Maturity Claims 期滿索償
A maturity claim arises when the life insured survives to the maturity date stated in the policy and the insurer must pay the maturity benefit. Endowment insurance is the classic example. Because the event is predictable, the insurer normally writes to the policyholder before the maturity date and encloses the forms needed.
The insurer usually asks for a completed discharge form and the original policy, and may ask for proof of age if age has not already been admitted. Because payment depends on the life insured being alive, it may also ask for proof of survival where the policyholder and the life insured are different people.
The amount paid is normally the sum insured plus accumulated policy dividends or other vested bonuses, less any outstanding policy loan and interest and any unpaid premiums. The policyholder may take a lump sum or use any settlement option the policy allows.
Payment must go to the person entitled to it. After an absolute assignment, the benefit belongs to the assignee. Under a collateral assignment of which the insurer has notice, the assignee is paid the outstanding debt first and the balance goes to the policyholder.
Death Claims 死亡索償
A death claim is triggered by the death of the life insured, and the claimant should notify the insurer promptly. The insurer usually asks for a claim form, a death certificate or other proof of death, and the original policy. Depending on the case, it may also ask for an attending physician's report, proof of age, or further evidence where an accidental death benefit is claimed. If there is no body, a court order presuming death is generally needed.
The insurer checks that the policy was in force at death, taking account of the grace period, the incontestability provision and the suicide exclusion. The suicide exclusion usually applies for a stated period after issue or reinstatement, commonly one year, and payment is then generally limited to the amount the policy states, such as a refund of premiums paid. A misstatement of age or sex does not normally void the policy; the benefit is adjusted to reflect the true facts.
The amount payable is normally the sum insured plus accumulated policy dividends and other bonuses, less any policy loan and interest and any unpaid premiums. If death occurs during the grace period, the insurer generally pays the benefit and deducts the premium due. Premiums already paid are not deducted.
The insurer pays a surviving beneficiary, and if the primary beneficiary has died, the contingent beneficiary takes instead. If the life insured was also the policyholder and no beneficiary survives, the money falls into the estate: an executor must produce a grant of probate or, where there is no will, an administrator must produce letters of administration. Under the Married Persons Status Ordinance (Cap. 182), a policy on a person's own life expressed to be for the benefit of a spouse or children can create a trust, so the money does not form part of the estate. Hong Kong has abolished estate duty for deaths on or after 11 February 2006, so no estate duty clearance is needed in those cases.
Surrenders 退保
A surrender is the policyholder's voluntary ending of a policy before maturity or the death of the life insured, in return for the surrender value. It is not a claim for an insured event. Once the policy is surrendered, cover ends and nothing is payable on the later death of the life insured.
The surrender value comes mainly from the cash value built up in policies with a savings element, such as whole life and endowment policies. Term insurance normally has no surrender value. Because initial expenses are high, the value in the early years may be very small or nil, and it may be far below the premiums paid.
The amount received is usually the cash value plus accumulated policy dividends and vested bonuses, less policy loans, interest and unpaid premiums. For a unit-linked policy, it depends on the current unit value and any surrender charges. The insurer normally asks for a completed surrender form and the policy. If the policy has been assigned or has an irrevocable beneficiary, the consent of that person, or an application by the assignee, is normally needed.
Surrender is different from cancelling during the cooling-off period: the rights and the way the amount is calculated are not the same. A policyholder who is short of money or cannot keep up premiums should first consider a policy loan, reduced paid-up insurance or extended term insurance, which may keep some cover in place. An intermediary should also explain the consequences of surrendering or replacing a policy.
Practice
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