Team Turtlemint, Author at Turtlemint

World Cancer day – Taking the Cancer fight head-on

February 4, 2019May 12, 2021 Team Turtlemint

Cancer is one of the leading causes of death in India. According to a report by National Institute for Cancer Prevention and Research (NICPR), 2.25 million people are currently living with the disease and risk of developing cancer before the age of 75 is 9.81% for males and 9.42% for females. Yet, in spite of these alarming statistics, doctors and researchers in India and across the world opine that incidence of cancer can drop gradually provided a holistic approach is taken towards this disease that includes prevention, early detection, and treatment.

What are the major reasons for cancer?

Let us first find out how cancer is caused. The dreaded disease refers to the condition when cells of the body keep dividing abnormally due to certain changes caused to the genes. These genetic changes can be inherited or caused by damage to DNA through external factors like tobacco, alcohol, radiation and internal ones like age, obesity, hormones.

Can cancer be prevented?

Yes. According to the National Cancer Institute, USA, there are 100 types of cancers and most of them can be prevented if we pay attention to the following:

Say NO to tobacco in any form
Maintain a healthy lifestyle through a balanced diet and proper exercise
Stay protected by taking required vaccinations and having safe sex

How can cancer be detected and treated?

Cancer can be detected early if we pay attention to some warning signs like unusual bleeding or discharge from any point in the body, sudden weight loss and appetite loss, incessant cough or sudden change of voice, chronic indigestion, a sore that refuses to heal, change in bladder or bowel habits, unusual lumps on the body. Consulting a specialist is of paramount importance once any of these signs sets in.

Next enters the role of treatment. Surgery, chemotherapy, radiation therapy or a combination of these can be used to treat a cancer patient. When detected at an early stage, cancer can be cured, with the patient than having a normal life expectancy. However, this treatment comes at a very high price; the financial strain being the primary cause for trauma in the patient. Herein lies the need for insurance.

What are the insurance options available?

Cancer insurance policies offer financial assistance to cancer patients and thereby help to mitigate both mental and financial trauma substantially. There are 3 options for taking cancer insurance.

Stand-alone cancer policy – There is still no evidence to suggest that a particular person will/will not get afflicted by cancer in the future. The incidence of cancer is unpredictable. Hence, it makes perfect sense to opt for a cancer policy early in life. This policy covers costs related to cancer diagnosis and treatment and the pay-out is given as a lump sum. A few insurance companies offer cancer policies that cover all stages of major types of cancer and can be purchased both online and offline.
Critical illness policy – This policy covers some major illnesses like stroke, renal failure, cardiac arrests, paralysis, etc, with cancer also constituting one of them. Such policies cover a few types of cancer at the advanced stage only and can be purchased online or offline as individual policies. This policy too should be opted for at an early age when the risk level is less. The biggest advantage of this policy is that it covers many other illnesses apart from cancer for the same investment.
Critical illness rider – A critical illness rider can be purchased with existing health or life insurance policy. It is cheaper but does not cover cancer at the early stage.

Is there a support system for cancer patients?

The diagnosis of cancer can seem like a bolt of lightning that destroys the very will to live. Realizing the extent of fear and trauma that cancer instills, many NGOs, hospitals and support groups are coming forward to help bolster the patient’s courage and improve his quality of life while the treatment is in progress. Counseling sessions are held where patients and their family members are motivated to overcome the challenges. Cancer survivors speak about their experiences and how they have effectively vanquished the disease. Organizations like the Tata Trust are working to build awareness around substances that increase the risk of cancer. Some hospitals are joining hands with celebrity chefs to come up with nutritious and tasty meal options for cancer-afflicted children.

The goal of all these valiant measures is to send a very important message – that getting scared and losing faith is not the way to fight cancer. The only option is to be prepared – mentally, physically and financially – and never give the disease the upper hand. The fight is on; and may the musketeer always win.

Read more about Benefits of critical illness policy

What are the returns which you can get from your insurance policies?

January 24, 2019May 12, 2021 Team Turtlemint

When it comes to buying insurance, many of you first demand to know the returns which you can get from your insurance plans. After all, you are investing your hard-earned money in buying an insurance plan so expecting a return is justified, right? Wrong! Insurance plans are aimed at providing you financial protection from possible contingencies. Their objective is to compensate for your financial loss and provide financial security. As such, generating returns is not the primary purpose of insurance plans.

Feeling dejected? Don’t be! The story doesn’t end here. There are some insurance plans which promise returns. To know about them, let’s first understand the basic types of insurance policies.

