Assignment of Term Life Insurance

POSTED BY Ankit Kumar Singh ON May 30, 2013 6:06 pm COMMENTS (2)

My loan from SBI is about to sanction. During the processing stage, i was asked to buy the Rinn Raksha policy from SBI life which I denied citing that this is not a good policy and i would rather go for term insurance policy.

I have taken SBI eShield term insurane policy with cover of 50 Lakhs and My loan amount is 25 Lakhs. 

My question is that if I was required to assign the policy to bank then how bank & nominee will get the benifit amount in case some misfortune happenes. Will Bank keep the balanced amount and give the remaining amount to nominee??.

In the policy document, it is written that only complete assignment of the policy can be done not the part of the policy which means that all the existing nominees will be cancelled.

Please guide me the through this process.

2 replies on this article “Assignment of Term Life Insurance”

  1. Dear Amit, relax. No reason to worry. As the E-shield is issued to you now, your family or nominee ‘ll be responsible to file a claim (if happens) & to pay the outstanding loan amount from the claim amount.

    Interestingly, even if you assign the policy to bank, bank has rights only on the claim amount & it ‘ll return the remaining amount after adjusting the loan amount from claim amount but the claim ‘ll be filed by your family & onus of successful claim settlement lies on your family. Bank ‘ll not help in any way for claim settlement process. 🙂

    Thanks

    Ashal

  2. If the policy has been issued. So who is the nominee now?

    “if I was required to assign the policy to bank …”

    The bank cannot ask you to do this. There is no law that you have to.

    You are free to assign the entire amount to any nominee of your choice. You will need to make a will stating that some % (initially equal to loan amt) goes to bank and rest to whomever you choose.
    If the bank wants proof the will can be shown in addition to policy documents.

    since the loan amount will decrease each year you can change the will every two years or so. No need to inform the bank about these subsequent changes.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today