A mortgage is a considerable financial responsibility, one which most likely hinges upon a steady income. The payments may become difficult to make without your assistance or, even worse, impossible to meet. Life insurance can help you to protect your home and family.

A life insurance policy can protect your family from the financial obligations of making mortgage payments without your salary. In the event of your death, your family will still be accountable for mortgage payments, which may be unaffordable without your contribution.

For protecting your family from bearing such a burden and possibly losing the house, you should purchase a life insurance policy. Although there are other insurance options available too, for example, mortgage protection insurance, the wisest and most economically sound choice is to buy a life insurance policy.

The death benefit of your life insurance policy should include your mortgage’s amount. On the occurrence of your death, the proceedings of the policy will cover the entire cost of your mortgage, your house will be paid off, and your family will have one less thing to worry about.

If taking out a mortgage has already substantially cut into your finances, life insurance is even more important. Although your mortgage payments may make paying premiums for a whole life insurance policy unimaginable, there are cheaper options.

As an alternative to purchase a permanent life insurance policy or mortgage protection insurance, explore the option of buying a term insurance policy for the same duration as your mortgage. This alternative is much less costly. The premiums will be considerably lower, but the coverage will remain the same.

At the end of the life of the policy, you can decide whether you want to convert or renew the policy or if you would rather discontinue the policy. This approach guarantees mortgage protection at the lowest cost.

In terms of cost, the best choice is decreasing term life insurance. If the main reason for purchasing a life insurance policy is for mortgage protection, investing in this type of term insurance is your best bet.

At the start of your mortgage, you owe the most to your lender and your mortgage protection should reflect that. However, since after a few years of making payments, you will owe significantly less, decreasing your protection is a logical move. A decreasing term life insurance policy allows this.

You can also design your life insurance policy so that your protection is the same amount as your debt. Although the premiums do not decrease over time, your mortgage life insurance quote will be considerably lower than if the quote you would receive and if the coverage of the policy were level throughout its term. Some policies annual premiums are the same as the level coverage, but the payments end earlier than the end of the policy. For e.g., the premiums on a 20 year mortgage protection insurance policy are required to be paid for only 16 years even thought the coverage will last all 20 years.

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This table shows who should sign the form of discharge in respect of a maturity claim under different circumstances.

Circumstances Who should sign the Discharge Form Policy on own life which has not been assigned The life assured Joint Life policy which has not been assigned Both the lives assured Policy which has been conditionally assigned Both the assignor and the conditional assignee Policy which has been absolutely assigned The absolute assignee

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The insurance company always attempts to settle maturity claims on or before the due date as long as their requirements are met within the stipulated time.

The requirements that you as the policyholder must take care of are:

The policy document must be submitted unless it is in the insurer's custody as security for a loan.

Age proof such as the municipal birth certificate or the school leaving certificate need to be submitted in case the age was not admitted when the policy was issued and the sum assured, or the paid-up value is above Rs.15000/-. Where the sum assured or the paid-up value is Rs.15000/- or less, age proof is normally waived.

If any assignment or reassignment was executed by a separate deed, such deed or deeds must also be submitted.

Finally, the Form of Discharge should be returned duly signed by the policyholder over a Re. 1/- revenue stamp and duly witnessed.

It is not necessary to have a duplicate policy made in case the policy that you wish to surrender is lost. However these requirements must be fulfilled:

No advertisement is needed for surrender values up to Rs.1000/-, inclusive of the vested bonus. LIC also holds the discretion to waive off the advertisement requirement depending on the merits of the case where the surrender value stands between Rs.1000/- and Rs.2000/-. However in cases where the surrender value exceeds Rs.2000/- or the sum assured exceeds Rs.25000/-, advertisement in one newspaper is insisted upon.
Declaration of surety is necessary as in the case of the issue of a duplicate policy.

An indemnity bond duly stamped and completed by the life assured along with a surety. The stamp duty on the indemnity bond will depend on the amount of the surrender value of the policy.

Discharge form and form of declaration of no assignment duly completed by the policyholder.

For settlement of claims, either through maturity or death of the policyholder, this procedure must be followed

Lost policy questionnaire form duly completed by the policyholder is called only in case of maturity claims. This can be obtained from the local Divisional office of LIC.

No advertisement is necessary for the loss of the policy.

No surety is required either for settlement of claim up to Rs.5000/-. For settling claims above Rs.5000/- but below Rs.10000/-, a surety is accepted by LIC without any verification. And in case of claims exceeding Rs.10000/-, the concerned Branch manager must verify the financial status of the surety. Procuring this report takes some time so the income tax returns for the last three years in respect of the person agreeable to stand as surety are called for. However, where one surety is not available for the requisite amount, two different sureties of sound financial standing are also acceptable. The surety should be completely unrelated to the life assured or the claimant.

Indemnity bond is waived in the case of claims up to Rs.1000/-. And for payment of claims exceeding Rs.1000/-, a stamped Indemnity bond is also required.

Discharge form and form of declaration of no assignment duly completed by the policyholder or the claimant are also required.
As long as these requirements are fulfilled and submitted promptly, the branch office can settle the death claim without delays. Early death claims however involve investigation and careful scrutiny before they are settled.

Regular and prompt payment of premiums is the single most important requirement of maintaining your policy in full force at all times.

