If one has multiple accident insurance covers, how can the claim be made?

A friend passed away in a road accident recently. He had accident insurance policies from HDFC Ergo of Rs 25 lakh and Rs 10 lakh each in PM Sadak Bima Yojana and PM Jeevan Bima Yojana and also on his debit and credit cards. On contacting the bank, we were told the claim can be taken from only one policy from either the insurance company or bank. Is this right?

Yashish Dahiya, Co-founder & Group CEO, Policybazaar.com replies: It is perfectly legal to buy and hold more than one policy. The beneficiary can rightfully claim from all the life insurance policies he holds in the unfortunate event of death. Multiple policies provide an extra layer of protection that a single plan might not necessarily provide. Keeping in mind that you’ve disclosed all the material facts and the combined sum assured should not exceed your human life value, you will be able to claim the sum assured from all the policies. However, the payment of sum assured will be in accordance of the terms and conditions.

I am 62. I bought a 10-year regular plan of UTI Ulip 71 in 1998 at an annual premium of Rs 4,500. The policy matured in 2008. However, I left the units as it is. I plan to redeem in the financial year 2020-21. Its target amount is Rs 45,000 and current value will be Rs 2.56 lakh. I bought ICICI Prudential Lifetime openended regular plan (Maximiser Plan) in 2005, at an annual premium of Rs 18,000, and with initial death benefit of Rs 1 lakh. Till date, I have given 16 premiums (Rs 2.88 lakh) and the current market value of units is Rs 5.25 lakh. Is the redeemable value of the units exempt from tax under Section 10(10D) in both cases? If it is taxable, how do I calculate the tax on it?

Amit Maheshwari, Partner, AKM Global replies: Investments in Ulips can be used to claim tax deduction under Section 80C till a limit of Rs 1.5 lakh. Apart from this, the returns from the policy are exempt from taxation on maturity under Section 10 (10D). In view of this, redemption of units of 10-year regular plan of UTI Ulip 71 in 1998 shall be exempt from tax. Similarly, the Maximiser Fund is also a Ulip and proceeds from this as well would also be exempt u/s 10(10D) on redemption.

Source: The Economic Times

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