Assignment and premium payment
An assignee has acquired all
the rights and liabilities of the assignor. Rights can be understood as all
benefits of the policy. Liabilities can be understood as payment of premium,
repayment of loan on the policy, if any etc. A natural doubt may come up in
your mind as to why then on all policies assigned to institutions for availing
housing loans etc the original policyholders (assignors) continue to pay
premiums.
This is the result of a clause in the loan agreement, which makes
it the responsibility of the assignor to pay premiums and keep in force the
life insurance policy that is offered as a collateral security. Some companies
may stipulate that if the assignor does not pay premiums the assignee will pay
the premiums and add that amount and interest there on to the loan amount.
There are cases where the employer takes the policy ownership
through assignment and insist that the premiums shall be paid by the employee.
This may be for loans granted for different purposes or on amount spent on the
foreign training of the employee.
In all such cases the assignee retains the right to surrender the
policy and avail of surrender value. On maturity or death claim the claim
moneys belong to the assignee.
Key words:
Assignment
Assignor
Assignee
Housing loan
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