As the above chart explains, insurance plans can be of two types – general insurance and life insurance.

General insurance plans are indemnity oriented plans. They compensate for the loss you suffer due to a covered contingency. For instance, health plans pay for the medical costs incurred if you are hospitalised. Fire insurance plans pay for the financial loss suffered due to damages caused by fires, etc. Given the nature of general insurance plans, there is no element of return. The plans simply pay for the financial loss and don’t provide any return if there is no contingency at the end of the term.

Life insurance plans, however, are a different concept altogether. These plans do provide you with some form of return based on the type of plan that you choose. There are savings oriented plans which aim to create wealth. These plans promise you returns along with insurance coverage. Let’s understand the plans which promise returns and the types of returns that you can get –

Plans which provide returns

These are the three main types of life insurance plans which promise something extra on your investments. Now let us see the returns which are promised under these plans –

Bonus – participating endowment plans and almost all money-back plans promise bonus participation. When the insurance company earns a profit in a financial year, a major part of the profit earned is distributed among policyholders in the form of a bonus. A bonus is declared as a percentage of the sum assured and is added to the policy benefits. The declaration might be on a simple interest or compound interest basis. The rate depends on the company’s profit experience and is not fixed. Although the bonus is added every year the company makes a profit, when the policy benefits are paid on death or maturity, an interim bonus and/or a terminal bonus might also be paid. Bonus declarations help in increasing the policy benefits and provide a return on your investments
Guaranteed additions – another form of returns promised by endowment and money back plans is guaranteed additions. These additions have a fixed rate and are added for a specific period. Guaranteed additions might be allowed even if the policy is non-participating, i.e. it does not earn a bonus.
Loyalty additions – loyalty additions are those which are awarded if the policyholder continues the policy for a long tenure of 10 or 15 years. These additions, too, have a fixed rate and do not need the policy to be participating in nature
Market-linked returns – market-linked returns are allowed only in ULIPs, not in traditional endowment or money back plans. Under ULIPs, the premiums you pay are invested in the market and grow as per market returns. ULIPs are, therefore, investment-oriented insurance plans whose main aim is to yield returns. You can get inflation-adjusted returns if you choose ULIPs for investments.

If you are looking to avail returns from your insurance policies, choose ULIPs or endowment and money back plans. However, a term insurance plan should not be overlooked. Though the plan doesn’t provide returns, it provides financial security for your family in case of your untimely demise. So, make your insurance plans earn returns for you but don’t forget that they are primarily designed to provide financial security. So, first, secure your finances through various general and term insurance plans and then look for returns.

Personal accident insurance – Standalone or add-on rider, which is better?

January 14, 2019May 12, 2021 Team Turtlemint

Accidents have become quite common whether they occur on roads or anywhere else. Severe accidents might result in death or disabilities and cause a financial loss. These financial losses might prove to be a financial strain on you and your family which is why a personal accident insurance cover is advised. You can opt for a standalone cover or choose a personal accident rider with various insurance plans. Have you wondered which alternative is a better choice?

Before discussing on the better alternative, let’s first understand what personal accident insurance is all about –

What is personal accident insurance?

A personal accident insurance policy is a policy which covers the risk of accidental death and disablement. The policy pays a benefit if you die or become disabled in an accident.

Buying personal accident cover

There are two options of buying a cover for personal accident insurance. These are as follows –

1. Through riders and add-ons

Health insurance plans and motor insurance plans allow personal accident add-ons which can be chosen with the basic policy by paying an additional premium

2. As a standalone plan

There are independent personal accident insurance plans available in the market too. You can buy an independent plan to opt for the cover.

Which option is better?

A standalone personal accident cover is always the better alternative because it provides various benefits. These benefits include the following –

– Wider coverage

Coverage under riders is limited compared to standalone personal accident plans. While riders might cover only accidental deaths and permanent total or partial disablements, standalone plans cover the following –

– Accidental death

– Permanent total disablement

– Permanent partial disablement

– Temporary total disablement

– Dismemberment

Moreover, standalone plans also provide additional coverage benefits like coverage for ambulance costs, funeral expenses, education fund for dependent children, loss of job, etc. Such coverage features are absent in riders.

– Scope of customisation

Independent plans also have the option of choosing add-ons for a more comprehensive scope of coverage. You can choose the required extensions in the policy and make your plan customised. Riders don’t allow any scope of customisation. When you choose a personal accident rider, you get the coverage which is promised in the rider, nothing more and nothing less.

