VARIOUS TYPE OF POLICY CONDITION AND THEIR IMPLICATION
Guidelines for policy holders
We welcome you as a policyholder and as a prospective customer to our customer service section. This section will guide you through the various intricacies of a life insurance contract and the facts that you must know to make the best out of your life insurance policy. Please read our guidelines immediately.
Payment of Premiums:
A grace period of one month but not less than 30 days is allowed where the mode of payment is yearly, half-yearly or quarterly and 15 days for monthly payments. If death occurs within this period, the life assured is covered for full sum assured.
If the policy has run for atleast 3 full years and subsequent premiums have not been paid the policy shall not be void but the sum assured will be reduced to a sum which will bear the same ratio as to the number of premiums paid bear to the total number of premiums payable.The concessions regarding claim in the above case is explained in the appropriate section.
Forfeiture in certain events:
In case of untrue or incorrect statement contained in the proposal, personal statement, declaration and connected documents or any material information with held, subject to the provision of Section 45 of the Insurance Act 1938, wherever applicable, the policy shall be declared void and all claims to any benefits in virtue thereof shall cease.
The policy shall be void, if the Life Assured commits suicide (whether sane or insane at the time) at any time or after the date on which the risk under the policy has commenced but before the expiry of one year from the date of commencement of the policy.
Guaranteed Surrender Value:
After payment of premiums for at least three years, the Surrender Value allowed under the policy is equal to 30% of the total premiums paid excluding premiums for the 1st year and all extra premiums.
Salary Saving Scheme:
The rate of installment premium shown in the schedule of the policy will remain constant as long as the employee continues with the employer given in the proposal. On leaving the employment of said employer the policyholder should intimate the Corporation. In case of the Salary Saving Scheme being withdrawn by the said employer, the Corporation will intimate the same to the policyholder. Thereafter the 5% rebate given under Salary Saving Scheme will be withdrawn.
After the policy is issued, the policyholder in a number of cases finds the terms not suitable to him and desires to change them. LIC allows certain types of alterations during the lifetime of the policy. However, no alteration is permitted within one year of the commencement of the policy with some exceptions. The following alterations are allowed.
- »Alteration in class or term.
- »Reduction in the Sum Assured
- »Alteration in the mode of payment of premiums
- »Removal of an extra premium
- »Alteration from without profit plan to with profit plan
- »Alternation in name
- »Correction in policies
- »Settlement option of payment of sum assured by installments
- »Grant of accident benefit
- »Grant of premium waiver benefit under CDA policies
- »Alteration in currency and place of payment of policy monies
A fee for the change or alteration in the policy is charged by the Corporation called quotation fee and no additional fee is charged for giving effect to the alteration.
A duplicate policy confers on its owner the same rights and privileges as the original policy. The following are the requirements for issuing a duplicate policy:
1. Insertion of an advertisement at the policyholder’s cost in one English daily newspaper having wide circulation in the State where the loss is reported to have occurred. A copy of the Newspaper in which the advertisement appeared should be sent to the servicing office one month after its appearance. If no objection has been lodged with LIC regarding the policy in question, a duplicate policy will be issued after complying further requirements, i.e., Indemnity Bond and payment of charges for preparing duplicate policy and stamp fee.
2. However, the requirement of advertisement and Indemnity Bond may be dispensed with or modified in certain circumstances as given below :
- »loss of policy by theft
- »destruction of policy by fire
- »loss of policy while in custody of an office of government
- »mutilated or damaged policy
- »policy in torn and a part of it is missing
- »policy partially destroyed by white ants
Age Proof accepted by LIC:
The Proofs of age, which are generally acceptable to the Corporation, are as under:
- »Certified extract from Municipal or other records made at the time of birth.
- »Certificate of Baptism or certified extract from family Bible if it contains age or date of birth.
- »Certified extract from School or College if age or date of birth is stated therein.
- »Certified extract from Service Register in case of Govt. employees and employees of Quasi-Govt. institutions including Public Limited Companies and Pass port issued by the Pass port Authorities in India.
Alternative Age Proofs which are accepted:
- »Marriage certificate in the case of Roman Catholics issued by Roman Catholic Church.
- »Certified extracts from the Service Registers of Commercial Institutions or Industrial Undertakings provided it is specifically mentioned in such extracts that conclusive evidence of age was produced at the time of recruitment of the employee.
- »Certificate of Birth granted by Syedna v. Molana Badruddin Sahib of Baroda
- »Identity Cards issued by Defence Department.
- »A true copy of the University Certificate or of Matriculation/Higher Secondary Education, S.S.L. Certificate issued by a Board set up by a State/Central Government.
