Endowment policy will continue even if you relocate overseas

Pay your premiums regularly to keep the insurance in force

Published in Mint on November 6th 2013, Written by Kapil Mehta

I have an endowment policy. I will shift to Australia with my family at the end of the year. Do I have to surrender this policy? If not, how do I continue with it?
—Kamlesh Gandhi

Your endowment policy can continue even if you relocate overseas. Pay your premiums regularly to keep the insurance in force. Most insurers will allow you to pay online. If you intend to retain an Indian bank account, then consider the electronic clearing system (ECS) payment option. ECS payments are automatic and you need not worry about renewal dates. The insurer can send you policy statements and information on email, so do ensure that they have your correct email address.

I have heard that life insurers charge a higher premium for smokers. However, does it matter what type of smoker one is? For instance, I smoke around 10 cigarettes a day.
—Anshul Prem

Premium rates for smokers are typically over 50% higher compared with non-smokers. Most life insurers don’t differentiate premium rates by the extent or type of smoking. However, if smoking levels are high then they may not issue the insurance at all. At 10 cigarettes a day, insurers will be careful while underwriting. They may ask for a nicotine test to make a better assessment of your habit.
I want to buy a life insurance policy for my 10-year-old son. Should I take it in his name or on mine?
—Ram Prasad

A common mistake is to insure a child’s life. It is the parent whose life should be insured with the child as a beneficiary. The underlying principle is that the primary wage earner should be insured. Your 10-year-old depends on you for financial sustenance. If you were to die he would face financial hardship. That’s why your life must be insured and he should be a beneficiary. Since your beneficiary is a minor, the law requires that you also name an appointee. If you die while your child is under 18, then the insurance benefit will be paid to the appointee who is expected to take care of the child’s interest. The insurance regulator follows some good practices when it comes to children’s insurance. For example, the only death benefit allowed on a young child’s life is return of premium. This removes the risk that a vulnerable child may be harmed for financial benefit.

If I assign my life insurance policy in favour of my bank, what will happen to the existing nomination of the policy?
—Gargi Patel

On assignment, the existing nomination is cancelled and the policy rights and title are transferred to the assignee, in this case the bank. If you die, the assignee will be the beneficiary. Further, you cannot revoke an assignment once executed.
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