– Level of sum insured

Personal accident sum insured under riders is, usually, restricted. However, in case of standalone policies, the sum insured depends on your income and you get the flexibility to choose a higher amount.

Standalone policies have these three distinct advantages over riders. But when you consider rider premiums, standalone policies are dearer. Since the coverage provided is wider in standalone plans, their premiums are higher than that of riders.

Which one to choose

Choosing the best alternative for personal accident cover depends on you. If you want a comprehensive scope of coverage with the flexibility of choosing your sum insured and additional coverage features, standalone policies are best. However, if you think that the restricted coverage under riders would be enough to fulfil your coverage requirements you can save on the premium and choose riders. So assess your requirements and then make a choice.

NCB and how to retain it in your Car Insurance Policy

January 4, 2019May 12, 2021 Team Turtlemint

Comprehensive car insurance plans provide you with innumerable benefits. Besides offering you a comprehensive scope of coverage, you get add-ons to enhance the coverage, value-added services and also attractive premium discounts. In fact, the premium discounts offered in car insurance policies can reduce the premium by more than half. No Claim Bonus (NCB) is one such way to reduce your car insurance premium. Do you know what no claim bonus is and how can you maximise its utilization? Let’s find out –

What is NCB in insurance?

Coverage under the comprehensive car insurance policy comes with a term of one year. If, during the year, you don’t make any claim in your policy you get a no claim bonus. This no claim bonus lets you claim a premium discount in the renewal premium for the next year. Moreover, if you do not make any claim in simultaneous policy years as well, the no claim bonus rate keeps increasing and offering you higher premium discounts every year.

NCB Rate

Now that you know what is NCB in insurance and that it increases every year, let’s have a look at the NCB rates. Here are the applicable rates of no claim bonus available in car insurance policies –

Period	NCB Rate
No claims in the first policy year	20%
No claims in two successive policy years	25%
No claims in three successive policy years	35%
No claims in four successive policy years	45%
No claims in five or more successive policy years	50%

NCB Retention

Though NCB allows attractive premium discounts, you lose the accumulated NCB if you make a claim in your policy. Moreover, if you sell your car, you need to transfer the accumulated NCB from your car insurance policy in your name to retain it.

Process of retention

The process to retain the NCB depends on the situation when retention is required. As stated earlier, there are two instances wherein you are required to retain your NCB –

When making a claim
When selling your car

Here is the process for each instance –

When making a claimWhen you make a claim in your policy, you lose the NCB. To retain, you can either not raise a claim or you can choose a NCB insurance add-on. Not making a claim is advised if your claim amount is small. For smaller claims, it is beneficial to pay the costs from your pockets rather than making a claim and losing the NCB discount. However, when the costs are substantial, making a claim is inevitable. In that case, having a NCB insurance add-on is advised. The add-on protects the accumulated NCB even if a claim is made under the policy. You just have to choose the NCB insurance add-on when buying or renewing your car insurance policy and pay an additional premium. If you do so, your NCB would be protected even when you make a claim.
When selling your carIf you are selling your car, you should request the insurance company for a NCB transfer. The insurance company would ask you to submit a proof of the sale of the car and then issue a NCB Certificate in your name. This certificate helps you in retaining your accumulated NCB. When you buy a new car and a new car insurance policy, you can use the certificate to claim a NCB discount in the policy’s premium. The certificate would be valid on another car insurance policy in your name.
NCB is, therefore, a great way to reduce your car insurance premiums by up to 50%. You should, therefore, be careful in retaining your policy’s NCB whether you sell your car or make a claim. NCB protect add-on is a must for protecting your accumulated NCB and earning a considerable premium discount. Make sure to choose this add-on when buying or renewing your car insurance policy. In case of selling your car, make sure to avail the NCB certificate. Protect and use your policy’s NCB and save on your premium costs.

How to choose the best car insurance company

December 25, 2018May 12, 2021 Team Turtlemint

Car insurance policies are a legal mandate and that is why almost every general insurance company offers car insurance policies. There are, in fact, more than two dozen car insurance companies in the market offering a car insurance policy for your car. Choosing the best company among so many choices is a difficult task. But this task can be simplified if you know how to choose the best car insurance company. There are some simple parameters which help you decide how you can choose the best car insurance company. These parameters are as follows –

The coverage benefits offered

Though every car insurance policy offers similar coverage features, there are some add-ons which companies build in the benefit structure. These inbuilt features enhance the coverage provided by the plan. Look for the coverage benefits in the company’s car insurance plans. If you find the benefits more inclusive than other plans, the company is offering you something extra and you should not let it go.

