Frequently Asked Questions
Get the Answers to Common Questions
Life Insurance
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).
| 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 |
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.
However, if you need a loan against your policy, then a proper duplicate policy is necessary against the one that has been lost.
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.
Mutual Funds
If the fund plans to sell a scheme to another fund the asset management company has to take the permission of 75 percent of unit holders or allow them to redeem without any exit load. This does not mean that the investor has nothing to worry about.
You need to find out whether the scheme is going to be managed by a different mutual fund and whether it suits your objective. Also find out the past performance of similar schemes. Note that such a change may have a bearing on the future financial performance of that fund. In case you are not comfortable with the various changes associated with the fund ship out.
In such a case the trustees have to send a notice to the Securities Exchange Board of India (Sebi) explaining the reason for winding up. The notice also has to be published in two national dailies and a vernacular newspaper belonging to the region where the fund is formed.
The trustee delegates the task of floating schemes and managing the collected money to a company of professionals, usually experts who are known for smart stock picks. This is an asset management company (AMC). AMC charges a fee for the services it renders to the MF trust. Thus the AMC acts as the investment manager of the trust under the broad supervision and direction of the trustees. The AMC must have a net worth of at least Rs10 crores at all times and it can not act as a trustee of any other mutual fund.
While the concept remains the same of collecting money from investors, pooling them and investing the funds, the target investors are different. In the case of portfolio management the target investors are high networth investors, while in the case of mutual funds the target investors include the retail investors. Further, in case of PMS the investments of each investor are managed separately, while in the case of MFs the funds collected under a scheme are pooled and the returns are distributed in the same proportion, in which the investments are made by the investors/ unit holders. Moreover, the investments of the PMS are managed taking the risk profile of individuals into account. In mutual fund, the risk is pooled depending on the objective of a scheme.
The custodian, an independent organisation, has the physical possession of all securities purchased by the mutual fund, and undertakes responsibility for its handling and safekeeping. For instance, the Stock Holding Corporation of India Ltd. (SCHIL) is the custodian for most fund houses in the country.