You can also sell life insurance if needed. You can also sell life insurance if needed: You can get more money by selling the policy than surrendering it, but it is better to take a loan.

These days, the trend of selling insurance policies to a third party or bank is increasing. In such a situation, a big question arises whether it is better to surrender life insurance in case of financial crisis or sell your policy to a third party. Actually, life insurance policy is an agreement between the insurance company and the policy holder.

Here it is necessary for the nominee to have a close relationship or blood relation with the policy holder. But there are instances where the lender or the policy buyer is being recorded as the nominee/beneficiary. But in such a case, always keep in mind that life insurance policy is necessary for your financial security. Let us understand what are the advantages and disadvantages of surrendering a life insurance policy or selling it to a third party? Come, let us understand this with simple questions and answers….

Question: Sell or surrender the policy? Answer: Generally, it is better to sell the policy rather than the surrender value, as you may end up with a little more money. In such a situation, the insurance company gets ready to include the name of a person in the nominee who is not a relative of the policy holder. This is called assignment. This means that you and your family will not have any right on the policy. The buyer of the policy will pay the further premium and receive the maturity amount.

In some cases, insurance companies pay death claim and other benefits as per the agreement. It depends on the terms and conditions of the companies. In most cases, the nominee does not even realize that his name has been removed from the policy.

Question: Are there any other options? Answer: If there is a need for money, endowment and ULIP policy holders can get a loan up to 80-90% of the surrender value of the policy from the insurance company. This ratio may vary in different companies and policies. However, loan interest has to be paid. Insurance will continue in this. All rights like bonus, accidental death, nominee rights etc. also continue.

Question: To whom can we sell the policy? Answer: Purchasing of life insurance policy is in trend in the country. Many companies do this. You can know the names of such companies. But to avoid fraud, take your insurance company into confidence.

Question: What will be its process? Answer: The normal procedure for changing the nominee will apply. The insurance company guides it. The policy becomes pledged once the overdraft is granted by the institution purchasing the policy. The original policy will be in the possession of the bond buyer.

Question: In whose account will the money go when the insurance matures? Answer: After the policy matures, the insurance company will transfer the money as per the terms of assignment. In case of absolute assignment, this amount will go directly into the account of the insurance buyer. Since the nominee does not have the original insurance policy bond, he cannot make a claim with the insurance company.

Question: What is the legal ground for selling this type of policy in the country? Answer: LIC considered such policy sales as unauthorized. Many years ago the company went to the Bombay High Court on this issue, where the decision was given by Insure Policy Plus Services (India) Pvt. Ltd. Came in favor of. Then LIC went to the Supreme Court. Here also his appeal was rejected. On this basis one is allowed to sell one’s insurance policy to a third party.