Value added features

Insurance companies often compete against one another by providing their customers enhanced value-added features. These value-added features make one company better than the other. The more the features available, the better is the company. For instance, many companies today have adopted technologically advanced measures to expedite claim settlements. You can upload videos and photos of the damage and get your claim intimated and processed easily. Many companies are also adopting live tracking systems to track the driving history of the vehicle. Attractive premium discounts are allowed if the history is safe and without any offences. Look for these value-added benefits when choosing the best car insurance company

Claim settlement ratio

Claim settlement ratio of an insurance company is the number of claims the company has settled in a year compared to the total number of claims made on it. A high ratio indicates that the insurance company settles most of its claims. It is, therefore, a favourable sign. So, compare different companies on their claim settlement ratios. The higher the ratio the better the company would be.

List of cashless garages

Cashless claim settlements are possible when you get your car repaired at a garage which is tied-up with the insurance company. Such a garage is called a preferred garage and the insurance company has a list of such garages. You should check this list to find out whether your preferred garage or the garage in your locality features in the preferred network list of the insurer. If it does, it would be easier for you to get cashless settlement of your car insurance claims. Moreover, the company’s network should be wide so that you can locate a preferred garage in any part of the country easily.

Premium discounts

Car insurance policies offer attractive premium discounts. These discounts help you in reducing your premium outgo to a large extent. Some common discounts which you can find include the following –

Discount for making no claims in the past policy year (s) (No claim discount)
Discount for being a member of a recognised automobile association
Discount for installing safety devices in the car
Discount for buying the policy online
Discount for choosing voluntary deductible
Discount for existing customers of the company, etc.

Though the no claim discount remains same, the rate of other discounts varies across companies. This variation is also an important parameter of choosing the best insurance company. The company which offers the highest discount would be the best as you would be saving on your premium costs.

These five points, when considered, help you in choosing the best car insurance company. Always compare car insurance companies on these parameters before buying or renewing your coverage. If you do so you would be able to find the best company which would not only give you good coverage benefits, it would also make your car insurance experience the best one.

The insurance industry has witnessed a paradigm shift. Have you embraced it?

December 14, 2018May 12, 2021 Team Turtlemint

India is a developing country which has witnessed great changes over the past decades as people’s perceptions have changed. Today, more and more women are becoming financially independent and are choosing to carve a niche for themselves in the corporate world. Start-ups are the trend for new entrepreneurs and youngsters have become financially independent as well as financially savvy. In fact, as per a study conducted by the Associated Chambers of Commerce and Industry in India (ASSOCHAM), among 1000 participants, 70% were youngsters who were single and 63% were financially independent.

The study shows that new age millennials, in the age group of 25 to 35 years are the potential customers of the insurance industry with high disposable incomes. These millennials are quite aware of the importance of insurance and are willing to invest in it. This has led to a paradigm shift among the targeted customers of insurance products. Insurance companies are also tapping into this paradigm shift by making their products more youth-oriented to appeal to modern day customers. Here’s how the insurance industry has revamped itself and its products following a generation shift in the market –

– Digitalisation of insurance

The online marketplace has become a craze among new age millennial who are not only internet-savvy but also looking for convenient ways of transactions. Digitally enhanced platforms have become the part and parcel of today’s age and insurance plans are also digitally adapting. While online plans have become the norm, companies are also developing personalised apps and digitally advanced software to help individuals buy and track their insurance portfolio online. Today, you can compare, buy, renew and also make a claim in your insurance policy online.

– Value-added features

Almost all insurance products are promising something extra to lure customers. Health plans provide health and wellness related programs, life insurance plans provide built-in additional benefits, motor insurance plans provide round the clock assistance in case of breakdowns, etc. By introducing value-added benefits, simple insurance products have become trendier and also more inclusive in terms of coverage.

– Quick claim processing

To make insurance truly appealing to customers, insurance companies have reduced the turn-around-time (TAT) in claim processing. Armed with Smartphones and mobile apps, claims can be intimated and initiated through texts, videos, images and calls. Claim processing has become easier and quicker, thanks to the quick access provided by high-speed internet.

– Technologically advanced interface

The websites of insurance companies and insurance aggregates have become technologically advanced and simple. You can calculate your premium, find the ideal coverage amount, explore the policies available and make customisations, all on a single website making it easier for you to buy an insurance plan. Premium payment gateways are also secured with multiple premium paying options which provides flexibility in paying the premium digitally.

