FAQs on Insurance

By reducing your tax liability, you can enhance your savings greatly. A great way to avail tax deductions is by purchasing Health Insurance. On buying Health Insurance, you will gain tax deductions and protect yourself against varied medical expenses.

The Section 80D of the Income Tax Act, 1961 allows you to claim tax deductions on Health Insurance taken for yourself and your family, including parents. An illustration of the tax benefit is given below:

Most insurance companies offer an optional feature called "waiver of premium". This typically states that in the event you become totally disabled for a period of six months or longer, the insurance company will pay your premium until you are no longer disabled. This feature is optional (available at an extra cost) and must be chosen at the time of your application.

Source: SBI Life Insurance

The policy can be surrendered for cash only after the premiums have been paid for at least three years. The minimum surrender value allowed is equal to a certain percentage of the total amount of premiums paid excluding the premiums for the first year and all extra premiums or additional premiums for accident benefits that may have been paid.

Source: SBI Life Insurance

This is the part most agents dislike telling their clients or prospective clients about. Usually, an individual buying insurance for a sum of Rs 600,000 and above has to undergo a medical examination. However time-consuming and cumbersome such a process may appear, an insurance company needs to ensure that the prospective client is healthy. (An insurance company needs to ensure that the prospect's objective to buy a policy is to genuinely insure against a risk and not a plan to deceive the company.

Source: SBI Life Insurance

Unlike endowment plans, in money back policies, the policy holder gets “periodic payments" during the term of the policy and a lump sum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid. These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder.

Source: SBI Life Insurance

Whole life insurance risk covers the death of the insured, whenever it may happen. It means that there is no fixed term under whole life insurance. Most policies provide a dividend to the policy holder which helps with retirement.

There are two variations in the whole life insurance products i.e.

Pure Whole Life Insurance: - where premiums are payable continuously throughout the life of the insured till death. Risk coverage is for the entire duration of life and the life insured amount is paid on the happening of the death of the insured at any time.
Limited Payment Whole life Insurance: - where premiums are paid for a limited and shorter period and the option of the insured or till death if earlier. Risk coverage is however throughout the life of the insured.

Source: SBI Life Insurance

A policy holder needs to open an e Insurance Account (e IA) with one of the Insurance Repositories to be able to buy and keep policies in electronic mode. An individual can have only one e IA with any one of the Insurance Repositories. Once an e IA is opened, the account holder can buy and keep all his electronic insurance policies – be it life, pension, health or general - issued by various Insurers under this single account.

Each e IA will have an unique e Insurance Account number; the account holder should quote this number in all correspondence with Insurance Repository. Each account holder will also get an unique Login ID and Password to access his account and electronic policy details online on the insurance repository website.

An Insurance Repository is a facility to help policy holders buy and keep insurance policies in electronic form, rather than as a paper document. Insurance Repositories, like Share Depositories or Mutual Fund Transfer Agencies, will hold electronic records of insurance policies issued to individuals and such policies are called "electronic policies" or "e Policies".

Period between the date of subscription to an insurance-cum-pension policy and the time at which the first installment of pension is received. Such policies generally prescribe a minimum and maximum limit on the deferment period.

Source: SBI Life Insurance

The insurer will receive a lump sum amount either at death during the term or at maturity of the term.

Source: SBI Life Insurance

Your Policy value is the Fund value. It is the total value of units that you hold in funds.
Fund Value = (Nos. of Equity Fund units x NAV of Equity fund) + (Nos. of Bond Fund units x NAV of Bond fund) + (Nos. of Money Market Fund units x NAV of Money Market fund)
For getting the latest NAV, Please select the product in the right hand panel or call our toll free number 1800-22-2123. At each Policy Anniversary and for any payments/withdrawals, you will receive a Fund value statement of your Policy.

Source: SBI Life Insurance

Policy holders are expected to pay premium on due dates. A period is 15-30 days is allowed as grace to make payment of premium; such period is days of grace or grace period.

Source: SBI Life Insurance

Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.

Source: SBI Life Insurance

Life insurance is protection against financial loss resulting from insured Individual’s death. In realistic terms, life insurance provides you and your family the financial security and certainty to deal with the aftermath of any unseen unfortunate events.

Source: SBI Life Insurance

It implies changing of your current contribution allocation percentage into various funds from now onwards. It does not affect the allocation percentage of the contribution already invested.

Source: SBI Life Insurance

The disinvestment of unit funds and reinvestment into others is called switching. It does not impact the investment allocation of your future contributions

Source: SBI Life Insurance

Term Insurance covers “Risk” and Risk means “Death”. Here a lump sum amount is payable only if death occurs during a selected period. If the insured survives till the end of the selected period, nothing becomes payable.


Source: SBI Life Insurance

Nomination: An act by which the policy holders authorizes another person to receive the policy moneys. The person so authorized is called Nominee.

Assignment: Assignment means legal transference. A method by which the policy holder can person on his interest to another person. An assignment can be made by an endorsement on the policy document or as a separate deed. Assignment can be of two types Conditional & Absolute

Source: SBI Life Insurance

Health insurance plan of general insurance company works on the principle of reimbursement. In which hospitalization expenses (provided that of min of 24 hrs hospitalization) is paid upto sum assured.

Health insurance plan of life insurance companies works on the principle of compensation. In which hospital daily cash benefit (provided that of min 48 hrs hospitalization) and major surgical benefits are paid as per the fixed amount under plan opted irrespective of actual expenses. In this type of plan premium are allocated in two parts one is investments and another is for providing benefits. Generally, premium and expenses are on higher side in such type of plan.

Insurance Account is absolutely FREE to the policy holder – the policy holder does not have to pay anything to open an e Insurance Account.

As per section 80D of Income Tax Act one can claim deduction on premium paid for self, spouse and dependent children upto Rs 15000/- in F.Y. and if tax payer is senior citizen than they can claim deduction upto Rs 20000/- in F.Y.