Insurance FAQ

Insurance FAQ Can a policy holder have both paper and electronic policies? Policy holders can choose the form in which they want their policies issued - paper or electronic. A policy can be bought or maintained in one form only - either in electronic form or paper but not in both. However, a policy holder can choose to keep some policies in electronic form and others in paper form - only the electronic policies will be reflected in his e IA account and he can use repository services only for the e policies (and not the paper policies) Can anyone become or set up an Insurance Repository? No, only entities approved by Insurance Regulatory and Development Authority (IRDA) can become an Insurance Repository. Insurance Companies cannot set up an Insurance Repository on their own nor can they hold more than 10% stake in any Insurance Repository. Can I take health insurance plan for my parents who are senior citizen? Is there any tax benefit available if I pay premium for them? Yes, you can take health insurance plan for your parents who are senior citizen. Now a day's so many insurance company has designed product especially for senior citizens. You are also eligible to claim tax deduction u/s 80D upto Rs 20000/- P.A. if you pay premium for them. Can I take two policies and get claims under both of them? In case of an indemnity cover (one that seeks to compensate the actual loss )--for instance, a policy that covers property, if there are two policies in vogue, the loss shall be shared by both the policies. In no case can an insured get more than the actual pecuniary loss he or she has incurred. On the other hand, in respect of benefit policies like the Personal Accident policy, where a fixed compensation is paid, no matter what the actual loss is , one may obtain more than one policy. Can policy holders have multiple e Insurance Accounts if they have multiple Insurance policies issued by various Insurance Companies? No. IRDA stipulates that an individual can have only ONE e Insurance Account across Repositories, irrespective of the number of policies owned by a policy holder - thus, if a person has an e IA with say Repository A, with any other Insurance Repository. All Repositories will have systems in place to check this before opening an e IA - any application for a second or multiple e IA will be rejected by the Insurance Repository. All the electronic policies owned by a policy holder can be credited or held under this single elA Can the eIA be operated by the Policy holder only? Yes, the e IA can be operated by the account holder only during his life time, unless, of course, he has been unfortunately rendered incapable to operate it (incapacity due to mentally unsound means or terminally ill as certified by a medical practitioner). In such circumstances, the e IA

may be operated by the Authorized Representative (AR) appointed by the account holder (pl see below for details). The account holder is strongly advised to keep the log In ID and password for online access of his e IA confidential and not share it with anyone else. For how long should I insure? Ideally, you should insure yourself for as long as you are the critical or crucial breadwinning member of the family. With the growing nuclear families and the typical Indian sacrificing mothers/wives. It may be prudent to ensure that the working man covers himself for his whole life; to ensure that his wife receives a lump sum upon his death. How can Insurance Repository provide free service to policy holders? Where is the catch? The Insurance Repositories will be paid directly by the Insurance Companies whose policies are held in electronic form in the respective Insurance Repository so that no charges are levied on policy holders. Insurance Companies will be able to pay these fees out of the savings that will accrue to them by the migration to issuance and maintenance of policies in electronic form. How do I collect the maturity amount from the insurance company? Usually, insurance companies send information regarding the maturity of the policy in advance, along with the forms to be filled and the documents to be sent. If the required documents are sent duly completed and signed, the payment is sent by post or in certain cases, even directly credited to your bank account. How do I convert my existing paper policy into electronic form? On opening an e IA, you just need to write out a request, addressed to the Insurer, for converting your existing paper policy to electronic mode. Request Forms for policy conversion are available in all offices of the respective Insurance Repositories. They can also be downloaded from respective websites. You need to fill out a separate request for each paper policy that you wish to convert to electronic form. These requests, duly signed, can be submitted at the respective Insurance Company or at any Insurance Repository office. If you do not have an e IA, you can submit an e IA opening form with the necessary supporting documents along with the request for converting paper policy to electronic mode. How do I open an e Insurance Account (eIA)? To open an e IA, you need the fill out an account opening application form of the Insurance Repository along with the necessary supporting documents. Application Forms would be available in all offices of the Insurance Repository, once they are operational. They can also be

downloaded from the respective website or you can fill out an application online at the website). You can also contact your Insurance Advisor (Agent) for an application form. You can submit the signed e IA application form at any Insurance Repository office. If you are applying to open an e IA at the time of buying a new Insurance Policy, it may be best to hand over the e IA form, along with the insurance proposal form, to the Insurance Company. To open an e IA, you need to necessarily have either a PAN or Aadhar number. When submitting your e IA application, please ensure that you provide copies of your PAN or Aadhar, Address Proof and proof of date of birth, along with a passport size photograph. You also need to show the original of address proof for verification (the list of acceptable address proof documents is given elsewhere). How do I reduce the cost of buying life insurance? The cost of a policy could be lowered if you • Buy insurance at an early age (while the risk is lower) • Insure yourself for a long period • Insure yourself for a large sum assured; offer to pay premium annually, thereby receiving discounts • Select a low cost policy such as a Term product, which offers negligible to minimum returns upon maturity. Do not buy riders or additional benefits that do not seem to add value to you or are available as other insurance policies at lower prices. How do I understand a life insurance Policy? It is necessary to know the following terms in order to understand a life insurance policy: Premium - the amount of money you have to pay to continue your insurance coverage. The premium amount depends upon • Your age • Policy selected • Mode of premium payment • Term of premium payment • Term of the policy You could choose to pay premium monthly (as a deduction from your salary), quarterly, half yearly or annually. However, there are Single premium policies where you pay premium once