After all, all your plans for the protection of your near and dear ones as well as your investment for your old age could be nullified due to your policy lapsing due to non-payment of premiums. Yet, thousands of policies issued by LIC do lapse after a few years as a result of negligence and carelessness of the policyholders in making regular premium payments.

A grace period of 30 days is allowed for payment of yearly, half-yearly and quarterly premiums and fifteen days, in case of monthly payment of premium.

Please do NOT wait until the last few days of the grace period.

The safest way to pay your premiums is on a yearly basis. Even if your policy has commenced on a quarterly premium basis, it is advisable to change it to yearly payment later on. The lesser your transactions with the insuring company, the better. Besides it is easier to remember the due date in a year. The more frequent the payments, the higher are your chances of the policy lapsing.

It is extremely important to safely retain all your premium receipts intact. You may be paying your premium on time but there are chances that the insuring companies' ledgers are not entered with your payment details. At times like this, the insuring company may write to the policyholder asking him to produce the premium receipts and vouch for the payments made. If the payments made are very old, then it may be difficult for the policyholder that is you to prove them without the premium receipts.

Needless to say, it is extremely cumbersome to preserve all the premium receipts. So the next best alternative is to periodically get a certificate from your insuring company confirming that all your premium payments are up-to-date. It is easier for you to preserve such certificates instead of individual premium receipts. The certificate can be obtained from the relevant branch office of LIC that services your policy and accepts the payment of premiums.

The Form of Discharge must be signed by

The nominee in case a nomination exists in the policy, or

The assignee if the policy was conditionally or absolutely assigned, or

The holder (s) of legal representation obtained if the policy was neither nominated nor assigned, or

All the Class 1 heirs of the deceased policyholder according to the relevant personal law applicable if the Divisional office has waived proof of title.

Whenever you shift from one place to another, make sure to notify the change in your address to the relevant office branch office, which directs your policy so that all your premium notices, receipts, etc will be sent to your new address.

On the other hand, transferring of policies creates a lot of confusion and dislocation within the insurer's offices. Your best bet is to let it remain at a branch office where your agent resides so that in case of any difficulty, his services can be utilised without having to bother yourself unnecessarily.

Subject to claim concessions, the net amount payable under a policy in settlement of its claim depends upon its status as on date of death.

In case of a reduced paid-up policy which has not been specifically enclosed for paid-up conversion, LIC will pay the claim for the full sum assured instead of the paid up value provided certain conditions are satisfied:

The life assured died within 6 months from the due date of the first unpaid premium.

Premiums under the policy have been paid for a minimum period of 3 full years.
Claims concession is not available on certain policies during the deferment period in case of Children's Deferred Endowment Assurance, Temporary Assurance and Convertible Term Assurance.

Extended claims concession is an extension of the regular claims concession. Here, the claim for the full sum assured is payable under a reduced paid-up policy provided two conditions that

The life assured died within one year from the due date of the first unpaid premium five years after the deferred date in case of CDA policies.

Premiums under the policy have been paid for a minimum of 5 years.
However the claims concession is subject to the deduction of

The premium or premiums unpaid with interest thereon up to the date of death.

Unpaid premiums falling due before the next anniversary of the policy (except in Fixed-Term (Marriage) Endowment and Educational Annuity plans).

In case, a policy document is irrecoverably lost, destroyed or damaged, you can obtain a simple copy of the policy by making the payment of Re.1/- only to LIC. Such a copy will serve the purpose of your obtaining details of the data pertaining to a lost policy, such as the sum assured, the insurance plan, date of maturity, etc. When the policy matures, the claim amount can be obtained on the basis of an indemnity bond. Similarly, you can also surrender a policy even if the original policy document has been lost.

However, if you need a loan against your policy, then a proper duplicate policy is necessary against the one that has been lost.

In event of the death of a policyholder, the claimant - the nominee, the assignee or the next of kin should immediately convey certain information to the insurance branch office where the policy is serviced:

A statement that the policyholder is dead.

The date of death.

The cause of death.

The place of death.

The policy number (s).

The claimant's relationship with the deceased policyholder.
As soon as the insuring company receives these details, the concerned branch office sends the necessary claim forms for completion along with specific instructions regarding the procedure to be followed by the claimant. If you have an agent, he should easily be able to procure the needful for you.

Every business organisation has a few key members who are vital towards its functioning and its success. Key people are not necessarily among the top management, which runs the company but even high-performing salesmen or production engineers or administrative heads.

In case of the death of one of these individuals, the organisation will suffer a definitely monetary loss in terms of its financial performance as well its creditworthiness. The loss will take some time to recoup before others can be trained and inducted to take their place. Besides the time and money invested in the training can make it an unnecessarily expensive proposition.

If the firm opts to take life insurance policies like the Keyman insurance policy on the lives of such individuals, it would definitely protect the firm from any loss of profits or earnings that would result from the death of any of its key employees.

The chaos that might result subsequent to the death of the firm's key employees will also require the expert services and consultations with legal luminaries and experts before the situation can be rectified. Needless to say, lump sum payments for services rendered are not an attractive option considering the fact that a bulk of such payments would be classified as taxes for the receiving individual.

It is advantageous for the firm to buy an Immediate Annuity policy or a Deferred Annuity policy that will provide payment through fixed timely amounts over a number of years. Thus the tax assessment for the outside expert will be charged over a longer period of time instead of the total amount in one and the same year.