Frequently Asked Questions

Frequently Asked Questions about Life Insurance

Who can buy a life insurance policy?

Any person above 18 years of age, who is eligible to enter into a valid contract, can go for an insurance policy. Subject to certain conditions, a policy can be taken on the life of a spouse or children.

What is a Whole Life Policy?

These are the simplest policies to understand. You pay a fixed premium every year based on your age and other factors; you earn increases in the policy’s surrender value as the years roll by and your beneficiaries get a fixed benefit after you die. The policy takes you into old age for the same premium you started out with. Whole life insurance policies are valuable because they provide permanent protection and accumulate surrender values that can be used for emergencies or to meet specific objectives. The surrender value gives you an extra source of retirement money if you need it.

What is an Endowment policy?

An endowment life insurance policy is designed primarily to provide a living benefit. Therefore, it is more of an investment plan. Endowment life insurance pays the face value of the policy either at the time of death of the policyholder or at the time of maturity of the policy. The policy is a method of accumulating capital for a specific purpose and protecting this savings program against the saver’s premature death. Many investors use endowment life insurance to fund anticipated financial needs, such as college education or retirement. Premium for an endowment life policy is higher than that of a whole life policy.

What is a Three Payment Plan?

It is an endowment policy for which a part of the sum insured is paid to the policyholder in the form of survival benefits, at fixed intervals, before the maturity date. The risk cover on the life continues for the full sum insured even after payment of survival benefits and bonus is also calculated on the full sum insured. If the policyholder survives till the end of the policy term, the survival benefits are deducted from the maturity value.

What is an Annuity Scheme?

Annuity schemes are those wherein policyholders regular contributions over a period of time (or a one-time contribution) accumulate to form a pool with the insurance company. This pool is used to yield a regular income that is paid to policyholders until death starting from your desired age. Some annuity schemes have the option to pay your survivors a lump sum amount upon your death in addition to the regular income you receive while you are alive.

What are Medical and Non-Medical Schemes?

Life insurance is normally offered after a medical examination of the life to be insured. However, to facilitate greater spread of insurance and also as a measure of relaxation, State Life has been extending insurance cover without any medical examination, subject to certain conditions. This facility is called Non-medical Scheme.

What are the policies available for kids below the age of one year?

There are only two policies available for the newborn. These are Child Education and Marriage Assurance and Child Protection Assurance. Child Education and Marriage Assurance provides a lump sum benefit for the child at the completion of the policy term and also has a family income benefit in case of death of policyholder (Allah forbid). Child Protection Assurance is a joint life assurance and covers the lives of child and either of the parents. For these plans, age of the child should be above six months.

Is there any policy where the insured gets no money at the time of maturity?

Yes, there are two policies on which you will not get any money on Maturity. These are Term Insurance by Annual Premium and Term Insurance by Single Premium.

What is Bonus?

State Life distributes its profits among it policyholders every year in the form of bonuses. Bonuses are credited to the account of the policyholders and paid at the time of maturity. Bonus is declared as a certain amount per thousand of sum assured.

What are Survival Benefits?

In some policies, a part of the sum insured is paid to the policyholder in the form of Survival Benefits, at fixed intervals before the maturity date. The risk cover for life continues for the full sum insured even after payment of survival benefits and bonus is also calculated on the full sum insured. If the policyholder survives till the end of the term, the survival benefits will be deducted from maturity value.

What are the various modes of payment for premium?

Premiums other than single premiums can be paid by the policyholders to State Life in yearly, half-yearly, quarterly or monthly installments.

What is Surrender Value?

The amount payable by State Life on termination of the policy contract at the desire of the policyholder before the expiry of policy term is known as the surrender value of the policy. Policy will acquire a surrender value after it has been inforce for at least two consecutive years provided no premiums are in default. The bonus is also added to the surrender value if the policy has been in force for at least 3 years.

Whom is a death claim payable?

Death claim is usually payable to the nominee/ assignee or the legal successor, as the case may be. However, if the deceased policyholder has not nominated/ assigned the policy or not made a will, the claim is payable to the holder of a succession certificate or such evidence of title from a Court of Law.

What is Nomination/ Assignment of a Policy?

When the policy money becomes due for payment on the death of the policyholder, it can be paid only to that person who is legally entitled to give a valid and effective discharge to the Corporation. If the policy bears nomination, the claim is settled in favour of the nominee. Similarly, if the policy is assigned, the assignee receives the claim amount. It should be noted that an assignment of a policy automatically cancels the existing nomination. Hence, when such a policy is reassigned in favour of the policyholder, it is necessary to make fresh nomination.

How do you effect a change of address and transfer of policy records?

When a policyholder wants to change his address in State Life’s records, notice of such change should be given to the zonal office servicing his policy. Policy records can be transferred from the zonal office that services the policy to any other zonal office nearest to the policyholder’s place of residence. The correct address facilitates better services and quicker settlement of claims.

When does a policy lapse?

When the premium is not paid within the days of grace provided after the due date, the policy lapses. The grace period in case of yearly, half-yearly and quarterly modes of payment is one month and in case of the monthly mode of payment, it is 15 days.

How can a lapsed policy be revived?

A lapsed policy may be revived during the lifetime of the life insured, but within a period of 5 years from the due date of the first unpaid premium and before the date of maturity. Revival of a lapsed policy is considered either on non-medical or medical basis depending upon the age of the life insured at the time of revival and the sum to be revived.

Can a policy be altered?

No alteration is permissible in the policy document – the evidence of contract, unless both the parties to the contract agree. After the policy is issued, a policyholder in a number of cases finds the terms not suitable to him or her and desires to change them to suit his or her convenience. State Life also realizes that insurance being a long-term contract, certain changes under given circumstances might necessitate an alteration of the contract. Keeping in view the basic principles of insurance and administrative convenience, State Life permits some alterations in the policy conditions.