only (hence you do not have the facility to make the effort of paying premium regularly). Term - the number of years you choose to insure yourself. The longer the term the lower the premium. Policy terms vary from a single year to a maximum of 55 years. Not all policies offer you a range of terms. Premium paying term - the number of years you pay premium on your policy. The longer the premium paying term, the lower the premium. Usually the premium paying term is the same as the policy term. However, some policies offer you the option of selecting a premium paying term that is lower than the policy term. Sum Assured / Face amount - the amount of insurance cover you have or the minimum amount your family receives in the event of your demise. Your family could get more than this amount based on the type of policy or riders that you select. Bonus / Participating profit - is declared by the insurance company each year as a proportion of the sum assured. This amount could vary; it could be different for different policies and terms. Although declared each year, the bonus is a lump sum payment made to the insured person upon maturity or to his family upon death, in addition to the sum assured. Bonus is based on an insurance company's assumptions about the future performance. Like any other assumption, actual results will be more or less favourable. The longer the time being projected, the greater the likelihood of variance from the predicted values. Not all companies guarantee the amount of bonus on each policy. Guaranteed Addition - is a declaration made by the insurance company; it states that irrespective of the financial results of the company, the company will pay the guaranteed amount of money, to the insured or his nominee. Like the bonus amount, this is a lump sum payment made to the insured upon maturity or to his family upon death, in addition to the sum assured. Survival Benefit - is the amount of money received at pre-fixed, regular intervals by the insured person, upon survival of the term of the policy.

Often, money received upon maturity or at the end of the term of the policy is also referred to as Survival benefit. Maturity Benefit - is the amount of money received by the insured, upon survival of the term of the policy. In case of policies that offer a bonus, the sum assured plus the bonus for the term of the policy is paid to the insured upon maturity. In addition, some policies offer a loyalty addition, which is paid as a proportion of the sum assured and is based on the term of the policy. In case of policies that offer no bonus, upon maturity, the sum assured or a refund of the premium or no money is receivable by the insured (depending on the type of policy selected). Cover or Death Benefit - is the amount of money the nominee receives from the insurance company upon the insured's death. In addition to the sum assured, this would include the bonus, if any. If additional riders such as Accident Death Benefit or Additional Sum Assured have been selected, the amount of money receivable by the nominee could be higher. Returns or Pre-tax yields - Interest earned on the premium, on a compounded basis, is the pre-tax yield. Post-tax yields - If the premium paid for a life insurance policy is used as a tax deduction under section 80C, then the effective premium paid by the insured is lower. Interest earned on the effective premium, on a compounded basis, is known as the post-tax yield. How long will it take for the Insurance Repository to open AN e Insurance Account? The Insurance Repository will open an e Insurance Account within 7 business days from the date of receiving the eIA application form. On opening the e IA, the Insurance Repository will inform the applicant the particulars of the e Insurance Account and usage instructions through email and by post. How much does life insurance cost? The cost of buying an insurance policy depends on: • Your age, health and the nature of work you do • Policy type selected. • Sum assured. • Policy term. • Premium paying term.

• Premium payment frequency. • Riders (if any) attached to the policy. How much health insurance I should opt? Looking to the present medical cost we should take min sum assured of 3 lacks. We should also keep in mind that once we will be suffered from and disease then sum assured will not increase so, we should consider higher sum assured to cover inflationary medical cost for future. How much should I insure for? The amount you insure for is called the sum assured. Normally a policy should cover the value of the asset - either the market value while insuring, or the cost of replacing the asset should it be lost or destroyed. The premium will depend on the sum assured. How much sum assured I should take? There are two methods of deciding the sum assured which is human life value and need based analysis. One should use need based analysis method for deciding sum assured. In need based analysis method we should add survivors living expenses, future value of outstanding life goals, outstanding debt, cost of dying (funeral, estate lawyer's fees, etc.) and subtracts saleable investments, and insurance already available. The difference is the sum assured required. I am already covered by my Employer in a Group Mediclaim policy, do I need to buy a separate policy? In case of a claim will I get paid from both policies? — It's good that your employer covers you under a group mediclaim but generally the SI of such policies is very low. This amount seems to be insufficient in today's scenario where the cost of treatment is increasing every year. — Most of the group mediclaim policies has clauses of co-pay and deductibles built in and due to these the insured has to pay from his pocket. — There are times when you change job and then you get covered under a new policy. As a result of this insured losses on his pre-existing benefit that he has accrued over the period. — There is always a time gap between joining a new job when the individual and his family is not covered. This makes them susceptible to risk situation — The insured might even think of starting his own business and this he and his family will no longer be covered under any insurance policy. I am healthy. Why should I take health insurance? Insurance cover is always available for uncertain event; once we suffer from any disease it is difficult to take coverage for such disease. Life is full of uncertainties we do not know when we

