What is Life Insurance?
What is a With Profit policy?
What is a grace period?
How long should premium is paid?
What happens if premium is discontinued?

What is Life Insurance? | top

Life insurance is a contract between a Life Insurance company (Insurer) and the life assured. As per this contract the Insurer promises to pay to the life assured (or failing him to his beneficiary) a sum of money (the claim amount) on the happening of the event which has been insured against. The life assured, on his part, promises to pay premium regularly to keep policy in force.

What is a With Profit policy? | top

The with profit policy is entitled to bonus, if any, declared by the Insurer periodically. The bonus vests on the policy and is payable along with claim amount at maturity or untimely death of life assured.

What is a grace period? | top

Premiums have to be paid on due dates to keep policy in force. However life assured may face temporary difficulty in paying premium. Insurer therefore allows a grace period of one month for yearly, half yearly and quarterly premiums and 15 days for monthly premiums. If death occurs during grace period policy is considered to be in full force by Insurer and claim is settled.

How long should premium is paid? | top

Premium should be paid on due date for full term of policy.

What happens if premium is discontinued?| top

If premium is discontinued within three years of commencement the policy is cancelled and nothing is payable. If, however, premium has been paid for minimum three years from commencement the policy becomes paid up for a reduced sum assured with vested bonus till lapse date payable on maturity. The policy does not attract any bonus after it becomes paid up. It is therefore very important to keep policy in force by paying premium in time.