What is Assignment?
Assignment is a process through which owner of a policy can transfer its rights and benefits to another individual.
Who can invest in a pre-owned policy?
Any individual can invest in a pre-owned policy.
What in Premium Financing?
Premium financing is lending of funds to a person or company to cover the cost of an insurance premium.
What happens if one is not able to repay the loan amount?
If loan amount is not repaid the lender can surrender the policy and recover the amount.
What is the tax treatment of insurance proceeds?
Process from an insurance policy is tax free provided the underlying policy is complaint under Section 10(10D) of Income Tax act 1969.
How much loan one can get against a policy?
This can vary depending upon the type of policy, generally the loan amount is in range of 50-90% of surrender value.
Post assignment of policy does the life insured change ?
No. Assignment is a process where rights & benefits of policy are completely transferred to the assignee. The life insured remains same.
Are the returns guaranteed?
The returns are assured in different ways e.g. for non-par policies, these are guaranteed while for participating policies these are linked with PAR fund performance. ULIP policies returns are linked with market performance and usually much higher.
What if I am not able to pay future premiums?
The policy will lapse, you can request for complete surrender as well however the return will be significantly lower.
What will be the tax treatment if the investor is a company ?
All institutional investors need to pay capital gains tax on the returns on these policies. However, the premium paid is a tax deductible expense and hence, the tax benefit can be availed there.
Are there options where one would pay only once ?
Normally, the investment in pre-owned or for that matter, any life insurance policy is a recurring event. However, there are certain policies where premium payment term is over. Our investment advisors can guide you on various options of buying these instruments to maximize the returns.
Can I invest in Unit Linked policies?
Yes, the investment in ULIP is always an option and generally, these polices provide better return due to market linkage
What happens if unfortunately, the original policy holder dies ?
In such an event, the nominee of the original policyholder files for a claim. The claim money, when approved by the insurance company, will first cover your original investment and the promised RoI till that date and the balance will be paid to the nominee of the deceased policyholder. Such is the construct of the contract between you and the original policyholder.
What is the minimum amount of investment?
You can go through all the policies available on the portal and choose the one that suits your investment appetite. You should consider the amount of the upfront investment and the investment in the subsequent years.
What is the average maturity or investment period?
It usually ranges from a minimum of 3 years and upto 12 years also. The investment timeframe is an important criterion basis which you should choose a policy to invest in. Our investment advisors will guide you on the same.
What is the average return?
As mentioned in the introduction of this investment class, the RoI is tax-free and ranges between 7-12%. In some rare cases, it may also go upto 14-15% also.
Can an investor invest in multiple policies?
Yes, it is an option always.
Is there any limit to the amount that one can invest in pre-owned policies?
No, there is no specified limit by the regulator or the insurance company. However, the insurance companies may assess or underwrite your capacity to pay future premiums and assign a limit upto which the pre-owned policies can be assigned to you.
