The death benefit paid to a nominee continues to be tax-free in India. However, it is not clear after fulfilling the claim process for nominees (if they are also non- resident Indians, or NRIs), what would be the problem in settling the claim? Second, whether the death benefit paid to a nominee would be taxable or tax-free in the hands of a nominee having NRI status.
—Name withheld on request
Policy taken in India would settle claims in Indian rupees only. So, to avail of the claim, the nominee should have an Indian bank account. As long as the nominee can fulfil these criteria, the claims process is the same for residents and NRIs. Death claim benefit is tax-free in India, even in the hands of an NRI nominee.
I am a 24-year-old student. I purchased a health insurance policy from an insurance aggregator and have to pay six instalments in a year for the same. I have paid one instalment as of now. However, I feel that I don’t need this policy anymore since I have other health insurance policies. Can I stop the rest of the payments? Will it hamper my credit score? If so, is there any other way I can cancel my policy without hurting my credit score?
—Devyanshu Gupta
Insurance policies contain a free-look period clause wherein you can cancel your policy, if this does not meet your needs.
The standard free look period is 15 days. In some cases, this could extend to 30 days. The latter is applicable in case of electronic policies or policies bought through distant mode.
You would receive a refund of 100% of the premium amount paid, subject to deductions for costs incurred by the insurer on medical underwriting and proportionate risk premium for the days for which policy has been in force.
If you do not cancel your policy, and stop paying the instalments, then it would impact your credit score. Most health plans have a built-in installment mode of payment.
For personal policies, I recommend opting for the installment facility offered by the policy itself, rather than opting for the buy now pay later option, which is akin to taking a personal loan to buy health insurance.
Abhishek Bondia is principal officer and managing director, SecureNow.in.
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