I am 24 years of age and have recently got a job. Should I buy a cover now or should I wait for some more time?
Amit Srivasthava asked:

Ideally, you should purchase a life cover when you are healthy because the premium on your life insurance policy depends on your age as well as the state of your health. If you are healthy and relatively young, you would have to pay a lower premium compared to when you have grown older and your health is comparatively poor. Normally, up to the age of 35, insurers do not insist on any health certification. But after that age, they may ask for a complete medical examination. Therefore, it is advisable to go for life insurance covers before attaining the age of 35.

Further, you need to be more particular if your family health history puts you in the ‘risky’ category. It could lead to an increased premium. If you have financial dependents, you should go for life insurance immediately. If not, you can choose the time of buying a policy considering the above factors.

What is meant by the assignment of a life insurance policy? How do I benefit from assigning my policy?
Saikat Chatterjee, email

When the policy owner assigns the benefits under a life insurance policy in favour of a third person, it is known as assignment of a life insurance policy. The policy is generally assigned in the favour of a creditor, as a guarantee for the return of a loan. If the policyholder wants to avail the loan facility, either from the insurer or anyone else, the assignment serves as a collateral option.

I lost my husband recently. He had taken a life cover when he was single and made his brother the nominee under the policy. I and my son are the legal heirs to my husband and, unfortunately, we are not on good terms with my brother-in-law. Will the policy proceeds go to him and is he entitled to retain the proceeds?
Firoza Rehman, email

It is not necessary for the nominee to be the legal heir to the life assured. The nomination only indicates the person who is authorised to receive the claim amount, on payment of which the insurer gets a valid discharge of its liability under the policy. The insurance company cannot deny the amount to be paid to the nominee.

However, the amount can be claimed by the legal heirs to the life assured, in accordance with the law of succession governing them. Therefore, although the nominee will be entitled to receive the proceeds of the policy, he will hold it in trust for you and your son. If you feel that it may be difficult to recover the money once it is paid to your brother-in-law, you have the option to move the court and get a stay order on the payment of proceeds to the nominee.

How and when do life insurers settle the claims under critical illness rider attached with a life insurance policy?
Sureshwar Sahu, email

The ‘critical illness rider’ attached with a life insurance policy provides coverage in the event of eruption of a critical illness mentioned in the policy. The entire sum insured under the rider becomes payable to the policyholder 30 days after the diagnosis of the critical illness.

Once the insured intimates the insurer of the claim, it carries out independent investigations. When it is satisfied about the genuineness of the claim, it settles the sum insured under the critical illness rider.

My life insurance agent told me about a life insurance policy which has an annual premium of Rs 25,000. What will be my tax liability if I get a gift of Rs 25,000 to pay the premium? Do I have to declare my PAN details?
Sandeep Agrawal, email

You can pay the premium on a life insurance policy out of your accounted income, including the gifts. If the proposal form of your life insurer warrants that you mention your permanent account number, you will have to mention it.

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