will be suffer from diseases and accident so, it is better to take health insurance when we are healthy. When we are healthy we have number of choices available and we can choose the best and affordable plan for us. I do not believe in taking health insurance instead of that I prefer in creating my own fund. It is good to create a fund but once we suffer from diseases then our fund will last. Whereas in health insurance if we availed total sum assured in one policy year then again in next policy year same sum assured is available to us even if we suffer from major diseases. If we see the yearly premium of health insurance it is ranging from 1% to 3% of sum assured which is negligible. We also get the tax benefit on premium paid for health insurance. I have not paid premium for some time. Can I revive my policy? For a regular premium paying policy, premium has to be paid within 30 days of the due date (15 days if the mode selected is monthly). The insurance company provides a grace period during which you can pay the premium and keep the policy in force. If the premium has not been paid within the grace period, the policy is considered lapsed. Insurance companies offer various schemes that facilitate the process of reviving lapsed policies. A few are mentioned below • Paying all the arrears of premium and the interest for the same period can revive the policy. In certain cases, the company may offer installment revival schemes, where you pay a part of the arrear along with the regular premium, and the balance of the revival amount is paid in instalments spread over a year of two years. • Under another scheme, a money-back policy can be revived by using the survival benefit under the policy (the money receivable from the insurance company at regular intervals) to pay premium plus interest. (If the survival benefit amount is lower than the revival value, you have to pay the shortfall. If it is higher, you receive the excess amount.) I have not paid premium for some time. I want to discontinue my policy. Do I get anything back from the insurance company? The insurance company provides a grace period during which you can pay the premium and keep the policy in force. For a regular premium paying policy, premium has to be paid within 30 days of the due date (15 days if the mode selected is monthly). • If it has been less than 3 years since you purchased your policy and not paid premium, you may not receive any money back from the insurance company.

• If you have paid premium for more than 3 consecutive years, you will receive a proportion of the premium paid; depending upon the sum assured, the bonus accrued; if any, the number of premiums paid and the term of the policy. (The amount receivable is known as the surrender value.) However, please note that the surrender value will vary by company and policy. • The surrender value depends on - Type of policy - Amount of premium - Policy term - Number of years for which the premium has been paid and - Accumulated bonus, if any. I want to save tax and plan for my 1-year old child's higher education. Which is the good insurance policy for this? Generally, you will find people opting for a child's insurance policy in such cases. However, this is not a very good choice. The returns from an insurance policy are usually poor as compared to pure investment products as they have higher charge-structure. Second, they offer very little diversification. Third, the flexibility to change is also quite low. Therefore, the normal moneyback, endowment, or ULIP type of an insurance policy is preferably avoidable. To cover for any unfortunate eventuality, you should ideally be buying a term insurance policy. This takes care of the 'protection aspect'. To get good returns with tax saving, presently the PPF (8% assured and tax free returns, 15-year lock-in) and ELSS funds (100% equity, 3-year lock-in) are the best tax saving products. Since your time horizon is long and assuming you have a reasonable risk appetite, you can invest about 50% money each in PPF and ELSS. This will give you tax saving under Section 80C. Further, it will also help you to create wealth for your child's higher education 16-18 years later. If I already have an e IA, how do I buy a new policy in electronic form? Once you have opened an e Insurance Account, it is quite simple to buy a new policy in electronic form. You just need to quote your unique e IA Number in your new insurance proposal form, with a request to issue policy in electronic form. Since KYC documents had

already been submitted and verified when you opened your e IA, the Insurer will not do KYC again, provided there has been no change to your KYC details, making the process simpler and convenient for you. If I get heart attack, cancer, stroke will I get covered in a health Insurance policy? Yes, all these would be covered under health insurance if it has not happened as a result of any pre-existing disease. All the pre-existing diseases would be covered after 4 continuous years of coverage. If there are problems with claims what can I do? First you should write to the company and give them sufficient time to respond suitably. If they don't respond, or it is not a response satisfactory to you, then you can approach the appropriate judicial channel. For complaints relating to personal insurance covers upto a value of Rs.20 lakh, you may approach the Insurance Ombudsman in your area.

( HERE ANNOUNCE THE CONTACT INFORMATION OF THE OMBUDSMAN ).

The Ombudsman has a technical team that will go into the merits of your case and give an award) If you are unhappy with the outcome with the Ombudsman you still have recourse to consumer courts.

The IRDA also has a Grievance Cell. You may contact.........................

( HERE ANNOUNCE THE CONTACT INFORMATION OF IRDA) . Is it compulsory for all Insurance Companies to offer electronic policies? Yes. It is the policy holder's prerogative to opt for a policy in electronic form. If a policy holder wants his/her policy (either new purchase or existing) in electronic form, then the Insurer is bound to fulfill his / her requirement.

