availed up to `25,000 per annum.
But if a person is below 60 years and
is paying premium for his or her
senior citizen parents, the maximum
tax benefit is `50,000. In the case of
a person who is above 60 years old
and his mother’s age is 84 years, the
deduction claim is `1,00,000. Tax
deduction rebate has been raised
for senior citizens from `30,000 to
`50,000 in the Budget this year.
Why should I buy early?
Whether it is life or health
insurance, buying a policy early
means you have to pay lower
premium. Unless you have been
suffering from a critical illness,
premium is charged according to
age. Insurers also have plans that
include members of a family in a
single floater policy. Such a policy
distribute the risk, and at the same
time, provide benefits in premium
unlike individual plans.
In India, people mostly opt for
a family floater that covers their
immediate family – wife and
children, says Rakesh Jain, Executive
Director and Chief Executive Officer,
Reliance General Insurance.
“This puts parents and financially
dependent siblings at financial risk
during unforeseen illness. One can
opt for an individual cover for the
parents and dependent siblings. The
premium for multiple set of policies
would be higher,” says Jain.
Three examples of family floaters
below demonstrate that if you insure
early, premium payment becomes
cheaper in the long term.
Example 1:
A 30-year-old person who buys a
family floater policy (father aged 57,
mother aged 55 and spouse aged 29)
for an insured sum of `5 lakh would
pay `11,802 per year, or `984 per
month.
Example 2:
A 40-year-old person who buys a
family floater policy (father aged 62,
LIFE
INSURANCE
Don’t Panic if
You’ve Missed
Your Premium
Date
Life insurance is a tool
which helps us to cover
financial risks. The
contract with the insurer
is based on timely
premium payment. We
can sometimes miss the
date, or cannot pay due
to financial constraints.
Missing a premium payment, however, does not mean the end of
the world. It also does not lead to policy cancellation. Even if you
have missed the date, you will get cover as before, and can continue
paying the premium without penalty charges.
What is grace period?
‘Grace period’ is the specific time provided to a policy holder over and
above the due date for policy renewal. Premium payment within this
period does not attract any penalty. A window is given to the policy
holder to arrange for the premium.
A grace of 15 days is provided for people making monthly premium
payments. In case of quarterly, half-yearly and annual payment
schedule, the grace allowed is 30-31 days. If you pay your premium
annually, 30-31 days grace will be provided for every payment
without penalty charges.
A rough calculation of a 40-years policy works out to three years, two
months and 15 days (without considering the leap years) of extra
cover. If we consider 10 leap years, then three years, two months and
25 days of grace will be given.
By Grace
One of its biggest benefits of grace period is that it keeps the policy
in force despite missing the date. The nominee is eligible to claim the
benefits, if the policy holder expires during the grace period.
To illustrate this point, if a person bought a life insurance policy on
5 June 2016 on annual mode of premium payment, and his next
premium due was on 5 June 2017, he will get 30 days grace without
penalty charges. In case he unfortunately met with an accident on 28
June 2017, and expired on 1 July 2017, the insurer will pay the nominee
the sum assured subject to deduction of unpaid premium.
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