New Delhi: The Life Insurance Corp of India (LIC) has warned policyholders about businesses seeking to buy their policies, instead of the usual surrender process. In a social media post, LIC stated that the country’s largest life insurer is not associated with entities offering such products and did not hold any responsibility or liability related to these offerings.
LIC urged policyholders to “exercise complete caution before making any decision on their policy” adding that it may affect their financial security and family risk cover. Policyholders are urged to consult LIC officials before considering any offers for the sale of their policy.
LIC also stated that it is empowered by law to decline to agree to the sale or transfer of policies, if:
It has reason to believe that this sale/ transfer/ assignment is not bone fide
It has reason to believe that this step is not in the policyholders interest
If it is not in public interest
If the sale/ transfer/ assignment is meant for the trading of insurance policies
Notice to LIC of India Policyholders#LIC pic.twitter.com/DxZkRv4W1r
— LIC India Forever (@LICIndiaForever) June 24, 2024
Difference between surrender and sale of insurance policy
Insurance policy surrender means voluntarily terminating a life insurance policy before it actually matures or before the event it is expected to cover (death in some cases) actually takes place. When you surrender your insurance policy, a certain amount is deducted from ti while the rest is paid out. Policyholders surrender the death benefit when they surrender their policy.
Companies such as Aceso Endowment Service and ValuEnable allow insurance policyholders to sell their policy and monetise it. The policy is assigned to a buyer while the seller receives an upfront return on their premiums paid as well as a portion of the death benefit. This product is called ALIP or assign your life insurance policy.
Lic has urged policyholders to conduct due diligence when considering schemes that offer to purchase their life insurance policy instead of surrendering them. Know what it means. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