The choice of a Repository for opening an e IA is the prerogative of the policy holder and hence all Insurance Companies will need to work with all the Insurance Repositories. Initially, repository service will be available for life insurance only; over time, health and general insurance (personal lines only) will also be brought within the ambit of repository services. Is it compulsory to issue policies in only electronic form? (i.e. is dematerialization of insurance policies compulsory, as in the case of shares?) No, it is not (yet) compulsory to issue insurance policies only in electronic form. Policy holders can choose the form in which they want their policies issued - paper or electronic. On what basis is claim paid? In indemnity policies, the upper limit of a claim is the sum assured and this usually applies for the period of the policy. Certain policies, however, allow for reinstatement of the Sum Insured by payment of proportionate premium for the remaining period of the policy. The actual claim will be the actual extent of financial loss as validated by documents like bills. If the property is underinsured, the insured shall bear a rateable proportion of the loss. There can be more than one claim in the policy period but the sum assured is usually the limit for the policy period unless reinstated. Nowadays health insurance policies - which cover hospitalisation costs - have also a cashless settlement of claims. That is, you don't have to pay for the treatment at the hospital and then make a claim for reimbursement of the expenses. The insurance company has a service provider called the third party administrator (TPA) health services, who liaises with the hospitals and directly makes the payment for your treatment as per the terms of your policy and coverage. Should I buy a life insurance policy even if my employer has insured me in a group insurance scheme? It is always prudent to buy an individual life insurance policy because a. The amount of insurance you are covered for may not be a very large sum b. If your employer decides on cost-cutting, you may no longer be insured b. If you decide to leave your employer, you may no longer be covered c. The older you are when you buy insurance, the higher is the premium you have to pay for the same insurance. Should I take Life Insurance? A person who have dependents (especially if they are the primary provider) or significant debts that outweigh ones assets, then you need insurance to ensure that your dependents are looked after if something happens to you.

However, buying life insurance doesn't make sense for everyone. If you have no dependents and enough assets to cover your debts, survivor living expenses, outstanding life goals and the cost of dying (funeral, estate lawyer's fees, etc.), then insurance is an unnecessary cost for you. Should I use insurance as an investment? You could use some of the insurance policies as investment products. Insurance companies now offer a variety of products that allow the insured to choose his investment option. There are policies that offer a fixed guaranteed rate of return, some offer a market-linked rate while some allow the insured to select his investment option. In the current state of the market, yields from insurance products can be expected to vary in the range of 6.5 7.5 - 8% per annum (pre tax). There is no return under Term Plan then why should I take Term Plan? Remember that nothing is free of cost. Even if you take ULIP plans, Money Back Plans, Endowment Plans or Whole Life Plans every plan attracts mortality charges which you have to pay. If you take term plan then in very small amount you can take higher sum assured. What are the basic elements of Life Insurance? The two basic elements to all individuals are • Risk coverage (i.e. Term Insurance) Savings for future (i.e. Pure Endowmen) What are the benefits of holding Insurance Policies in electronic form? There are multiple benefits in holding insurance policies in electronic form under a single eInsurance Account (e IA). These benefits include: a. Safety: There is no risk of loss or damage of a policy as may happen with paper policies; the electronic form ensures that the policies are in safe custody and can be easily accessed when needed. b. Convenience: All insurance policies, be it life, pension, health or general, can be electronically held under a single e IA. This means all details of all policies are available in a single account (place). The details of any of the policies can be accessed at any time by logging on to the online portal of Insurance Repository. Premium for all the policies can be paid online and many service requests or complaints can be logged at this website. c. Single Point of Service: All service requests in respect of e IA or any of the electronic policies held under the e IA can be submitted at any of the Insurance Repository service points - there is no need to go to the offices of individual insurance companies for service.

d. Less Paper work: When you want to buy a new electronic insurance policy under an existing e IA, you don't need to go through KYC verification all over again, if there are no changes to your KYC details already recorded in your e IA. Further, if you want to make any changes to your personal details like address or contact no, it is enough to change the details in your e IA with the Insurance Repository by submitting a single request - the Insurance Repository, in turn, will inform all the insurance companies with whom you hold electronic policies, about the changes. What are the documents required to open an eIA Account? ID Proof: • AADHAR CARD or • PAN Card Address Proof: A copy of any one of the following documents should be submitted as proof of address; the original of the relevant address proof should be produced for verification by the Insurance Repository: I. Ration Card II. Passport III. Aadhar letter IV. Voter ID card V. Driving license VI. Bank Passbook (not more than 6 months old) VII. Verified copies of a) Electricity bills (not more than 6 months old), b) Residence Telephone bills (not more than 6 months old) and c) Registered Lease and License agreement / Agreement for sale. VIII.Self‐declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts. IX. Identity card/document with address, issued by

a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to universities; and g) Professional Bodies such as ICAI, ICWAI, Bar Council etc. to their Members. What are the guaranteed Savings/bonus applicable under a Life Insurance Policy? Some insurance policies guarantee the amount of money that you would receive upon maturity or the minimum amount that you would receive upon maturity. Usually, this amount is a proportion of the sum assured such as a bonus or a guaranteed addition of say Rs 70 per Rs 1,000 of the sum assured. This means if you have an insurance policy for a sum assured of Rs 100,000 then you earn a bonus of Rs 7,000 each year on the sum assured. Other policies may offer you a guaranteed bonus as a percentage such as a guaranteed addition of 3.5% per annum on a compounded basis. This means you earn Rs 3,500 on a sum assured of Rs 100,000 in the first year while in the second year you earn Rs 3,623 (3.5% of Rs 103,500). What are the Tax benefits applicable to me if I invest in a Life Insurance Policy? Under Sec 80C of Income Tax Act Available for Premium paid (max. up to 20% of SA) on Life Insurance policies with a maximum ceiling p.a. Rs. 1,00,000 irrespective of the Gross Total Income. A maximum of Rs. 1,00,000 p.a. paid as a contribution on a pension plan is fully deductible from the taxable income (within the max. ceiling Rs. 1 lakh ) Under Sec 80D of Income Tax Act Premium paid for Critical Illness rider is deductible as medical insurance premia from the annual income chargeable to tax up to a maximum amount of Rs. 10,000.

