The , is a non-linked, non-participating, credit protection product. This product is designed to cover each individual group member’s outstanding loans. In the event of the policyholder’s death, this product ensures, that the burden of repaying these loans, does not pass on to other group members or dependants.
Eligibility Conditions for Loan Suraksha Plan:
- The member's entry age must be between the age of 18 years - 65 years.
- If the policy is being taking as a group insurance, then the number of members in the group should be at least 50.
- The premium payment term is a single premium.
The Features of Loan Suraksha Plan:
- This is a single premium term insurance plan, designed for members of financial institutions, in order for them to provide new and existing borrowers with life coverage.
- The policy term must be between 2 - 30 years.
- The minimum sum assured should be Rs. 20,000, the maximum amount for sum assured is based on underwriting considerations.
- The policy covers all loan products, from mortgage to auto loans, from education to even personal loans.
- This policy has the option of being taken as a single life policy or joint life policy. For a single policy the insured will only have insurance cover for himself, and in the event of his death, will payout any of his outstanding loans. The benefits from this policy will be provided to the policyholder’s nominee. For a joint life policy, it can be taken by the insured to include his/her spouse, business partners, etc. The joint policy can be taken as long as each members have insurable interest among them. The policy will cover only the share of the policyholder, at his/her demise.
- The plan will be offered to customers on a Decreasing basis, wherein, the insurance cover or the sum assured will reduce based on the interest rate of the loan.
- The product will have a free-look period of 15 days from the commencement of the policy, during this time, you have the option to cancel the policy if you do not agree with the policy terms.
Benefits of Loan Suraksha Plan:
- Death Benefit - In the unfortunate death of the insured, the outstanding loan balance will be repaid, as per the loan schedule provided in insurance certificate. After making the payment of the outstanding amount, the policy will terminate. The benefit will be paid to the nominee of the insured. In the case of a , the policy will cover only the insured individual’s share of the loan amount. The insurance policy will continue for the surviving member of the joint policy, and will not be affected.
- Maturity Benefit - With this insurance scheme, there is no maturity benefit.
- For any top-up or additional loans, the insurance coverage can be increased.
- Surrender Benefit- This policy can be surrendered at any time by the policyholder. The policyholder will be paid a guaranteed surrender value. This value will be based on the formula: guaranteed surrender value (GSV) x single premium. The policyholder will not be able to surrendered in the last year of the policy. The GSV, if lesser than Rs. 100, will not be payable.
- Top-up loans - You can choose to take up a top-up loan, and would like to have this as well covered under the policy, the top-up will be considered as a new loan. The added premium will be based on factors such as age, date of the top-up loan availed, the outstanding loan schedule, and the term when the top-up is repayable.
- Tax Benefits - The policyholder will get tax benefits for both, premiums paid and also claims made. The premium paid benefit can be claimed under section 80C, while the claims can be claimed under section 10 (10D) of the Income Tax Act 1961.
- Loan Facility - Policyholder will not have the facility to take up loans under this policy.
- Pre-closure of loan - Pre-closing a loan doesn’t affect the sum assured of the policy, as this will still be based on the loan schedule available in the certificate of insurance. However, if the policyholder repays the full outstanding balance, before the term agreed upon, then he/she can claim a surrender benefit.
Mr. Rajshekar, a healthy 35 year old, decides to take a coverage plan for 10 years for his outstanding loans. His sum assured value is the same as the outstanding balance on his loan which is an amount of Rs. 20 lakhs. The premium he will pay towards this will be based on the his age, the outstanding loan amount, the loan interest and duration. He starts to make payments, towards the policy, and after the 3rd year of the policy, Rajshekar unfortunately dies, the loan outstanding as of the date of death will be paid off, and the Future Generali Term policy will then be terminated. The nominee and the next of kin, will not need to make any payments towards the loans of Rajshekar.
- Can I apply for a loan under this scheme?
No, loans will be available under this group policy.
- Does this plan have a maturity benefit?
No, there are no maturity benefit under this plan.
- What are the exclusions under this plan?
If the insured member commits suicide within 12 months of the policy start date or risk commencement whichever is later, only 80% of the premiums paid will be payable to the nominee or the beneficiary of the policy.
GST of 18% is applicable on life insurance effective from the 1st of July, 2017