A paradigm shift in the insurance market has made insurance companies offer the above-mentioned benefits with their products. Are you utilising these benefits to make your insurance experience more enriched?

Let us pledge to provide quality healthcare to disabled person

December 3, 2018May 12, 2021 Team Turtlemint

December 3^rd is celebrated as the International Day of Disabled Person which is promoted by the United Nations. This day promotes the rights and well-being of disabled persons across the globe. But is one day sufficient for recognising the disabled in our society?

As per the Census of 2011 and later updated in 2016, about 2.21% of the total Indian population, which comes to 2.68 crore individuals, are disabled. Out of the disabled population, only 0.81 crore individuals live in the urban areas while the major populace lives in the rural areas. Have a look –

(Source: https://wecapable.com/disabled-population-india-data/).

With so many disabled in India, especially in the rural area, the question arises – do the disabled get proper healthcare facilities?

Disability can be mental, accidental or congenital. Whatever be the nature, people with disabilities face higher healthcare costs than normal individuals. Given the rising costs of medicine, affording quality healthcare becomes very difficult for such individuals and their families. As such, the need for a health insurance plan arises. But does a health insurance plan cover disabled individuals?

Yes, it does. There are various types of Government sponsored health insurance schemes as well as health insurance schemes offered by private insurance companies which cater to the healthcare needs of the disabled. Many don’t know about these schemes which lead to a lack of good healthcare facilities for the disabled. So, here’s a look at the available health insurance schemes –

Swavlamban Health Insurance Scheme – This scheme has been implemented through the National Institutes and Composite Regional Centres for Persons with Disabilities under the Department of Education and Ministry of Social Justice and Empowerment. The scheme allows the facility of cashless hospitalisation for individuals having an income of up to INR 3 lakhs annually.
Nirmaya Health Insurance Scheme – This scheme covers dental check-ups, pathology, corrective surgeries, therapies, etc. up to INR 1 lakh. Individuals affected with cerebral palsy, autism, mental retardation or any other disability can buy this policy. Pre-entrance medical check-ups are not required and pre-existing illnesses are covered from the first day itself. The premium is a flat rate and is INR 250 if the family income is up to INR 15, 000 and INR 500 for higher incomes.
Health plans by private companies – almost all health insurance companies allow coverage for people suffering from disabilities. However, before allowing coverage, the extent of disability, present health condition, earning capacity and the family income is considered by insurers. Different disability-related documents would also have to be submitted for availing coverage. Pre-entrance medical check-ups are also required to determine the severity and extent of disability.

So, handicaps can also avail quality health care through health insurance coverage provided by both the Government as well as health insurance companies. Through a health insurance policy, disabled individuals can ensure to get good treatments for their disabilities which would help them lead a comfortable life. So, this world handicap day let’s pledge to educate individuals about available health plans for the disabled so that affordable quality healthcare can be made available to the disabled.

All you need to know about the Ayushman Bharat Scheme

November 23, 2018May 12, 2021 Team Turtlemint

It’s been more than a month when our honourable Prime Minister, Narendra Modi, launched the Ayushman Bharat scheme on 23^rd September, 2018. The scheme has been renamed to PM Jan Arogya Yojana (PMJAY) and it is the largest health scheme ever funded by a Government. Though the scheme has become operational, many of you are still unaware about the details of the scheme. So, here is a brief look into the main features of the scheme which you should know about –

Objective of the scheme

This health scheme aims to pay for the hospitalisation expenses of the poor population of India which is not able to avail basic healthcare due to lack of funds.

Who is covered?

The scheme covers those families who have been defined as ‘poor and vulnerable’ as per the Rural Development Ministry’s Socio Economic Caste Census which was published in 2011 and was later updated in 2015. About 10.74 crore named families are covered under the scheme covering approximately 50 crore Indians who comprise of about 40% of the total population.

What is covered under PMJAY?

Hospitalisation expenses are covered on a cashless basis for all types of secondary and tertiary treatments. The hospitals would not charge the patients any money and treat them on a cashless basis. OPD expenses, however, are not covered. The coverage amount is INR 5 lakhs per family on a floater basis and there is no restriction on the number of members who can be covered under a single floater plan.

How would the claim be settled?

The Central and State Government would bear the medical expenses on a ratio of 60:40. The costs incurred on treatments would be paid by the Central and State Government directly to the hospital. The scheme has fixed 1350 medical packages across 23 specialities and the hospitals are bound to adhere to these costs. They cannot charge more than the fixed costs on a particular treatment.

