I am 40 years old and have a seven-year-old son. Five years ago, I took a life insurance policy of Rs 1 crore. However, my financial conditions are not the same at present as I lost my job twice in the last two years. Now the premium amount is hurting my daily expenses and I may not be able to pay the premium. I know that life insurance policy is important and would not want to discontinue it. At this stage, I would like to have an insurance policy with a lower cover. Can this be worked out?
In my view, an adequate insurance cover at your age is quite important. I want you to explore every option of maintaining the insurance cover. Insurance companies have some flexibility in terms of reducing cover or opting for a loan against policy. I would recommend you to explore the options with your insurer. Here, you have not mentioned the type of policy you have purchased. Considering the nature of your query, I presume you have bought a savings-oriented life insurance product with sum assured of Rs 1 crore. If this is right and you are in such dire straits where you just can’t afford to pay the premium then I suggest you look for a term insurance plan with a cover of Rs 1 crore. You can buy an insurance plan online since they are cheaper. If the policy that you already have is a term insurance, then I suggest you to maintain it and let it go only as a last resort.
I am 45 years old an have a term insurance plan of Rs 80 lakh. I am a divorcee and the nominees to my life insurance policy are my children, two sons aged 5 and 9, and my ex-wife. I want to exclude my ex-wife from the policy and would like to continue to keep my children as the nominees. How can I ensure that after my death, my life insurance policy will provide for my children?
A nominee is merely a custodian of the proceeds received from an insurance policy. The proceeds ultimately can only be given to the legal heir. If you haven’t prepared a legal will, it is advisable that you prepare one in which the proceeds of this insurance policy are given to your children. Meanwhile, you can change the nomination of the existing policy and exclude your ex-wife from the new list. Since your two children are minor, you will have to appoint an appointee who will be the custodian till your children achieve the legal maturity age.
Amitabh Chaudhry, MD & CEO, HDFC Standard Life Insurance Co. Ltd
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