What does it do?
This policy is specially designed to cover loan liability. If anything happens to the insured member, the insurance company pays sum assured equal to the outstanding loan amount to the nominee of the insured. The sum assured is calculated on the basis of loan schedule.
Policyholder can choose a sum assured and interest rate closest to the loan amount and interest. The choice of available interest rates includes 6, 8, 10, 12, 14, 16, 18 and 20 per cent. For example, if policyholder has taken a loan at 10.25 per cent, he may either select 10 or 12 per cent as rate of interest to prepare loan schedule under this plan. Similarly, the policyholder can select the sum assured nearest to the loan amount in multiple of Rs 50,000.
The policy can be surrendered and surrender value will be calculated on the basis of predefined formula.
The policy doesn’t offer any survival or maturity value.
Pros
The plan offers rebate on high sum assured.
Taxation benefits as per Section 80C.
Cons
Premium can be paid in single installment only.
