All Your Life Insurance Premium

This is in continuation with our earlier article on �All Your Life Insurance Premium Queries Answered�. Most people make sure to enquire about obvious questions like how the premium is to be paid, how frequently, its tax implications and what if it lapses. But there are also some not so general questions that might slip your mind while purchasing a life insurance policy and could create huge problems later. Like how about if you forget where you have kept the original documents pertaining to your insurance? What if they get misplaced, burnt or stolen?
What if after a few years of buying insurance you realise that the policy is worthless and you might not get much return from it on maturity and hence stop paying premiums altogether? Or from the bulk of policies that you have, you have forgotten to pay premium on some policy for the last few years? Can you get anything back from this policy after not paying premium for so long?
And finally, did you find out if your policy makes you eligible for loans and up to what limit? After all, it is always better to be aware of any and all cheap loan options, just in case you need one some time! Below we try to address some of these irregular but important questions about life insurance.
�What should be done if an insurance policy is lost?
First of all you must try your best to locate it; it is likely that you might have kept it in the office or at home or maybe in a bank locker! It is also possible that your insurance agent might have forgotten to hand over the original document to you, so confirm with him too. Try to remember if you promised it as security against some loan you could have taken. It is always a good idea to make duplicate copies of such important documents in case if the originals get lost or destroyed.
You will need to apply with the insurance company for another copy of your policy which they may provide upon furnishing some documents like past premium receipts and other ID proofs.
�Is there any return on a policy for which premium has not been paid for last few years?
Depends. If you pay the due premium with interest during the grace period, your policy could be reinstated. In case your policy has been in force for less than 3 years and you fail to pay premium for some time, then the insurance company is not obliged to give you any returns. If your policy is older than 3 years and you have missed paying last few premiums, then you might be eligible to some form of surrender value depending upon your policy type, term, duration, amount etc. But all this varies from one insurance company to another.
�What is the loan facility available on a life insurance policy?
Not all insurance policies are eligible for loan. For example, the basic term insurance does not provide loan benefit. But most other policies like with profit, guaranteed returns and even ULIP policies can provide loan facility, depending from company to company and on different policy types. It is prudent to enquire about it from the company at the time of taking out a policy or refer to the company brochures for details. The loan amount is arrived at after considering several factors like nature of policy, term, duration, premium amount etc and may be easily available in the initial years of taking the policy. Almost 80% – 90% of the surrender value can be taken as loan and must be repaid with interest during the tenure of the policy, or else the amount will be deducted from the maturity value of the policy