• Thu. Aug 11th, 2022

What is the damage to the customer if the policy is lapsed?

Byfloreena thomas

Jul 25, 2022

What is Tamadi policy and why Tamadi?

Generally, the policy earns surrender value only after two or three years in operation. Those policies which have not achieved the surrender value, except the first premium, if the subsequent premiums are not deposited within the grace period, the policy lapses. All these Tamadi policies can be initiated at any later time (not exceeding 5 years) subject to payment of outstanding premium along with interest charged by the Corporation, supporting documents (eg: Declaration of Good Health, Short Medical Report, Full Medical Report).

Policies expire for various reasons. For example:

A. If the insurance document is not issued in time.

b. If the Premium Demand Notice is not sent in time.

c. Failure to provide after sales service i.e. failure to maintain contact with insurance customers after sale of policy.

d. Non-selling of policies according to the needs and capabilities of the insured by untrained sales representatives

if

e. If the insurance seller/agent makes unrealistic promises (which cannot be fulfilled) to the insurance customer.

f. If you don’t get good service from the insurer’s office.

G. If the insured suddenly falls into financial trouble.

h. If the insurance customer’s policy needs change.

Jh. If the policy-bonus rate declared by the insurer is not satisfactory.

J. If the reputation of the insurer is tarnished.

What is the damage to the customer if the policy is lapsed?

1. If the policy lapses the policyholder faces financial loss. Because Tamadi policy surrender value

    The insured does not get his deposit back as he does not achieve it.

    2. If the policy lapses, the life of the insured is not covered. As a result the policy is insured in the state of tamadi

In case of untimely death of the subscriber, his nominee does not get any benefit of the insurance. As a result, the insured’s nominee and family face an uncertain future.

What is Survival Benefit and Paid-up Policy?

Survival Benefit (Expected Benefit): In those life insurance policies, if the insurance is in operation before the expiry of the policy period, the financial benefit is paid to the policyholder at a percentage of the original sum assured after a certain period of time, the portion payable at that percentage is called survival benefit or expected benefit. Eg: In three installment insurance plans and multi installment insurance plans, the survival benefit or expected benefit is paid to the insured at specified intervals.

Paid-up Policy (Paid-Up Policy): After two or three years of policy in force, the policyholder can convert the original policy into a policy paying a relatively low one-time premium at a cash surrender value if desired. This type of convertible insurance is called a paid-up policy. Surrender value earned on paid-up insurance is treated as a one-time premium for that insurance with no further premium to be paid later. Paid insurance becomes a claim as per the original insurance contract. Bonuses earned during that period are distributed along with the sum assured in the with-profits insurance plan. Paid-up insurance is the future value of the insurance. This premium will either be received by the policyholder at maturity or will be paid to the policyholder’s nominee on premature death during the term.

Formula for determining price paid :   

Paid up value of insurance:

Principal Sum Assured χ Total Number of Annual Premiums Paid

Term of Insurance

Added to this will be bonus earned (if in profit insurance plan).

What is comprehensive and third party motor insurance and what are the benefits?

Comprehensive Insurance is a type of motor vehicle insurance in which the insurance company covers the loss in case of damage to the customer’s own vehicle.

Comprehensive Insurance is called First Party Insurance. The insured gets the highest level of protection for his vehicle. This policy is an optional policy, not binding on the customer.

Benefits:

(1) Replace or repair compensation if the vehicle is stolen.

(2) In case of damage (other than collision), repair compensation is given.

(3) Compensation is paid in case of fire, damage by uprooting of trees or damage by rock fall.

Third party motor insurance:

Third party motor policy In case someone else’s car is damaged by someone else’s car (motorcycle), it is called Third party motor insurance. Third party motor insurance is a compulsory policy in Bangladesh.

Third party motor insurance; Insured is First party Insurer is Second party, to whom Claim is being paid is called Third party.        

Third party insurance is said to be indemnified to the 3rd person.

Benefits:       

         The insurance company/insurer pays the compensation on behalf of the insured if the insured’s car causes damage to others. 

What is re-insurance and what are its benefits?

If any insured contents or property is re-insured by the insurer, it is called reinsurance or reinsurance. Reinsurance business is spread worldwide on an international basis.

As we know, the insurance company bears the risk of the insured contents (life) or property, but it does not bear all the risks alone. When he feels that he will take as much risk as he can bear, he enters into a reinsurance contract with another reinsurance company.

Therefore, reinsurance is a part of the insurance risk accepted by an insurance company (up to the retention limit) and the remaining part is assigned or transferred to another insurance company. Here the insurance company that transfers its excess risk is called the ceding company and the insurance company that accepts the risk is called the reinsurance company.

Irrespective of the size of the insurance company or the fund, most insurance companies have to take advantage of reinsurance, some of the reasons for which are mentioned below:

A. An insurance company has very limited assets at the beginning of its business, yet the insurance company has to bear unlimited risk even with these limited assets. Insurance companies are only able to bear this unlimited risk through reinsurance.

b. Insurers/insurance companies may limit their own liability.

c. Insurance helps the company to cover the financial loss within its capacity.

d. Reinsurance helps the insurance company to keep its business stable.

e. Reinsurance helps small insurance companies enter and compete in larger insurance markets.

f. Reinsurance also helps insurance companies gain experience in risk management and risk management.

Process of payment of premium

Premium Payment Process

A) Pay Premium Online

1. Internet Banking
2. SBI Life Website
3. Visa BillPay
4. ‘Easy Access’ Mobile Application
5. e-Wallet
6. Credit Card Online Standing Instruction or Banker’s Order

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