I started a Max Life Monthly Income Advantage Plan, 50k/ year in 2016. Made only one payment of 50K and could not continue. Will I get the paid amount at maturity?

Ans: Hi Sharad, unfortunately when you stop paying your premiums, the policy lapses. If your policy has lapsed owing to non-payment of premiums on time, the terms and conditions of the policy contract are null and void until you reinstate it. A lapsed coverage must be reinstated by paying the accumulated premiums with interest and providing the necessary health information.You will have to pay the premiums of the years missed and then the policy will get revived.

Ans: Hello there,

Based on the information available, the survival benefit you're receiving from your Birla Sun Life Insurance Income Assured 2017 Term 15 Years Pay 05 Years policy is generally not taxable. This is because any sum received from a life insurance policy, including maturity proceeds and death benefits, is usually tax-free, subject to certain conditions.

However, it's important to note that there was a change proposed in Budget 2023. If the aggregate annual premium of a life insurance policy exceeds Rs. 5 lakh, the maturity amount may be taxable. So, if your annual premium is more than Rs. 5 lakh, you might have to pay tax on the maturity amount.

Remember, these are general guidelines and tax laws can change. It's always a good idea to consult with a tax advisor or professional to understand the specific tax implications for your situation.

I hope this helps!

Ans: Understanding the Insurance Premium Refund Process

When you close a housing loan early, you might wonder about getting back the insurance premium. The insurance you bought covered the loan term. Now, let's explore if you can get a refund for the insurance premium paid.

Nature of Loan Insurance

Loan insurance safeguards the lender and your family. If something happens to you, the insurance pays off the loan. It’s a crucial element in securing financial stability. But when you repay the loan early, the scenario changes.

Terms and Conditions of Insurance Policies

Insurance policies come with specific terms and conditions. These conditions dictate the refund policy. Usually, insurers have clauses about refunding premiums if the loan is closed early. Reading these terms is essential to know your entitlement.

Pro-rata Refunds

Some insurance companies offer a pro-rata refund. This means you get a refund based on the remaining term of the policy. For instance, if your loan was for 25 years and you closed it in 28 months, you might get a refund for the unused period. This could be a significant amount, given the long-term nature of your original policy.

Administrative Fees and Charges

Be aware of administrative fees and charges. Insurance companies might deduct these fees from your refund. This can affect the total amount you receive back. Ensure you understand these potential deductions by reviewing your policy documents or speaking with your insurance provider.

Communication with Your Insurance Provider

To initiate the refund process, contact your insurance provider. They will guide you through the steps needed to process your refund. Having all your loan and insurance documents handy will streamline this communication.

Importance of Documenting Communication

Keep records of all communications with your insurance provider. Emails, letters, and call logs are crucial. This documentation can be useful if there are disputes or delays in processing your refund.

Insurance Policy Alternatives Post Loan Closure

After closing your loan, you might still need insurance coverage. Reassessing your insurance needs is wise. A Certified Financial Planner can help you determine the best coverage to protect your financial interests moving forward.

Reinvestment of Refund

If you receive a refund, consider how to use it wisely. Consulting with a Certified Financial Planner can provide insights. They can guide you on reinvesting the money in mutual funds or other beneficial financial products.

Common Misconceptions about Insurance Refunds

Many people believe that closing a loan guarantees a refund of the insurance premium. This is not always the case. The refund depends on the specific terms of your insurance policy. Understanding these nuances can save you from unrealistic expectations.

Assessing the Financial Impact

Evaluate the financial impact of closing your loan and getting an insurance refund. This analysis helps in understanding the overall benefit. You might find that the refund can be a valuable addition to your financial planning strategy.

Potential Delays in Refund Processing

Be prepared for possible delays in the refund process. Insurance companies have their procedures and timelines. Staying patient and following up regularly can ensure a smoother process.

Appreciating the Value of Insurance

Even though you might get a refund, it’s crucial to appreciate the value insurance provided while your loan was active. It offered peace of mind and financial security, which is invaluable.

Conclusion

Closing your loan early and seeking a refund on your insurance premium is a prudent financial move. Understanding the terms, communicating effectively with your provider, and planning the use of your refund are essential steps. Consulting with a Certified Financial Planner can further enhance your financial strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

This fund has a good past performance record therefore,
I suggest you continue this policy.

This high growth fund is oriented towards midcap equity.

You may also add allocation to large cap fund and debt fund to mitigate risks.

Best wishes;