Life cover does not have the flexibility to add dependants

Published in Mint on 18th Nov 2015, Written by Abhishek Bondia

I want to extend my life insurance cover to include my wife. Would it just be better to get another plan instead?
—Nandan Kishore

Yes, buy a separate insurance policy for your wife. Typically, a life insurance plan does not have the flexibility to add dependants. Only a few insurance companies offer joint life term plans that cover both husband and wife. But in these, one needs to enrol both lives together at inception. Even in such joint-life plans, mid-term addition of dependants is not possible.

What is assignment and is it allowed in all insurance plans?
—Jayant

Assignment is the transfer of rights and title of your policy to a third party. Post-assignment, all survival and death benefits accrue to the assignee. And, any nomination on the policy is overridden. Assignment is typically done to execute a policy lien in favour of a financial institution. Assignment can be done across all types of life insurance plans—term, endowment and unit-linked.

What are the important details required to be submitted if I wish to change or add another nominee?
—Naznin Rustagi

Adding or changing a nominee is a straight forward process. You need to submit the name, address and relationship with the nominee. If you wish to add or change a nominee after the policy is issued, the same needs to be endorsed in the policy. You need to file a nomination form at your insurer’s branch along with the above details.

Do note three things about nomination: a) A nominee will not automatically retain proceeds of the policy; her role is that of a custodian for the legal heirs, b) A nominee should have blood relation with the policyholder, c) You can divide the share between two or more nominees. For example, 80% to one and 20% to another.

I have lost/misplaced my policy docket? What should I do?
—Faisal

To get a duplicate policy bond, you will have to apply to the insurer. The process of getting a duplicate bond varies across insurers and can be tedious. The insurer will require you to advertise in a leading English daily about the loss of your policy bond and await objections, if any. If there are no objections, the insurer will issue a duplicate policy subject to receipt of an indemnity bond, duplicate copy charges, and stamp fees. The requirement of advertisement is generally waived if the policy was stolen, burnt, or partially damaged.

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