum Sum Assured for single premium is 125% of premium paid and 500% is the maximum limit. As per income tax rules, if the premium paid for a policy is more than 20 per cent of the sum assured in a year, then deduction from taxable income will be allowed only up to 20 per cent of the sum assured. In other words, to get the entire premium deducted from taxable income under section 80C, make sure the cover is at least five times the premium.
Death Benefit: On the death of the Life to be assured before the maturity date, while is in the policy in force, the company, subject to section 11 and 18, shall pay higher of Sum assured or Fund value for type-I ULIP. Type-II ULIP policy can fetch both sum assured and fund value. While paying death benefit the nominee of the policyholder, the partial withdrawal made from the basic policy fund during 24 months preceding to the death will be subtracted from the Sum Assured. The same formality is followed for top-up cover. For Zero Death Benefit policy this is not applicable only the fund value is provided.
Maturity Benefit: If the life assured is alive on the maturity date, the fund value relating to the basic policy fund value and the top-up fund value if any will be paid to the policyholder. The policy terminates on payment of the maturity benefit.
Surrender Value Benefit: If the policyholder wants to surrender his policy, it is allowed after completing 36 months from the risk commencement as per section 5 (b).
Rider Benefit: The additional rider benefits, if any, as specified in the policy shall be subject to the terms and conditions of the respective riders and payable at the time of contingencies arisen.
Settlement option: Some policies offer the policyholder to take the maturity proceeds in periodic installments within a maximum of 5 years from the date of maturity.
Partial Withdrawal: Partial withdrawal is allowed after 3 years from inception or on attainment of age 18 by the life insured whichever is later. The minimum of Rs. 5,000 and maximum of 25% (varied from policy to policy) of the fund value is allowed to withdraw.
In addition to the above some insurers offer varied facilities like systematic transfer plan, exchange option facility, premium redirection facility. Thanks to their initiative towards strengthening insurance market.
The policyholders have the option to switch between the funds as per conditions imposed in the policy. The company expects written notice about the proposed amount of the switch, the funds to be switched from and the funds to be switched. If the switching requisition is made before 3.00 p.m. the closing unit price of the day shall be applicable, if it is made beyond 3.00 p.m. the closing unit price of next day shall be applicable.
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