First, you should ascertain your need for an insurance policy. This will largely depend on the financial needs of your dependants and your financial requirements in the old age. The next step is to shortlist the products which will fulfil the needs of the policyholders. On analysing the products, one can easily ascertain the most suitable product in terms of duration, risk coverage and the procedure to make interim payments. Another important point that one needs to keep in mind is the financial strength and the reputation of the insurance company. Although, all insurers are regulated by the Insurance Regulatory and Development Authority (IRDA), in india, it is always better to take a policy from a reputed company with a long-term standing in the market.
Besides this, the amount of premium to be paid and the periodicity of the payment under the contract need to be considered by the policyholder.
Is there any restriction for purchasing a life insurance policy? Can everyone buy a policy?
The basic criterion to be able to purchase a policy is the policyholder's insurable interest. Any person who has attained majority and is eligible to enter into a valid contract can insure himself or herself and those in whom he or she has insurable interest. Policies can also be taken subject to certain conditions, such as, on the life of one's spouse or childern.
All insurance companies set some underwriting guidelines for their policies. As underwriters they usually consider factors such as, policyholder's state of health, the proponent's income, the relationship between the proposer and the proposed life assured.
I am single and have no dependents. What type of life insurance policy should I take?
The basic purpose of a life insurance policy is to provide financial security to the dependents of the insured, if he meets an early death. If you are single and do not have any dependent, you should go for a personal accident policy with all the benfits, including temporary total disablement and a mediclaim policy. Such policies are normally marketed by the general insurance companies. These policies provide financial assistance at the time of need during the life time of the policyholder.
Few years back I took a loan from a person. As security for the return of loan I had assigned my life insurance policy in his favor. Now, I have come to know that the assignee of my life insurance policy has died due to an accident. What happens to the assignment in this case? Can I change the assignment?
A life insurance policy once assigned cannot be reassigned by the insured irrespective of circumstances. In fact, the assignee has the right to reassign the benefits under the policy. Assignments are primarily of two types, absolute and conditional assignments.
In case of an absolute assignment, if the assignee dies before the policy matures, then the rights of the policy automatically shifts to the legal heirs of the assignee.
In case of conditional assignment, the right of reassignment will depend on the conditions of the assignment. For instance, according to the condition, if the assignee dies before the maturity of the policy, the rights under the policy will shift to the assignor, then the interest in the policy automatically reverts to the life assured, In that case, the insured will also have the right to reassign the policy.
