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Insurance Laws and Practices

Notes 8. Guaranteed insurability benefit
9. Extended insurance benefit.

Insurance for women

Prior to nationalization (1956), many private insurance companies would offer insurance to
female lives with some extra premium or on restrictive conditions. However, after nationalization
of life insurance, the terms under which life insurance is granted to female lives have been
reviewed from time-to-time. At present, women who work and earn an income are treated at
par with men. In other cases, a restrictive clause is imposed, only if the age of the female is up to
30 years and if she does not have an income attracting Income Tax.

Caselet Top 10 Life Insurance Myths

ife insurance is not a simple product. Even term life policies have many elements
that must be considered carefully in order to arrive at the proper type and amount
Lof coverage. But the technical aspects of life insurance are far less difficult for most
people to deal with than trying to get a handle on how much coverage they need and why.
This article will briefly examine the top 10 misconceptions surrounding life insurance and
the realities that they distort.

Myth #1: I’m Single and Don’t Have Dependents, so I Don’t Need Coverage
Even single persons need at least enough life insurance to cover the costs of personal
debts, medical and funeral bills. If you are uninsured, you may leave a legacy of unpaid
expenses for your family or executor to deal with. Plus, this can be a good way for low-
income singles to leave a legacy to a favourite charity or other cause.
Myth #2: My Life Insurance Coverage Needs Only Be Twice My Annual Salary
The amount of life insurance each person needs depends on each person’s specific situation.
There are many factors to consider. In addition to medical and funeral bills, you may need
to pay off debts such as your mortgage and provide for your family for several years.
A cash flow analysis is usually necessary in order to determine the true amount of insurance
that must be purchased - the days of computing life coverage based only on one’s income-
earning ability are long gone.

Myth #3: My Term Life Insurance Coverage at Work Is Sufficient
Maybe, maybe not. For a single person of modest means, employer-paid or provided
term coverage may actually be enough. But if you have a spouse or other dependents, or
know that you will need coverage upon your death to pay estate taxes, then additional
coverage may be necessary if the term policy does not meet the needs of the policyholder.
Myth #4: The Cost of My Premiums Will Be Deductible
Afraid not, at least in most cases. The cost of personal life insurance is never deductible unless
the policyholder is self-employed and the coverage is used as asset protection for the
business owner. Then the premiums are deductible on the Schedule C of the
Form 1040.

Contd...

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