- »Non- standard age proof like Horoscope, Service Record where age is not verified at the time of entry, E.S.I.S. Card, Marriage Certificate in case of Muslim Proposer, Elder’s Declaration, Self-declaration and Certificate by Village Panchayats are accepted subject to certain rules.
The nominee is statutorily recognized as a payee who can give a valid discharge to the Corporation for the payment of policy monies.
Nomination will be incorporated in the text of the policy at the time of its issue. After the policy is prepared and issued and if no Nomination has been incorporated the assured can ordinarily affect the nomination only by an endorsement on the policy itself. A nomination made in this manner is required to be notified to the Corporation and registered by it in its records. A nomination is not required to be stamped.
Any change or cancellation of nomination should be given in writing only by the Life Assured.
Nomination under Joint Life Policy can only be a joint nomination. Nomination in favour of a stranger cannot be made as there is no insurable interest and moral hazard may be involved. Nomination in favour of wife and children as a class is not valid. Specific names of the existing wife and children should be mentioned. Where nomination is made in favour of successive nominees, i.e., nominee “A” failing him to nominee “B” failing whom nominee “C”, the nomination in favour of one individual in the order mentioned will be considered. Where the nominee is a minor, an appointee has to be appointed to receive the monies in the event of the assured’s death during the minority of the nominee. No nomination can be made under a policy financed from HUF funds.
In the case of first endorsement of nomination the date of registration of nomination will be the date of receipt of the policy by the servicing office and in case of any other nomination or cancellation or change thereof, the date of receipt of the policy and/or of notice whichever is later, will be the date of registration.
An assignment has an effect of directly transferring the rights of the transferor in respect of the property transferred. Immediately on execution of an assignment of the Policy of life assurance the assignor forgoes all his rights, title and interest in the Policy to the assignee. The premium/loan interest notices etc. in such cases will be sent to the assignee. In case the assignment is made in favor of public bodies, institutions, trust etc., premium notices/receipts will be addressed to the official who has been designated by the institutions as a person to receive such notice
An assignment of a life insurance policy once validly executed, cannot be cancelled or rendered in effectual by the assignor. Scoring of such assignments or super scribing words like 'cancelled' on such assignment does not annul the assignment. And the only way to cancel such assignment would be to get it re-assigned by the assignee in favor of the assignor.
There are two types of assignments:
1. Conditional Assignment whereby the assignor and the assignee may agree that on the happening of a specified event which does not depend on the will of the assignor, the assignment will be suspended or revoked wholly or in part.
2. Absolute Assignment whereby all the rights, title and interest which the assignor has in the policy passes on to the assignee without reversion to the assignor or his estate in any event.
Status of your policy indicates if your policy is in force or has lapsed due to non-payment of premium. It also provides other important information with respect to your policy, for your reference.
Concessions for claims during the lapsed period:
1. If the policyholder has paid premiums for atleast 3 full years and subsequently discontinued paying premiums, and in the event of death of the life assured within six months from the due date of the first unpaid premium, the policy money will be paid in full after deduction of the unpaid premiums, with interest upto date of the death.
2. If the policyholder has paid premiums for atleast 5 full years and subsequently discontinued paying premiums and in the event of death of the life assured within 12 months from the due date of first unpaid premium, the policy money will be paid in full after deducting the unpaid premiums, with interest upto date of the death.
If the premium under a policy is not paid within the days of grace the policy lapses. Revival is a fresh contract wherein the insurer can impose fresh terms and conditions. A policy can be revived under the following types of revival:
1. Ordinary Revival
If a revival of the policy is effected within 6 months from the due of first unpaid premium no personal statement regarding health is required and the policy is revived on collection of delayed premium plus interest. The rate of interest to be charged for such delayed premium will depend on the date of commencement of the policy.
2. Revival on non-medical basis
For revival of the policy on non-medical basis the amount to be revived should not exceed the prescribed limit for non-medical assurance taken by the life assured.
3. Revival on medical basis
If a policy cannot be revived under ordinary revival or revival on non-medical basis it can be revived with medical requirements. The medical requirements will depend upon the amount to be revived.
4. The other schemes for revival are
A. Special Revival Scheme
B. Revival by installment
C. Loan- cum- revival
D. Survival Benefit- cum- revival
The Corporation can grant a loan to the policyholder against his policy as per the terms and conditions applicable to the policy. The requirements for granting a loan are as under :
a) Application for loan with an endorsement of terms and conditions of the loan being placed on the policy.
b) Policy to be assigned absolutely in favour of the Corporation
c) A receipt for the loan amount
The maximum loan amount available under the policy is 90% of the Surrender Value of the policy (85% in case of paid up policies) including cash value of bonus.
- »Loans are granted on policies as per Conditions and Privileges printed on the back of the Policy Bond.
- »It is mentioned in the policy whether a particular policy is with or without loan facility.
