• Tuesday, November 28, 2023
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Your life insurance policy is worth some money…loan seekers need it


 If you have got a life insurance policy that is worth a huge sum of money at maturity, then you have an asset that loan seekers and mortgage buyers are looking for. Because lenders of these fund what assurance for repayment, you are the bride being sought for by the loan and mortgage seekers to be able to access this facility.

Now therefore, you have a huge assets in your hand that you can trade for money to those who want need them. Rather than, think that your policy will only be relevant when you die, it can fetch you money now and still remain valid at the point of maturity.

Godwin Chilekezi, a chartered insurer, said insurance has a lot of advantages that is inexhaustible, but has not performed its functions very well as a result of lack of interwoven information among financial services providers. “If banks, insurance, lending houses and financial services institutions can realize the importance of one another in an economy like what is found in other markets, each of their individual products can complement the other.”

Chilekezi noted that there are so many benefits accruable in a life insurance, which gives the policy holder the rights to make money on his policy before the maturity date. Life insurance can be used to access loan facility or acquire mortgage. In this case somebody can actually transfer his insurance policy to another person who needs it to access a loan facility or mortgage acquisition.

To really benefit from the hidden values in life insurance, get closer to your insurance company, lender, broker or financial adviser and you will be amazed what can be possible.

Sunita Abraham, finance expert writing on transfer of insurance policy notes that a person can transfer his rights, title and interest in a life insurance policy to another by assigning it to him. This is usually done in order to provide security for a loan or secure the financial interest of the other person. After the insurance policy is assigned, the assignee is set to receive the benefits from it.

Below is a list of requirements and procedures for concluding a life insurance transfer: 

Assignment form: The policyholder has to send the assignment form or application to the insurance company providing details of the policy that has to be assigned and those of the assignee. These include the name, address, contact information, signature of the assignee, and his relationship with the policyholder 

and the reason for assignment.

Documents: Along with the form, the policyholder should send the original policy and KYC documents of the assignee. It should be signed by at least one witness, whose name and details should be provided in the form.

Processing: Once the documents are submitted to the insurance company, the latter will take 10-15 working days to process the request and make the necessary changes in its records.

Endorsement: The assignment can be endorsed on the policy document, or a notarised assignment deed on a stamp paper confirming that it can be executed. The assignment can be revoked at a later date by the policyholder. In such a case, a ‘no-objection certificate’ has to be submitted by the assignee.

Points to note: 

• Assignment in a policy takes precedence over nomination.

•A nominee will receive the benefits of an insurance policy only on the death of the insured. An assignee will get the ones that are paid out even during the lifetime of the insured.

• Endorsing the assignment on the policy document can save the hassle of getting a stamp paper for executing the assignment deed.