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NIA Life Agent study materials
NIA Life Agent study resources

NIA Life Agent: Policy Documentation, Premium Payment and Policy Servicing

NIA Life Agent · Work through your exam, one topic at a time.

All guide sections

Policy Documentation, Premium Payment and Policy Servicing

Expect questions on which document does what, when risk begins, and how a policy behaves through grace, lapse, revival, paid-up and surrender.

Documents and their legal role

  • Prospectus and benefit illustration: mandatory disclosure of features, charges and the prescribed higher and lower gross yield scenarios.
  • Proposal form: the basis of the contract; the declaration binds the proposer.
  • Policy document: schedule, standard and special provisions, endorsements. The free-look period (30 days from receipt of the document under the 2024 policyholder protection regulations) starts on receipt, not on issue.
  • Premium receipt and renewal notice: evidence of payment. Section 64VB of the Insurance Act, 1938 - no risk is assumed until the premium is received in advance by the insurer.

Servicing events

  • Modes: annual, half-yearly, quarterly, monthly, ECS/auto-debit, with mode loadings.
  • Grace period: 30 days for modes other than monthly; 15 days for monthly. Cover continues, but unpaid premium is deducted from a claim.
  • Lapse and revival: revival within the window (typically up to five years for conventional plans) needs arrears with interest plus a health declaration or fresh medicals for large sums.
  • Paid-up value = sum assured × (premiums paid ÷ premiums payable); bonuses attach on the reduced sum assured.
  • Surrender and loans: available once the policy acquires surrender value; a loan is granted against that value.
  • Alterations: address, name, mode, nomination, reduction of premium - not an increase in sum assured without fresh underwriting.

Worked example

₹10,00,000 sum assured, 20-year endowment, premium discontinued after 6 years. Paid-up value = 10,00,000 × 6/20 = ₹3,00,000, payable at maturity with attaching bonuses. Reviving within the window restores full benefits, but the lapsed months carried no cover.

Traps

Premiums paid to an agent personally do not bind the insurer until received by it. Grace is not a free holiday. Revival is never automatic, and lapse does not forfeit money when paid-up value exists.