Life Insurers do allow certain alterations in the policy which would not impact the financial features but could alter the main structure of the product. Alterations are made for a fee charged by the insurer. Alterations in policy can be as follows:
The Insurer may also provide options. Options sometimes enhance the financial value of the policy while some options may be non-financial like change in ownership and change in nominee. Some options include:
These features in the product allow more suitability and flexibility in choice to the Insured. For example; an Insured who has been paying premium on monthly basis can now afford to pay premium on a yearly basis and hence saves in premium payment. An insured who has not paid premium within the grace period is allowed to pay late premium. An Insured may want to change the type of product from whole life plan to endowment plan and he is allowed to do so. The insured may partially surrender the policy according to the option provided by the insurer. In such a manner, the product becomes viable and consumer friendly too.
- Change in the term of the policy: Usually an increase in policy term is not allowed as it can lead to selection of policies that are disadvantageous to the insurance company. However a reduction in policy term is possible.
- Increase in Sum Assured is allowed to a certain extent with medical examination.
- Change in the type of plan from say whole life plans to term plans are sometimes allowed
- A without profit contract could be made into a with profit contract.
- Premium payments can be made from monthly mode to yearly mode.
The Insurer may also provide options. Options sometimes enhance the financial value of the policy while some options may be non-financial like change in ownership and change in nominee. Some options include:
- To be able to partially surrender the policy
- Backdating of policy at the inception of the contract
- Increase in the grace period for premium payments
- To change the owner (not the life assured) of the policy
- Conversion of a convertible term life insurance plan into an endowment contract or a whole life assurance
These features in the product allow more suitability and flexibility in choice to the Insured. For example; an Insured who has been paying premium on monthly basis can now afford to pay premium on a yearly basis and hence saves in premium payment. An insured who has not paid premium within the grace period is allowed to pay late premium. An Insured may want to change the type of product from whole life plan to endowment plan and he is allowed to do so. The insured may partially surrender the policy according to the option provided by the insurer. In such a manner, the product becomes viable and consumer friendly too.
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