Exemption from the Life Insurance proceeds Under Sec 10(10D) of IT Act

• Maturity benefits are tax-free in the hands of the policyholder if, at any point of time during the policy life, premiums paid within one year do not exceed 20% of the basic Sum Assured. • Death benefits are tax-free. • Please note that tax laws are subject to change and changes in tax laws could be with retrospective effect. This information should not be construed as tax, legal or investment opinion from SBI Life Insurance Company Limited. SBI Life Insurance Company Limited is not responsible in any manner for decisions made on the basis of the above information. • Please consult your tax advisor in connection with your taxability. What are the tax benefits on Health insurance policy? any additional tax benefits in proposed DTC? Individual can claim maximum benefit of Rs 15,000 under sec 80 D and this can go upto Rs 20,000 in case coverage is opted for senior citizens. What are the various types of insurances? The insurance sector is classified into Life and Non-life (or General insurance as we know it). Under Life insurance, an individual's life is covered i.e., the insured's nominee receives a certain sum of money if the insured individual dies within a specified time. Under General Insurance, everything but an individual's life is covered. Thus, an individual could insure himself for his health, home, automobile, travel, office, shop, and even pets. What coverage available under health insurance plan? Hospitalization expenses for treatment of disease and accident for min of 24 hrs, pre and post hospitalization expenses generally upto 30 days are paid max upto sum assured. Hospitalization expense includes Room Rent, Medicine Expenses, Doctor Fees, Diagnostic Expenses and other medical expenses related to treatment. Expenses which are not paid by insurance company are registration charges, service charges/ nursing care chares, personal expenses such as telephone, fax, refreshment etc., taxes levied by government from time to time and other expenses which are not related to treatment. What do I do if I lose/misplace my insurance policy? You could apply for a duplicate document from the insurance company. You will receive a duplicate policy after paying the necessary fees and executing an indemnity bond.

You could facilitate the process of verification by carrying a premium receipt and an identification card at least. What do I do if I need to make any changes to my policy or e IA? Do I submit a request to the Insurance Company or to the Insurance Repository? It is best to submit ALL requests in respect of either your e IA or any of your electronic policies to the Insurance Repository. If the changes are with respect to an account level detail (like address or phone number), the Insurance Repository will execute the change after the necessary KYC verification, if any. The Insurance Repository will then intimate the changes to all the Insurance Companies whose policies are held in that e IA, so that the changes are effected in all the policies, in one go (so there is no need for the policy holder to approach the various insurance companies individually for the changes). In case of any changes at the policy level, the Insurance Repository is expected to forward the request to the respective insurance company and ensure that the same is executed and reflected in the electronic policy held with the Insurance Repository. What do I get if I insure? A Peace of mind, that you have secured your family from major risks - be it death, illness, accidents, theft or natural calamities In monetary terms, you can claim tax-deductions under section 88 (although now the deductions will depend on your income bracket). Premium paid towards a life insurance policy, up to Rs 1,00,000, can be claimed as a taxdeduction u/s 88. However, the amount that can be claimed as a tax-deduction depends on the income bracket (given below in the table). • Survival benefits or Interim benefits, i.e. money received during the term of a money back policy are tax-free. For example, money received from SBI Life's Back policy, during the term of the policy, is guaranteed and tax-free. • Maturity benefits or the amount received at the end of the term of a policy is also tax-free. • Premium paid towards certain pension policies such as SBI Life - Lifelong Pension Plus is eligible for tax deduction under section 80CCC.

• Regular pension received under pension policies is taxable. However, the lump-sum cash option available under these policies is tax-free. • Proceeds of a life insurance policy, received by the nominee, are tax-free. • For a Health insurance policy, you can claim the premium amount, up to a maximum limit of Rs 10,000 u/s 80D. Moreover, the money you receive from the insurance company, during the term of the policy and/or upon maturity, is tax-free (with the exception of the pension policies). What do I get if I survive the term of the policy? If you have purchased a term policy, you may not receive any money from the insurance company upon maturity. However, some companies offer a term policy with return of premium or the sum assured upon maturity. For policies that offer bonus or profits upon surviving the term of the policy, you would receive the sum assured along with the accumulated bonus (if you have a with bonus policy) for the term of the policy. For example, if you have insured yourself for 25 years you will receive the sum assured plus the accumulated bonus for 25 years. What do I need to pay to maintain electronic policies in my e IA? And what is the fee for converting my existing paper polices into electronic policies? All the services provided by Insurance Repositories are absolutely FREE of charge to policy holders. Policy holders need not pay anything extra to buy an electronic policy or to convert an existing paper policy into electronic form. Similarly they need not pay anything to avail of any services from the Insurance Repository, including online premium payment and services at the respective online portal. What does my family get on my death? • If death takes place during the term of the insurance policy, then the nominee receives the sum assured plus the bonus, if any. If the policy is a 'with bonus' policy or 'with participative profits', the bonus is payable for the number of years the premium has been paid, in addition to the sum assured. • If death takes place due to an accident, and the insured has purchased the accident benefit rider, then double the sum assured (up to a limit of Rs 500,000-10,00,000 varies by company), is

