Prajna Capital

Insurance is null and void if suicide is committed within a year
Do not depend on Bank Managers Financial Advice
Karnataka Bank

Insurance is null and void if suicide is committed within a year

Posted: 30 Oct 2015 03:15 AM PDT

Death claims are not payable under certain circumstances in case of life insurance.

Although life insurance policies are taken in order to ensure that the nominee receives the sum assured (and other benefits, such as riders, bonuses etc.) on the death of the insured, there are quite a number of typical circumstances in which death claims are not payable. Some of these are:

If the insured, whether sane or insane, commits suicide within 12 months from the date of issue of the policy or the date of any reinstatement of the policy.

Let's assume that an individual's policy had lapsed due to premium non-payment. He makes up the payment backlog to bring the policy back in force. Two months later, he commits suicide. The insurer will not be liable to pay the death claim to the nominee.

If the insured has misrepresented facts, usually pertaining to health conditions, at the time of entering the insurance contract.

However, an incontestable period (usually two years after the policy has been in force) is imposed. That is, once the policy has been in force for this period, the insurance company cannot nullify or void a policy on the basis that the policy holder had made any misrepresentation or omission, usually pertaining to health conditions, at the time of entering into the insurance contract. The incontestable period clause does not affect the rights of the company in case there is any fraud involved. The onus of proving fraud lies on the insurance company. In such cases, the only one to lose out would be the nominee/family of the insured who would be dragged through unnecessary complications at a time when they need all the calm and peace they can get.

A misstatement of age clause is inserted by the company to protect itself against the insured wrongly stating her/his age. This doesn't void the policy, however. It still remains valid. In the event of the insured's death during the term of the policy, the death benefit is adjusted as per the actual age of the insured.

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Do not depend on Bank Managers Financial Advice

Posted: 30 Oct 2015 01:33 AM PDT

AIN'T THE BEST ET did a round of banks only to find out that the advice wasn't reliable

In the past five years, the Insurance Regulatory and Development Authority of India (Irdai) has taken a number of steps to curb the menace of mis-selling. After showing the door to Ulips with high charges, the regulator has now trained its sights on banks. It wants banks that sell insurance products to be accountable for the advice given. ET did the rounds of six banks to find out the utility value of their financial advice, and this is what we found.

UNBANKABLE ADVICE?

Typically a bank's advice appears to be driven by the quantum of commissions earned rather than requirements of the customer. The modus operandi was almost uniform across banks. While maintaining that they had an array of investment avenues on offer, the banks unfailingly promoted traditional endowment and money-back plans. In some cases they did not even mention, until asked, that what they were offering were insurance policies. The insurance was presented as an additional benefit. "If you invest in a tax-saving FD, it will be a one-time investment, but this product (insurance policy) will get you tax benefits every year," was the refrain, glossing over the fact that insurance policies entail recurring premium payments.

The banks covered by us included two PSU banks, three private banks and one foreign bank. The foreign bank refused to offer any advice unless the customer opened an account with the bank.

The larger PSU bank's officials wanted to know the products we needed, emphasising on the wide range of instruments on offer. The smaller PSU bank's officials, who were asked to recommend products for a senior citizen, laid out three options--tax-free bonds, single premium endowment plan and an immediate annuity scheme. The single premium plan was billed as the one offering best returns.

At private banks, the scenario was skewed in favour of investment-cumlife insurance policies. One private bank's relationship manager went to enumerate the features and benefits of the money-back plan without mentioning that it was an insurance policy . The product was termed ideal for a goal with a seven-year horizon, as it would start "returning" the money after eight years. Upon enquiring about mutual funds, the adviser merely listed out the categories of funds, instead of naming the schemes. He also recommended Ulips over mutual funds.

At the second large private sector major, the official did not even mention other investment instruments. The emphasis was on Ulips, with invest ment in equity fund options as they will help "make more money in a short period of time". Also, the stock markets were doing well ensuring that there would be no threat to capital.Traditional endowment plans were the second best bet, according to him.

The adviser at the smaller private sector bank, when told that the objective was tax-saving, suggested a money-back plan. Pointing to tax-saving FD rates, he said they had come down after RBI reduced the repo rate. "It will offer you around 8%, but this (insurance) product will yield 1012%," he said. Worryingly, he claimed the money could be withdrawn after five years. While this is indeed the lock-in period, surrendering the policy in such a short span of time is not a viable option due to low returns (5-7%) and high charges. Ulips and traditional plans typically yield returns only over 8-10 years.

ET's experience shows that customers must be wary about the advice hey receive from their banks. It is un ikely that banks will offer you any hing other than insurance policies if you are uninformed. Therefore, do your homework on products, their eatures and your requirements, be ore you approach your branch.

Souce: Economic Times

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1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

Invest in Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

Leave a missed Call on 94 8300 8300

Karnataka Bank

Posted: 30 Oct 2015 12:01 AM PDT

Karnataka Bank Limited, a leading 'A' Class Scheduled Commercial Bank in India, was incorporated on February 18th, 1924 at Mangalore, a coastal town of Dakshina Kannada district in Karnataka State. The bank took shape in the aftermath of patriotic zeal that engulfed the nation during the freedom movement of 20th Century India. Over the years the Bank grew with the merger of Sringeri Sharada Bank Ltd., Chitradurga Bank Ltd. and Bank of Karnataka.

With over 87 years experience at the forefront of providing professional banking services and quality customer service, they now have a national presence with a network of 488 branches spread across 20 states and 2 Union Territories.

Managed by a dedicated & professional management team, they have over 5,844 employees, 86,868 shareholders and over 4.84 million customers.