Category: Insurance Interview question

Generally, every insurance company provides a grace period of 10-15 days to the insurance policyholders if they fail to pay the premium before the due date. However, if the policyholders don’t pay the premium even in the grace period, their policy will lapse. After that duration, if the policyholders want to revive their policy, they would have to pay the due premium and interest charged on the premium since the due date to revive the policy. Different insurance companies have different norms for reviving their lapse policies.

On the other hand, if the policyholder paid premium payments for a substantial duration, i.e., generally more than 2-3 years, and then they stop paying the premium, the insurance company will deduct the premium from the accumulated sum. It continues till there is an available fund. After that, the company terminates the policy. This is common practice with permanent life insurance policies.

If you are an insurance policyholder, then you can follow the steps given below to claim an insurance policy:

• First, you have to fill up the insurance claim form.
• After that, contact the financial advisor from whom you have purchased the insurance policy.
• After completing the above step, you must provide the required documents, such as the payment receipt and other documents asked by the insurance company.
• After verifying the documents, you have to pay the deemed fine, and you will get your insurance claim within certain days. It is generally seven to ten days from your claiming date.

It depends on the situation. If you are an insurance policyholder and it is not long after you have bought the policy, you can replace the policy with another policy if you see better returns. But if you have purchased that policy long ago and already paid many premiums, then it is not advisable as you will lose all the benefits of the previous policy. Also, the premium will go high as you grow older. Another issue you will see in this case is that the two-year contestability period will also begin again.

The term “Loss Payee” specifies a party, an institution, or a person that receives the insurance payment in the case of the loss of a vehicle or property they own. In the event of a loss, the payment is made under the policy concerning the insured, and it would go to the third party rather than to the beneficiary of the same.

It acts as a guard for the lender to protect it against unpaid loans. For example, suppose you have bought a car on loan and have car insurance. So, if your car would be crashed within the loan’s payment duration, the money would go to the bank from where you have taken a car loan rather than your account.

The paid value is an amount when the insurance policyholder stops paying the premiums after a specific duration but does not withdraw the amount. The policyholder gets the amount at the end of the term. In this case, the insurance company provides an assured amount but is reduced proportionally according to the time when the policyholder has stopped paying the premium.

The deduction from the matured amount depends on how soon before the maturity period that person has requested the paid value. In other words, we can say that when a person who has purchased insurance stops paying premiums after a specific duration, the insurance policy remains active but with a lower assured amount. This reduced amount is called paid value or paid-up value.

The term Surrender Value specifies an amount the policyholder will get from the life insurance company if they decide to exit the policy before maturity. Eventually, it is a loss for the policyholders because they don’t fulfill the insurance company’s criteria. Some other names of surrender value are surrender cash value or, in the case of annuities, called annuity surrender value.

For example, suppose you have paid 15000 rupees (5000 per year x 3) in the initial three years for a sum assured of 1.5 lakh rupees, and you decide to exit the policy before maturity, so the minimum surrender value you can get is 30% of 10000, which is 3000 rupees.

Following is the list of the most common types of Insurance:

• Life insurance
• Medical and Health Insurance
• Personal accidental Insurance
• Travel insurance
• Retirement annuity insurance
• House and property insurance
• Investment-linked Insurance etc.

Co-insurance specifies a policy usually offered by health insurance companies. In this policy, the policyholder has to share the coverage with the insurance policy in a percentage of the policy value after paying the deductible or co-payment. Usually, it is an 80% and 20% split where the policyholder has to pay 20% while the insurance company pays 80% of the covered amount.

For example, suppose you have a health insurance policy for 120000 rupees, and the deductible amount is 20000. So after paying the deductible, the remaining amount is 100000, and the co-insurance is 80/20. You will have to pay 20000 out of your pocket, and the insurance company will pay the remaining 80000.

Travel insurance is one of the most important things you should buy if you travel with your family, especially abroad. It is important while traveling abroad because it covers several risks. For example, medical risks, travel risks, and also flight disruptions.

The following list specifies the main reasons to buy travel insurance:

Travel insurance covers against general risks of travel

The biggest advantage of travel insurance is that it covers risks during travel such as loss of passport and personal belonging cover, loss of checked-in baggage, etc. It ensures an additional layer of protection against financial loss. For example, if your flight is canceled for any reason, having travel insurance will give you compensation up to a particular limit as per coverage terms & conditions. Without travel insurance, it may be a very costly affair for you.

It covers medical emergencies during traveling.

A travel insurance policy covers the cost of medical treatment up to a specific limit. If you face any medical emergencies during traveling, the insurance company will reimburse the medical or accident treatment costs up to a particular mentioned limit. Insurance companies consist of a list of network hospitals where you can get treatment.

Travel insurance covers trip disruptions.

Suppose you face any trip disruptions that may cause you to cancel your trip or curtail your trip due to any reason. In that case, the policyholder gets coverage for canceled bookings, entire trip cancellations according to the policy, and terms & conditions against each cover.

It assists the policyholders.

The travel insurance companies provide all types of assistance in the case of any problems on your trip. You can get guidance to file your claims correctly and help you find a network hospital for treatment.

Along with these facilities, the travel insurance assists in losing your baggage, belongings, and money, losing your passport, personal liability, delayed baggage, travel delays, hijacking, repatriation, etc.

In Insurance, the term “Annuity” specifies a policy issued by the insurance company to promise the policyholder a fixed income for the lifetime. It is a fixed amount of money that the policyholder gets each year for the rest of their life. According to this contract between the policyholder and the insurance company, the insurance company has to pay you either immediately or in the future after a certain period.

The policyholders get this payment monthly or quarterly. This is the best insurance policy for supplementing income after retirement to help you handle some of the basic living costs.