receivable by the nominee. Even if an additional term rider has been purchased, double the sum assured would be receivable by the nominee. • If death takes place after the policy has matured, then the nominee does not receive anything from the insurance company, unless specifically mentioned in the policy. Certain policies offer to cover the insured for the sum assured or a part of the sum assured, even after the policy has matured. (The insurance company would mention such details in the brochure and the policy.) What is "Waiver of Premium"? 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. What is a Guaranteed Surrender Value? 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. What is a medical examination when buying 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. What is a Money Back plan? 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. What is a Whole Life insurance product? 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. What is an e Insurance Account (e IA)? 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. What is an Insurance Repository? 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". What is Deferment Period? 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. What is Endowment product? The insurer will receive a lump sum amount either at death during the term or at maturity of the term. What is Fund Value and how it is determined? 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. What is general insurance? Insuring anything other than human life is called general insurance. Examples are insuring property like house and belongings against fire and theft or vehicles against accidental damage or theft. Injury due to accident or hospitalisation for illness and surgery can also be insured. Your liabilities to others arising out of the law can also be insured and is compulsory in some cases like motor third party insurance. What is Grace Period? 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. What is Group 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. What is insurance? We face a lot of risks in our daily lives. Some of these lead to financial losses. Insurance is a way of protecting against these financial losses. For a payment (premium), an insurance company will take the responsibility of compensating your financial losses. What is 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. What is Pre existing, Waiting periods and Exclusions in a health Insurance policy? Pre-existing are the diseases from which a customer suffers from before taking a policy cover. Most of companies in industry provide coverage to these pre-existing diseases after 4 continuous years of coverage. Waiting period is also called the cooling period. It is the time after the purchase of policy under which no claim is paid other than in the situation when claim has resulted due to an emergency situation. It varies (from 30 days to 90 days ) from insurer to insurer. What is Redirection? 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. What is Switching?

The disinvestment of unit funds and reinvestment into others is called switching. It does not impact the investment allocation of your future contributions What is Term 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. What is the difference between "Nomination" & "Assignment"? 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 What is the difference between health insurance plan of General Insurance Companies and Life Insurance Companies? 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. What is the fee I need to pay for opening an e Insurance Account? Insurance Account is absolutely FREE to the policy holder - the policy holder does not have to pay anything to open an e Insurance Account What is the periodicity of premium payments? Most general insurance policies are annual and the premium payment is in advance. No risk commences unless you have paid the premium. In some long term policies companies have the facility of collecting premiums periodically. What is the right age to buy a Health Insurance Policy? Today's fast paced life leaves us with little time to take care of our health. High stress life, irregular & unhealthy eating habits and no physical exercise make us susceptible to health concerns. People across the age groups run the risk of falling ill at regular intervals. Even though we now have cures for most of the diseases but it has also lead to increasing medical cost year on

year. This has direct impact on our savings. Health insurance provides us the required support in these times of need so that an individual can be with his family giving emotional support rather than being concerned of financial burden. What is the tax benefit available under health insurance plan? 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. What is vesting age? The age at which the receipt of pension starts in an insurance-cum-pension plan. What kinds of policies are there? Most general insurance policies are annual - that is, they last for one year. Some policies are given for longer periods - like fire insurance for residences - and some for shorter periods - like insurance for goods transportation or for emergency medical treatment during foreign travel. What should be the duration (term ) of my insurance policy? Ideally, the term of your policy should be equal to the number of years your family will be dependent on you financially. However, ensure that your insurance payment period is also equal to the number of years you plan to work (and hence is not a burden for you). If you are one of those gentlemen who have been lucky to have a wife that has always been a homemaker, please ensure that you have a pension policy or a whole life policy that takes care of your wife's needs, in your absence as well. What type of insurances should I have? To ensure you are safe, the least you should do is to ensure that you have - Health insurance - Life insurance, Accident Insurance - Automobile insurance - Home insurance What's the advantage of starting early in health insurance? In initial life stages most insurance companies provide coverage to customers without any medical checkups. As the age increases these medical checkup become mandatory and the insurance company has the right to reject the proposal based on the reports of these tests. So it might happen that insured might not get coverage from any insurance companies at latter stages of life. Secondly if a company issues a policy to an individual then they can never refuse a renewal to the customer (IRDA guideline). So if an insured joins early he will have coverage for lifetime.