- »The rate of interest charged on policy loan is declared by the Corporation every year and they are plan specific.
- »Interest on loan is payable half yearly.
The minimum period for which a loan can be granted is six months from the date of its payment. If repayment of loan is desired within this period the interest for the minimum period of six months will have to be paid.
In case the policy becomes a claim either by maturity or death within six months from the date of loan interest will be charged only upto the date of maturity/death.
Claims settlement procedure:
The settlement of claims is a very important aspect of service to the policyholders. Hence, the Corporation has laid great emphasis on expeditious settlement of Maturity as well as Death Claims.
The procedure for settlement of maturity and death claims is detailed below :
1) In case of Endowment type of Policies, amount is payable at the end of the policy period. The Branch Office which services the policy sends out a letter informing the date on which the policy monies are payable to the policyholder at least two months before the due date of payment. The policyholder is requested to return the Discharge Form duly completed along with the Policy Document. On receipt of these two documents post dated cheque is sent by post so as to reach the policyholder before the due date.
2) Some Plans like Money Back Policies provide for periodical payments to the policyholders provided premium due under the policies are paid up to the anniversary due for Survival Benefit. In these cases where amount payable is less than up to Rs.60,000/-, cheques are released without calling for the Discharge Receipt or Policy Document. However, in case of higher amounts these two requirements are insisted upon.
The death claim amount is payable in case of policies where premiums are paid up-to-date or where the death occurs within the days of grace. On receipt of intimation of death of the Life Assured the Branch Office calls for the following requirements:
a) Claim form A – Claimant’s Statement giving details of the deceased and the claimant.
b) Certified extract from Death Register
c) Documentary proof of age, if age is not admitted
d) Evidence of title to the deceased’s estate if the policy is not nominated, assigned or
issued under M.W.P. Act.
e) Original Policy Document
The following additional forms are called for if death occurs within three years from the date of risk or from date of revival/reinstatement.
a) Claim Form B – Medical Attendant’s Certificate to be completed by the Medical Attendant of the deceased during his/her last illness
b) Claim Form B1 – if the life assured received treatment in a hospital
c) Claim form B2 – to be completed by the Medical Attendant who treated the deceased life assured prior to his last illness.
d) Claim Form C – Certificate of Identity and burial or cremation to be completed and signed by a person of known character and responsibility
e) Claim form E – Certificate by Employer if the assured was employed person.
f) Certified copies of the First Information Report, the Post-mortem report and Police Investigation Report if death was due to accident or unnatural cause.
These additional forms are required to satisfy ourselves on the genuineness of the claim, i.e., no material information that would have affected our acceptance of proposal has been withheld by the deceased at the time of proposal. Further, these forms also help us at the time of investigation by the officials of the Corporation.
Double Accident Benefit Claims:
Double Accident Benefit is provided as an inject to the life insurance cover. For this purpose an extra premium of Rs.1/- per Rs.1000/- S.A is charged. For claiming the benefits under the Accident Benefit the claimant has to produce the proof to the satisfaction of the Corporation that the accident is defined as per the policy conditions. Normally for claiming this benefit documents like FIR, Post-mortem Report are insisted upon.
Disability Benefit Claims:
Disability benefit claims consist of waiver of future premiums under the policy and extended disability benefit consisting in addition of a monthly benefit payment as per policy conditions. The essential condition for claiming this benefit is that the disability is total and permanent so as to preclude him from earning any wage/compensation or profit as a result of the accident
Claims Review Committees:
The Corporation settles a large number of Death Claims every year. Only in case of fraudulent suppression of material information is the liability repudiated. This is to ensure that claims are not paid to fraudulent persons at the cost of honest policyholders. The number of Death Claims repudiated is, however, very small. Even in these cases, an opportunity is given to the claimant to make a representation for consideration by the Review Committees of the Zonal office and the Central Office. As a result of such review, depending on the merits of each case, appropriate decisions are taken. The Claims Review Committees of the Central and Zonal Offices have among their Members, a retired High Court/District Court Judge. This has helped providing transparency and confidence in our operations and has resulted in greater satisfaction among claimants, policyholders and public.
- »The Grievance Redressal Machinery has been further expanded with the appointment of Insurance Ombudsman at different centers by the Government of India. At present there are 12 centres operating all over the country.
- »Following type of complaints fall within the purview of the Ombdusman
a) any partial or total repudiation of claims by an insurer;
b) any dispute in regard to premiums paid if payable in terms of the policy;
c) any dispute on the legal construction of the policies in so far as such disputes relate to claims;
d) delay in settlement of claims;
e)non-issue of any insurance document to customers after receipt of premium.
- »Policyholder can approach the Insurance Ombudsman for the redressal of their complaints free of cost.