Can I change insured’s name in Ulip cover during policy term?

—  Name withheld on request

It is not possible to change the insured during the term of a Unit-Linked Insurance Plan (Ulip). If the policy has been in force for more than five years, you can withdraw the fund value at no charge. Else, you can stop paying premiums, and the policy will be moved to a discontinuance fund that will pay out after five years. The payments will be made to the nominee i.e. your nephew. 

When funds lie in the discontinuance fund, the insurance company applies  a fund management charge. The fund lying in the discontinued policy fund will continue to earn interest as insurers have to give a minimum guaranteed return. However, this may change from time to time.

What is covered under the damage component of a motor policy if we don’t buy a zero depreciation cover?  My vehicle is seven years old. Should I buy only  third-party insurance?

—  Name withheld on request

Under the own-damage section of the motor policy, damages to your own car are covered. The third-party liability insurance covers any kind of damage or injury to a third person’s property or body, caused due to your car.

 Zero depreciation cover is an add-on cover for partial damages to the car due to an accident. When a repair is conducted after partial damage, then the insured is liable to reimburse only the depreciated amount of the part damaged. With a zero depreciation add-on, the liability of the insurer increases. Instead of the depreciated amount, insurer becomes liable to pay the full amount of repair barring the deductible. 

If you do not buy the own-damage section of the policy, then repairs to your car will be completely uninsured.  Moreover, in case of total loss such as theft, zero depreciation clause has no relevance. If you are covered for the own-damage section, then you will get the complete insured declared value (IDV) in case of theft, irrespective of whether you have zero depreciation coverage. I recommend buying both  third party and own damage.

When I search for motor insurance policies, I see only regular plans. How do you purchase a pay-as-you-drive policy? 

— Name withheld on request

While the pay-as-you-drive motor policy has been recently approved as a product feature, it is still offered only by a handful of insurers and not promoted aggressively. One of the challenges in this product is that it needs installation of a telematic device in the car. As the logistics and economics of fitting the device becomes clearer, the product might become universally available.

Abhishek Bondia is principal officer and managing director, SecureNow.in.