Thirdly, if a customer enrolls in a policy early then he will have coverage for all diseases in latter stages of his life when he needs it the most. What's the difference between Health Insurance & Mediclaim? Insurance companies offer two types of products under Health Insurance. These are indemnity and benefit products. Indemnity insurance compensates the beneficiary of the policy for their actual economic loss up to the limiting amount of the insurance policy. The insured has to share the necessary proofs to recover his loss. Mediclaim is an example of such product. Benefit products promises the payment of a lump sum amount in case of triggering of the insured events. Few examples of benefit policies are Critical illness, Persona Accident, Hospital Cash. Insured does not have to submit all the hospitalization bills for claiming under this policy. When should I insure? The minute you have people dependent on your income, you should insure yourself. The younger the age, the lower is your premium. At SBI-Life, we believe anybody who is married and has children or plans to have children needs to be insured. Even if you are single, earning and intending to marry, you should think of buying a policy now, as it costs less now than it will when you marry. Remember, it is never too late to buy an insurance policy. Even if you are 45, and are not insured, you could choose insurance products that provide benefits to your family and provide income during your retirement period. Which Insurance Policies can be held in electronic form? The following types of insurance policies are eligible to be held in electronic form: (a) All individual life insurance policies including health and pension policies. Policies issued to groups by registered life insurance companies can also be held in electronic form. (b) All general insurance policies held by individuals including group policies (c) Any other class of insurance policies that may be notified by IRDA u from time to time Which Life Insurance Plan I should opt? If you need pure protection then Term Plan is best for you. Which Policy is better - from General Insurance co, Health Insurance Co. or Life Insurance cos? Health Insurance companies operate only in the field of health and travel insurance. This limited scope helps them to build specialization in the field and deliver better service to their customers.

Which type of policy is best suited for me? The type of policy that suits you best depends on many factors, such as your insurance objectives, your income, assets, liabilities, number of dependent members in your family and family expense. Life insurance policies are broadly classified in to three categories Endowment policies Whole life policies Pension policies Endowment policies Endowment policies cover the insured for a specified period. Thus, the insured may select to insure himself until retirement; e.g. if he is 25 years old, he may choose to insure himself for 35 years, until he reaches the age of 60. • Upon the death of the insured (during the term of the policy), the nominee receives the sum assured plus the bonus, if any. Bonus is paid for the number of years the policy was in force. • Upon surviving the term of the policy, i.e. upon maturity, the insured receives the sum assured plus the bonus for the term of the policy, if any. Thereafter, the insured is not covered by the policy. • Endowment policies are usually more expensive in comparison to whole life policies. Endowment policies are broadly classified into two types - Endowment - Without profit and Endowment - With profit. • Endowment - Without profit or Term products - offer the nominee the sum assured only, upon death of the insured. Upon surviving the term of the policy or upon maturity, the insured may receive the sum assured or a portion of the sum assured or a refund of the premium only. Typically, such policies are low-cost policies. • Endowment - With profit policies - offer a bonus (which could be guaranteed) in addition to the sum assured, upon death of the insured or at the end of the term of the policy. These policies cost more than the Endowment - Without profit policies. Currently, four types of Endowment - With profit policies are offered in the market: Endowment with profit policies • Upon death of the insured, the nominee receives sum assured plus bonus for the number of

years the policy was in force. • Upon surviving the term of the policy or upon maturity, the insured receives sum assured plus bonus for the term of the policy. The amount receivable upon maturity is tax-free. • Many people prefer to buy such policies for terms that mature during their retirement period. Often, the maturity amount is utilized to supplement the pension income (pension income is taxable). Money back policies During the term of the policy, the insured receives a fixed portion (percentage) of the sum assured at regular intervals. This money received during the term of the policy is tax-free. Upon surviving the term of the policy or upon maturity, the insured receives the balance amount of the sum assured plus bonus for the term of the policy. Upon death of the insured, the nominee receives full sum assured plus bonus for the number of years the policy was in force. (Money received by the insured during the term of the policy is not deducted from the amount paid to the nominee.) Money back policies cost more than Endowment - With profit policies. Many people prefer to purchase such a policy to utilize the money receivable for going on a holiday, re-furnishing their homes or even re-investing the same amount. Child Plans • The child receives sum assured plus bonus (if any) at a pre-determined time. This money is receivable irrespective of the fact that the proposer is dead or alive. • The proposer for such a policy could be the parent/guardian/grand parent; he pays the premium for the policy. • In the event of death of proposer, usually no further premiums need to be paid by the family. However, depending upon the policy type, the child may or may not receive the sum assured upon the death of the insured. However, the policy continues and the child receives the sum

assured plus bonus, if any, at the pre-determined time of the policy. • Upon survival of the term of the policy, the child receives money at the pre-determined time. • Such policies are best suited for planning children's higher education and marriage expenses. Unit-linked Insurance Plans • A portion of the premium is invested in the stock market or in a mutual fund. Thus, the returns earned on such a policy are transparent (unit-linked) since they can be tracked on a daily basis. • The company utilizes balance part of the premium to cover insurance and administrative costs. • In the event of death of insured, the nominee receives sum assured plus returns earned in the market by the insurance company. • Upon surviving the term of the policy, the insured receives the returns earned in the stock market by the insurance company. Whole life Plans Whole life policies provide insurance until the death of the insured person. • Upon the death of the insured, the nominee receives the sum assured plus the bonus, if any. • Whole life policies typically offer no survival benefits, since there is no definitive term to the policy. However, the insured could make withdrawals or take loans against the cash value of the policy. • Typically, the cash value (the interest or bonus earned on the premium) of a Whole Life policy is higher than that of an Endowment with Profit policy. • Moreover, the premium for a Whole Life policy is paid for a longer duration of time (since the insurance coverage term is longer). However, the insured has the option of selecting the premium paying term. Pension Plans

