Are you an Insurance Beneficiary

Having a life insurance policy means you have secured the life of your loved ones in case of any mishap with you. By purchasing the policy, you did your moral duty towards them in protecting their life for adverse scenarios. But the thing really matters is whether they (Insurance Beneficiary of your policy) are equally aware of the policy and the claim procedures or not?

If not, then again it becomes your duty to make your insurance beneficiary aware of all things related to the insurance you bought for them. There are certain things which you should know being a beneficiary of any policy or can be told by you to loved ones appointed as a beneficiary by you.

Things to know for Insurance Beneficiary

You will not get full face value

Please keep in mind that the face value or amount dictated by the company in documents is not the one your insurance beneficiary will get credited with. In actual some minor fees and charges will be deducted at the customer’s end by the company before processing the claim, but the charges may be very minimal.

If the policyholder has taken any loan against the policy and some portion of it is still to be paid, in those case company simply deducts the unpaid loan from the claim amount and processes the rest money to the insurance beneficiary.

Amount of claim is tax free

The amount of claim credited to the account of the insurance beneficiary will be completely tax-free. You don’t have to pay any taxes for that because it is clearly stated in the rules by Taxation Services that the policy claim amount cannot be taken as the income source for the beneficiary. Only one exception is when the policy was transferred to you against any valuable consideration or cash but it happens very rarely.

Mode of payouts of Insurance Benefits

Insurance companies provide monetary benefits to the insurance beneficiary on the maturity of the policy or if some mishap with the policyholder. It is totally the will and wishes of the insurance beneficiary that how he wants to receive the claimed amount. Usually, companies provide three modes of payout to the beneficiary:

  • A lump sum amount where the total amount of claim is settled in one go and credited to your bank account.
  • You can opt for drawing the total claim amount into equal monthly installments.
  • Alternatively, you can also go for equal payment for throughout of life.

Who will get Benefitted

A policy can only be claimed by the person or persons listed in the beneficiary list of the policy. A list of the beneficiary must be updated accordingly to let the right person make claim hassle-free. Nobody except the name included in the list has the right to claim and the company has every right to hold the claim in event of any confusion or legal issue. The company will only release the claim amount when the legal issues among beneficiaries will be sorted out and you cannot direct the company for early release.

Rights of the Policy Company

Before claiming the amount of insurance, you must know the very rights of the policy company as well. The company has a right not to disclose the name of other beneficiaries listed in the policy to you if you are among one of the beneficiaries. Also, it is not mandated at the part of the company to inform the customer about discontinuation or maturity of the policy. You should keep tracking the policy for its premium and maturity dates and must act accordingly. 

Keep paying the premiums regularly

Just purchasing insurance is not quite enough, but to keep paying the insurance timely is more important. If you forgot to pay a premium once, it becomes problematic for you to continue with the same insurance. Because there is a limit of three months delay period and companies will not accept payments after this delay period. That simply means your policy is discontinued and you have only three months to restart it, so you must pay premium regularly to keep the policy alive.

No need of paper policy

You don’t have to produce the very paper policy document to make yourself eligible beneficiary for the claim. In the digital age, all the related information is secured digitally by the company and you only need to know the time of maturity and the name of the insurance provider. If you are sure that policy is matured or policyholder is no more, in that case simply approach insurance provider and claim process will be initiated after simple verification of beneficiaries.

Need for Certificates

In case the policyholder is no more, maturity benefits can be claimed by you as the listed beneficiaries. But you have to produce the death certificate of the policyholder, to make your claim viable to the company. In case of accidental insurance, a medical certificate by the certified and qualified medical professional must be produced. In case of any legal contradiction among beneficiary, valid legal order must be produced to the insurance company to get due benefits.

Last thing you must keep in mind while planning for an insurance that you must read all Terms and conditions for particular insurances carefully. Some important benefits are deleivered by the company to consumeres or not? Rules and regulation are decided by government and all companies must adhere to these rules made by the IRDAI, and you can also go through the official website of IRDAI fo information like companies engaged in this buisness and all.

The points discussed above are worth knowing and understand for a better experience with the insurance companies and to avoid any further delay in claim processes.