— Sanjay Awasthi
Nomination authorises the nominee to receive claim proceeds from the policy on the death of the life insured. However, such proceeds are not to the exclusion of the rights of any other legal heirs. Assignment, on the other hand, transfers policy rights and title in favour of the assignee until such time that the assignment is revoked. You can nominate a minor child as a nominee. However in that case, you will have to specify an adult as an appointee, who will take care of any claim money, till the nominee attains adulthood. If, however, the nominee attains adulthood at claim payout, the money will be given to him.
How will the new life insurance products from January 1 be different from the existing ones and does it make sense to switch to the new policies?
— Prabhat Kumar
The new Irda guidelines make traditional products more customer-friendly. Some of the broad changes include (a) improved guaranteed surrender value, which will now depend on the year of surrender against a fixed guaranteed surrender value throughout the term as was the case earlier; (b) higher minimum cover compared to earlier plans; and (c) a minimum guaranteed death benefit of 105% of total premiums paid at any point in time during the policy term. The new guidelines also make unit-linked plans even more flexible, with the introduction of a reduced paid-up option and allowing for revival for discontinued policies beyond the lock-in period.
How can I change the frequency of my life insurance premium to reduce the one-time burden and will the company charge me for doing this?
— Subham Nath
If your policy features allow premium payment term alteration and mode change (say from yearly to half yearly or vice versa), such requests can be placed through either branches or call centres. Your policy document will specify if it has such features enabled and the conditions thereof. If your policy does not, then you may not be able to, as products are approved for sale, in the first place, based on conditions outlined in the policy document.
How can I take a top-up policy and how beneficial is it in the long run?
— KP Rao
Top-up allows you to contribute additional amounts over and above the regular premium payable, thereby increasing the investment component in your base plan. Topping-up allows you to increase your investment and savings at your own pace. Also, since the premium allocation charge on top-ups is lesser compared to base plan, the investment component is higher. You can contact your insurer to top up your current plan. However, top-ups do not alter the original sum assured under the policy.
My family consists of four people-- wife and two sons. Should I opt for an individual or a floater health insurance policy?
In case of an individual policy, one needs to take out separate policies for each family member. In the case of a family floater, all family members are covered under one policy. However, there are pros and cons.
Family floaters are simpler to manage in that one can add or reduce members and the maximum sum assured can be used for the care of one or several members. They may also be marginally cheaper. However, typically they are renewable only till the oldest member of the group remains within renewable age, and, earlier continuous coverage and claim history may also not get proportionate benefit.
* The author is executive vice-president, Kotak Mahindra Old Mutual Life Insurance
* Send your queries at firstname.lastname@example.org