• Pension policies provide a regular sum of money to the insured or to his nominee for a fixed period. • The insured has the option of selecting when and for how long (term) she or he would like to receive the pension amount. • In the event of death of the insured during the term of the policy, the nominee has the option of taking a lump sum amount or receiving a regular pension for the remaining term of the policy. It is advisable to have a portfolio of policies with varied benefits, as a single policy cannot meet all your insurance objectives. Who is an Authorized Representative (AR)? A policy holder who opens an e IA shall appoint an Authorized Representative (AR) who shall be entitled to access the account in the event of demise of the policy holder or in his incapacity to operate the e Insurance Account. The AR is entitled only to access the e IA so as to know the portfolio of insurance policies and the nominees of the respective policies held under that account. The Policy Holder can change the AR, at his discretion, during the term of the eIA. The AR is different from a nominee and has only access rights to the e IA in the event of demise of the policy holder. Who should buy general insurance? Anyone who owns an asset can buy insurance to protect it against losses due to fire or theft and so on. Each one of us can insure our and our dependents' health and well being through hospitalisation and personal accident policies. To buy a policy the person should be the one who will bear financial losses if they occur. This is called insurable interest. Whom should I insure? Breadwinner - If you are the breadwinner of the family, you should insure yourself first. Working spouse - If you have a working spouse who could use an insurance policy, both of you could insure yourselves in a joint-life policy. It could serve as a low-cost policy which covers both of you, and which either of you could use for tax-saving purposes as well. Children - If you have children you could buy an insurance policy in their name. This would ensure that your children receive a certain sum of money in their needy years of higher education. The major advantage in such a policy is that your child or family receives a guaranteed amount of money at a specified period in life.

This type of a policy helps since the earning parent may not be alive later when the child needs money for higher education and the spouse may not be in a position to provide such a large sum of money. Moreover, a policy of this kind ensures a compulsory saving for the child's future. Partner/Key-person in the organization: If you have a working partner in your firm or a keyperson(s) in the organization, your firm/organization could buy life insurance for them. Such a policy would insure your firm against any financial loss that would be incurred in the event of your partner/key-person's death. Why do different people have different premiums? The premium is calculated on the extent and nature of the cover you want. A higher sum insured means a higher rate of premium. Similarly a higher risk will be charged a higher premium. An example of this is that an older person will have to pay a higher premium for health insurance for the same sum insured. Sometimes the risk is higher depending on the location of risks - for example in motor insurance in areas where accidents are higher. So the premium will vary according to the nature and severity of the risk.

If I buy a policy and don't make a claim, it is a loss. So, why should I buy insurance? General insurance is not meant to be for savings or investment returns. It is meant for protection. What you pay for is the protection against a risk. To approach it as something from which returns should be obtained is not the correct approach as there is a price to pay for protecting a property worth lakhs for a few hundred rupees. Why do I need Insurance? You need insurance for Family that is financially dependent on you: If you have a family that is financially dependent on you, then you definitely need to insure yourself. The most common reason to buy life insurance is it provide protection to your family incase of any unforeseen events. The life insurance proceeds can be used to support your family members with the expenses. Loans or liabilities: It is very important to insure yourself if you have taken a loan or mortgaged your assets. It not only provides peace of mind but also a steady source of income for your family

Compulsory saving-cum-investment: A life insurance policy could be used as a compulsory saving-cum-investment avenue. Proceeds from the insurance policy could be used to fund future expenses such as child's higher education or retirement funds or even a well-deserved holiday. Partner in a firm or Self-employed: It is highly needed by people who are partners in a firm or have their own proprietor firms. Life insurance can be a critical component for specialized business applications - such as funding a buy-sell agreement. The proceeds of a life insurance policy could be used to provide cash for the purchase of a deceased owner's interest in the business or to pay off business liabilities. Other than the RBI Bonds, insurance products are the only other investment products that guarantee yields over a range of time - from 5 years to 25 years. Insurance companies offer single premium investment products as well as regular investment-cum-insurance products that guarantee high yields over a period. Why should I buy life insurance? Life Insurance provides you and your family with protection against all the risks involved, moreover providing you an opportunity to grow your investments. It could be viewed as a longterm investment to provide for your child's future expenses or your expenses, post retirement. Why should one insure? One of the main reasons one should insure is to protect one's belongings and assets against financial loss. When one has earned and accumulated property, protecting it is prudent. The law also requires us to be insured against some liabilities. That is, in case we should cause a loss to another person, that person is entitled to compensation. To ensure that we can afford to pay that compensation, the law requires us to buy liability insurance so that the responsibility of paying the compensation is transferred to an insurance company Will my family receive the insurance amount immediately after my death? Usually the proceeds of the insurance policy are made available to the nominee in a period of 3 months; provided all the relevant paperwork has been done. If you have purchased a policy for your child, then please verify the details of the policy. Few children's policies offer no money to the nominee upon the death of the proposer or the parent. Will my premium amount increase after I have bought a policy? Typically, when you buy an insurance policy, it is a contract or an agreement that you are entering into with the insurance company. It is a fixed price (premium) that you are willing to pay in order to remain insured for the term of the policy. Thus, such a price (or the premium amount) is pre-fixed and the insurance company cannot increase the same later. However, as the

Finance Ministry levied a service tax on insurance companies in 2002-03, premiums payable by the insured may increase!!!