How does the scheme work?

The scheme first identified the families which were to be covered. Then, a letter was sent to such families which contained a unique QR code. To avail cashless treatments, the beneficiary of the named family should go to a hospital and approach a designated Aarogya Mitra appointed at the hospital. The QR code sent in the letter should then be matched with the scheme’s IT database. The member should also present an identification proof to authenticate his identity. Once the authentication is done, every covered member, named in the scheme, would get a ‘Golden card’ which would serve as a health card for cashless treatments.

Hospitals that are providing coverage under the scheme

The scheme would be applicable at all public hospitals and empanelled private ones. Private hospitals can be empanelled if they apply with the Government and have a minimum of 10 beds.

The Ayushman Bharat scheme is a step in the right direction for a country where a majority of the population lives below the poverty line. Though the scheme has become operational, it faces some hurdles and challenges which would smoothen with time. Till then, the backward section of India can look towards better health care facilities at their disposal.

To know more about the scheme you can visit https://www.abnhpm.gov.in/

Read more about types of health insurance plans

Know all about tax in case you surrender or terminate your life insurance policy

November 10, 2018May 3, 2022 Team Turtlemint

A life insurance policy is a long term contract. You buy the policy with a term ranging anywhere from 5 years to 35 years. The policy is intangible and pays a benefit either in case of maturity or death during the term of the plan. However, many times than not, you want to give up your policy before its stipulated tenure. Though you can give up your policy, is there any tax implication which you should know? Yes, in case you surrender or terminate your life insurance policy before its stipulated tenure, there might be a tax implication. Let’s understand what these implications are and how they work but first, a word on surrender of life insurance plans –

What is surrendering or terminating a life insurance plan?

Surrendering your life insurance policy means giving up the plan before the stipulated time and redeeming the benefits applicable as on that date. Say, if you have a plan for 10 years and you want to end the plan and avail any benefit after the first 5 years itself, it is called surrendering the policy. The value which you get on such surrender is called surrender value.

Taxation of surrender value

The surrender value of a life insurance policy is allowed as a tax-free benefit only if it fulfils the below-mentioned conditions –

If it is a traditional plan like endowment, money back, etc., the surrender value would be tax-free if the premiums of the first two years have been fully paid and then the plan is surrendered
If it is a single premium traditional plan, the surrender value would be tax-free if the plan is surrendered after the completion of the first two years
In case of unit linked insurance plans, the surrender value would be tax-free if the plan is surrendered after the completion of the first five years of the plan

Moreover, the period when the policy was issued also determines the taxability of surrender value. Here’s how –

If the policy was issued any time before 31^st March 2003, the surrender value would be completely tax-free
If the policy was issued between 1^st April, 2003 and 31^st March 2012, the surrender value would be tax-free only if the sum assured is more than 5 times the amount of annual premium
If the policy was issued on or any time after 1^st April 2012, the surrender value would be tax-free only if the sum assured is more than 10 times the annual premium amount
If the policy was issued on or after 1^st April, 2013 and if the insured is disabled according to the definition provided under Section 80U or suffers from an ailment listed under Section 80DDB, the surrender value would be tax-free only if the sum assured is more than 6.67 times the annual premium

If the surrender value meets the above listed criteria, the amount received on surrendering the policy would be tax-free in the hands of the policyholder.

However, if the surrender value does not qualify on the above-listed parameters, there would be dual tax implications. These implications would be as follows –

The premium exemption claimed under Section 80C in the years when the premiums were paid would be reversed. The tax exemptions claimed in the years when premiums were exempted would be not applicable any more. You would, therefore, have to pay additional tax on the exemptions claimed in earlier years
The surrender value received would not be exempted under Section 10 (10D). The amount that you receive as surrender value would be treated as ‘Income from other sources’ and taxed at your existing tax bracket.

Surrender value in case of pension plans

If you have a pension plan and you surrender it, the surrender value would be completely taxable under the head ‘Income from other sources’. There are no conditions which make the surrender value tax-free. Moreover, the premium exemption claimed under Section 80CCC for pension plans would also be reversed. You would have to pay additional tax for tax exemptions availed on pension plan premiums if the plan is surrendered any time before the stipulated maturity date.

So, if you are thinking of surrendering your life insurance policy, first understand the tax implications associated with surrender. Only if your surrender value qualifies for tax exemption should you surrender the plan otherwise you would incur dual tax implications.

Read more about tax benefits of life insurance policy

Read more about TDS on life insurance policies