It would be really great in case people could turn the time back and make a huge amount of money by investing in the correct financial products. The person can’t go back in time when it comes to investments, but you can surely purchase certain life insurance plans with a back date.
Back-dating of a life insurance policy is legal as well as standard practice in the insurance sector. Therefore, new insurance products introduced by insurers in the past 1-2 months can be purchased with any date in the financial year starting 1 April 2013. Below are some important facts about back-dating policy:
This option is available only in money-back and endowment plans. Before opting for any product, perform life insurance comparison always and know whether this option is available with the plan or not. Insurers charge the certain percentage of interest on these plans based on various factors. Generally, interest is not charged in case the plan is backdated by less than a month.
Back-dating of life insurance in India decreases the policy tenure, but the customer also ends up giving an additional premium. The next premium becomes due faster.
This feature proves beneficial under certain circumstances. In case a taxpayer requires meeting his limit of Section 80C through a term insurance plan this year, decides to pay the premium on a quarterly or monthly basis from next year onwards. Due to this feature, the maturity of life insurance coincides with important dates like birthday, wedding anniversary etc.
Generally, life insurance companies in India will either use customer’s actual age or the age he is nearest to depends on the birth date he is closest to.
The policyholder is charged around 10 percent interest on the premium amount he or she pays for the back-dated policy. The customer is charged a 10 percent interest annually on a pro-rata basis if the back date is more than one month away. Therefore, those who want to back-date a policy by around three months should ready to pay an interest of nearly 2.5 percent.
In some cases, insured backdate life insurance in India by certain months to help policyholder get the lowest rate allowed for that age. But, you also need to understand that insured will have to pay the premiums for the months insured by backdating. For more information, check life insurance reviews for backdating feature and then take a right decision.