The Insurance Regulatory and Development Authority (Irda) recently released revised guidelines on reinstating lapsed unit-linked insurance plans (Ulips). Under this regime, which comes into effect from November 1, policyholders can revive their Ulips up to two years from the date of discontinuance. This extension could mean that individuals who miss a couple of premium payments need not fear that the policy would lapse. However, the norms for traditional endowment policies — which allow reinstatement only if it is done within six months from the date of the first unpaid premium — remain unchanged. And, only a handful of plans in the country offer the flexibility to policyholders finding themselves briefly unable to honour their premium commitments.
Star Union Dai-ichi's Suraksha Kavach, a participating endowment plan, aims to be one of them, going by its official product literature. Its feature promising continuation of the life cover even in the event of premiums not being paid for three years (from the date of the first unpaid premium) is listed as its unique selling point (USP). It allows you to take a break from premium payment any time after paying at least two full years' premiums. In case of the insured's death during this period, the sum assured along with the vested bonus, if any, is paid to the survivor(s).
Upon resumption of premium payment, however, the amount you pay will be set off against the unpaid premiums, starting with the first one. If all unpaid premiums are paid in full, the policyholder will be entitled to the policy benefits even if the premium is not paid for three years again.
A 35-year-old healthy individual opting for a Rs 10-lakh basic cover and a policy tenure of 20 years will have to shell out an annual premium of Rs 50,910. The minimum age at entry is 18 years, with 50 years being the upper limit. Similarly, the insured has to be at least 28 and cannot be older than 65 at maturity. The policy term varies between 10 and 25 years.
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