Some term plans provide life cover up to 75 years of age

Published in Mint on 12 May, 2015, Written by Abhishek Bondia

I am a 57-year-old man and do not have a life cover. Can I buy a term plan now? What are the things a person my age should consider while buying a life insurance policy?
—Ishwar Das

You can buy a term cover at the age of 57. Term plan benefits are same irrespective of age group. So, any specific precautions are not warranted. Considering that you are buying a term plan at a senior age, you should insure yourself at least for the next 15 years. There are several plans in the market that provide cover up to the age of 75, with some plans going even beyond that.

My son had taken an insurance policy in 2007 and the annual premium was going from his local savings account. He has now migrated to the US.Can the premium still be paid from his local account as the policy has another 12 years to mature, or should he close the policy? What would be the tax implication as by then he would get a green card? He has not yet opened a non-resident Indian (NRI) account in India.
—Swamy B.

You can continue the existing policy and pay the premium from the registered account. However, as per banking norms, you need to convert the account from a normal savings account to an NRI/Person of India Origin compliant account.
Most banks provide this service without changing the bank account number. So, any standing instructions issued to the insurance company should not require change.
Insurance claim amount is exempted from tax under section 10(10)D subject to the sum assured being 10 times of the annual contribution. In case the policy fulfils the criteria, tax liability does not arise.

I am a member of a Hindu Undivided Family (HUF). I have taken an individual life insurance policy from a public sector insurer and have paid premium for a year from my taxable income. Now, I want to bring this policy under the HUF and pay future premiums out of the HUF income. Naturally, maturity proceeds will also go to the HUF. Please clarify whether this is possible, and if so how to go about it.
—Anand Jathan

You can change the beneficiary in the policy by assigning it to the HUF. Once the policy is assigned, all rights on the policy are transferred to the assignee. Future premiums can be paid either by the HUF or by you.

On what grounds can a life insurance claim get rejected?
—Amaira Tandon

Life insurance policies have limited exclusions. Rejection could be because of either of the following two reasons: death due to suicide in the first year of the policy or intentional misrepresentation or fraudulent statements made during proposal stage.

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