Usually, we think of tapping the life insurance policy of a deceased, which she may have bought in her lifetime. But without our knowing about them, we end up getting free life insurance covers at times. These are typically called add-on covers in insurance parlance; most of them come absolutely free or with very nominal charges. While the death of a loved is an irreparable loss, any kind of monetary help could at least help you tide over a tight financial situation you might be in. Here are four such insurance covers that you mustn’t forget to claim from.
“Since these insurance covers are issued as group policies, the master policy document is with the issuer and when one cannot trace any documents, these are forgotten,” says certified financial planner Pankaaj Malde.
Bank Account linked life insurance cover
When the Jan Dhan scheme was initiated in 2014, every bank account holder was offered a life insurance cover under the Pradhan Mantri Jeevan Jyoti Bima (PMJYB) policy. Check the deceased’s bank account statement closely. If the premium of Rs 330 was regularly debited at each policy anniversary – last week of May or early June – then you can claim Rs 2 lakh upon death of the account holder. Malde says the PMJYB ceases at the age of 55.
Also, if multiple bank accounts are linked to the same person, only one insurance claim would be accepted per person.
To claim the insurance amount, you would have to approach either the bank branch or the insurance company associated with the bank.
When a person enrols for the Employees’ Provident Fund (EPF), there is a nominal amount from the employer’s contribution that is diverted toward premium payment of Employee Deposit-Linked Insurance (EDLI) Scheme. This premium is for a life insurance policy with a sum assured of Rs 2.5 to Rs 7 lakh. But this amount is paid only if the person who expired was in active service and was contributing to EPF immediately prior to death. “The insurance cover is 10-12 times the employee’s wages. So, the family of the deceased should seek help from the human resources department of the company or his financial advisor to understand the available cover and the claims procedure through Form 5 IF,” says Malde.
The employer will either offer a group term insurance cover or pay for EDLI. Both the benefits cannot be claimed.
“The family can claim the EPF-linked life insurance. But the claim process is not simple. You need to know when the person started his employment, his Universal Account Number (UAN) and also whether there was a valid nomination done. The heir would also need a succession certificate,” says Ajay Sehgal, co-founder and director at Allegiance Financial.
Mutual funds have been trying to lure investors to stay put for longer periods and use free insurance as a bait.
ICICI Prudential Mutual Fund calls SIP with life insurance cover ‘SIP Plus.’ Aditya Birla Sun Life Mutual fund offers Century SIP, PGIM India Mutual fund calls it ‘Smart SIP’ and Nippon India offers ‘SIP Insure.’ These bundled free life insurance covers are offered as group plans and require no health check-ups.
Though the maximum life insurance coverage amount is restricted to Rs 50 lakh, the amount you are eligible for would depend on the fund house you have chosen and the year in which you started your SIP. ICICI Prudential AMC offers 10-100 times the SIP amount and PGIM India Mutual Fund provides 20-120 times the monthly SIP amount based on whether your SIP was allowed to run for one year or more. Higher the duration, the better the insurance proceeds. However, if you miss an instalment, discontinue or switch the funds within the first three years of starting the investment, then the insurance cover offered with SIP would be null and void.
“These insurance covers are offered through the parent or associate company, but the condition is that the SIP should be continued for three years. These insurance covers are forgotten, due to a lack of awareness and as there are many strings attached,” says Sehgal. The insurance is offered in the name of the first/primary holder only.
But ensure that the age group of the deceased investor is valid. The insurance cover is valid till the investor turns 55 in the case of ICICI Prudential AMC, while for Aditya Birla Sun Life Mutual Fund the coverage is valid till age 60. Your mutual fund distributor or advisor can help you make a claim or you can directly go to the fund house with the account statement.
Insurance with mobile connections
Bharti Airtel has been offering free life insurance covers to anyone purchasing its mobile packages. The operator offered a Rs 2-4 lakh life insurance cover with its Rs 179 (Bharti AXA Life Insurance) and Rs 279 (HDFC Life) pre-paid packages for those between 18 and 54 years of age.
These covers are by default issued in the same name as the SIM card holder, so you can check with the relevant insurance company. There is a provision to fill nominee details while purchasing the mobile package and even receiving a policy copy on the address registered while purchasing the SIM. Trace the documents if possible.
Alternatively, the details along with the nominee information can be accessed through the app on the deceased’s registered phone. The life insurance company or the mobile company’s retail outlet can help you access the requisite policy number and other details to claim the insurance amount.
The importance of insurance has gained significance after the pandemic’s outbreak. But if a person does not purchase life insurance during his lifetime, these little known life insurance benefits can come to the rescue of dependents.
Even though a life insurance amount of Rs 2 lakh would appear small, if invested in the right instrument offering 12-15 percent returns, it has the potential to grow to Rs 10.94-16.27 lakh after 15 years.
The absence of the insurance policy document makes the claims process a bit cumbersome, but the effort is worth the while.