Important Things to Consider After Taking a Life Insurance Policy

People never even look at the policy document after taking out a life insurance policy. Now even the policy premium is auto debited or paid online. In this, some important things are overlooked. So let’s see what precautions you need to take after taking out a life insurance policy.

Correspondence address change

Our KYC documents are immediately updated when we change the address, phone number or bank details, but people are slow to make necessary changes regarding life insurance policy. However, the insurance company conveys important information to the insured based on the details it has. If they do not have your latest information available, you will be deprived of that important information. Nowadays it has been observed that people easily migrate from one city to another, and sometimes even abroad.
A few years ago, there was an arrangement in the insurance companies that they would take the premium of certain years in advance i.e. in advance. It is sometimes detrimental to pay the insurance premium in advance, as people do not think about when the premium will be due, thinking that the premium has already been paid. Sometimes when the premium is due in three-four years, the company delivers the information to the old address or phone number and if the policyholder does not provide the new details to the company, the premium is missed. This can lead to policy lapses. Therefore, everyone should report their latest details to the insurance company keeping in mind.

Nomination

The policy amount is paid to the nominee in case of death of the policyholder, but suppose the nominee dies before the policyholder? The insured should also make necessary changes in the nomination if required. It is often observed that the policyholder is unmarried while taking the policy. So they make a nominee from one of their parents. When they get married, they should nominate their spouse.
It is to be noted that post-marriage changes should be made in the policy made before marriage. Notably, a minor can also be made a nominee in a life insurance policy. It is necessary to appoint an appointment as the guardian of the minor child. Appointments have to be kept in mind for the sum insured till the minor enters adulthood. In short, the necessary changes should be made in the nomination. The nominee should also be aware of all the information related to the policy.

Policy Assignment

Many students take loans from trusts and institutions to study abroad. Such institutions ask for a life insurance policy in the name of the student so that they have some kind of security. The policy thus taken is assigned to the lending institution. In case of unfortunate death of the policyholder, the loan amount is repaid to the lending institution due to this insurance. This is also the case when the policyholder offers his life insurance policy as collateral to an institution for taking a loan. It is pertinent to mention here that after the loan is repaid, the policyholder should cancel the assignment and decide his nominee and report it to the insurance company.

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