Condition relating to commencement of risk
- Commencement of risk:
The risk will commence when the first premium paid and thereby received by the insurer. The letter of acceptance is not a note of commencement of risk, however if the first premium is paid with the proposal from, the date of letter of acceptance will be the date of commencement of the risk.
- Proof of age:
The insurer does not withhold the issue of the policy until the age proof is given, but does not sanction the claim if the proof is not submitted. The rate of premium is decided on the basis of age therefor; ideally it is to be submitted with the proposal later or immediately after that. However, if the age proof is submitted later and the age of entry was not the actually age then the amount of the insurance will be reduced or adjusted towards future premium.
Conditions of premiums
- Payment of premiums:
The premium can be paid annually, half-yearly, quarterly or monthly according to the convenience of the policy-holder. On delay of payment of premium the insurer losses interest and the expense is included in frequent calculation of premium. However, if death takes place before the payment of all the premiums the insurer will deduct the unpaid amount and then sanction the claim
- Days of grace:
In case of delay in payment of premium the insurer grants an additional period called days of grace. The policy will lapse is the payment is not made even after the days of grace. Is the last day of grace falls on a holiday or a Sunday it is not supposed to be considered instead its following regular day is to be considered as the last day. However, the delay of payment due to postal services or otherwise is not considered by the insurer.
- Premium note:
The notice of due premium will be regularly sent to the policy holder, but in case of monthly payment of premium the insurer is not bound to give any such notice and thus it cannot be stated as an excuse for the delay in payment.
Conditions relating to the continue policy
- Indisputable clause:
To protect the interest of the assured indisputable clause is added according to which policies shall be disputable after a period i.e. two years from the date of issue except for non-payment or fraud.
- Alterations in policies:
The insurer is permitted to alter the policy to an extent it can be change is reduction of the sum; sharing of policy; mode of payment of premium etc; however if the insurance company can reject the alteration without any justification. Generally the alteration regarding increase in risk is not approved.
The premium for hazardous occupation is more as it has higher risk involved. The corporation of India has lasted such occupation. The policies issued to students are also on hazardous occupation basis as the occupation of a student is not settled until he completes his education. In case of war mortality, if death occurs due to war the insurer is liable to pay the higher amount of the surrender or the premium value.
- Lost policy:
The policy can be reissued if the insured has proved the evidence of loss or destruction, against a charged fee for issuing the duplicate copy.
May grant loan on security of the surrender value of the policies. In India, loans are granted on unencumbered policies up to 90% of the surrender value in case of policies that are in force of full sum assured and 85% in case of policies that are in force of reduced sum assured.
At the time of getting life insurance the holder of the insurance policy registers a nominee i.e. a person to whom the policy amount will be payable in case of the policy-holders death. However, if the policy matures or expires the policy amount is payable to the alive insured (policy-holder).
A transfer of assignment of a policy whether with or without consideration, may be made only by an endorsement upon the policy itself or by a separate instrument, signed y the transferor or the assignor the assignment can be of two kinds:
Assignment where all rights, title and interest of assignor in the policy passes to the assignee without reservation in any former event.
On happening of a specific event which does not depend on the will of the owner, the assignment shall be either wholly or partly inoperative.
In case of suicide committed by the assured within one year from the date of commencement, the liability of the cooperation will be limited up to the beneficial interest only. A notice in writing is submitted before one calendar month and is to be accepted by the office of cooperation, the policy shall be void and
- Double accident benefit:
This provides double the sum assured on death by accident. If the insured has a physical injury because of an accident and dies within 90 days of its occurrence the double of the sum assured will be payable. The aggregate limit is up to 1, 00,000.
- Disability benefit:
This benefit is applied to all the policyholders. If the insured is disabled from earning his livelihood he will be exempted from paying premium on his policy. This benefit is granted on the first 20,000 of the assurance.
- Extended disability benefit:
It provides payment of premium as well as the assured amount on permanent disability in case of an accident. This benefit is available by paying extra premium of ₹ 2/- per thousand of sum assured.
- Lapse of policy:
If the insured fails to pay the premium amount even within the grace days then the policy is lapsed and the liability is ceased and the contract come to an end. However the insured is given alternatives at such time.
- Revival of lapsed policy:
The policy can be revived anytime within five years from the due date. Interest is to be paid along with the premium for revival the first unpaid premium can be relived within six months with 7.5% interest without any evidence. However, the revival after six months and before five years of the first unpaid premium is to be done with proper and valid evidence.
- Special revival scheme:
Many policyholders find it difficult to pay the interest on premium. Under this scheme the date of commencement will be fixed by dating back the policy depending upon the premium paid. The plan and period will be the same as under the original policy.
The special revival is possible only if:
- The policy has not acquired surrender value.
- Period from the date of lapse must not be less than six months and not over two years.
- Such revival in not allowed more than once.
- Surrender value:
When the assured is unable to revive his policy, he can surrender his policy a
nd can get surrender value. With this payment the contract comes to an end and the assured with get cash without any liability to pay further premium. In India the corporation guarantees the surrendered value if the payment in made for at least two years.
- Extended term insurance:
If the premium remains unpaid at the end of the days of grace and the policy has been active for at least three years then the insurance will consider it paid up to a period called term. The term amount depends upon the premium amount. During the term if the insured dies then the full amount are assured whereas he survives no payment is done.
- Automatic premium loan:
The assured may opt for automatic premium loan before the maturity in which the insurer wont lapse the policy but will automatically pay from the surrender value, the assured can repay the premium until the policy is active however if the value of surrender is exhausted then the policy will be lapsed and can only be revived after payments of all premium at 7.5% interest.
- Reduced paid up insurance:
When the policy holder is unable to pay
any more premiums he can opt for reduced paid up insurance where he can reduce the rate of premium and by doing so he also reduces the sum assured in the same proportion of the reduced insurance.
- Settlement of claims:
The policy amount is payable either on the assureds’ death or on expiry of the policy. The proof of death title and age is to be submitted with the company for the payment the proof may include the death certificate from the hospital or from the official registrar in case of death. In case of expiry the insurance company informs the assured well in advance so that he is ready with the required documents. The age proof is not to be submitted if it is submitted before claim.
- Settlement options:
The claim amount may be paid in cash or in instalment. The instalment payment may be of different type’s payment of interest annually for a particularly period or up to survived and the sum assured at a time may be paid.