1. Nature of Life Insurance
According to the Law on Insurance Business 2022, life insurance is a type of insurance in case the insured person lives or dies. In essence, this is a humane product, intended to protect risks, not a profitable product.
In fact, many insurance businesses focus too much on consulting on insurance profitability. That is the main reason why buyers are confused about the purpose of life insurance.
2. Subjects and insurable benefits of a life insurance contract
According to the Insurance Business Law 2022, the insured objects of life insurance contracts are:
– Longevity;
– The human’s life.
Accordingly, the insurance buyer has insurable interests for the following people:
– The policyholder himself;
– Spouse, father, mother, and children of the insurance buyer;
– Brother, sister, younger sibling or other person who has a nurturing or supporting relationship with the insurance buyer;
– People who have financial interests or labor relations with the insurance buyer.
3. Redemption value of life insurance
Many buyers are confused about the surrender value of life insurance products. Refund value is the amount of money the insurance buyer will receive when terminating the contract before its expiration date. This only applies to insurance products with a surrender value.
The formula for calculating the refund value is as follows:
Refund value = Account value – Contract termination cost
The refund value will usually be stated in the insurance benefits clause of the contract. This provision is mostly exaggerated by “heartless” consultants in terms of profitability. However, in principle, the refund value is proportional to the time the buyer terminates the contract before maturity. That is, the earlier the contract is canceled, the lower the refund value.
4. Note when participating in life insurance
Before signing, the buyer should ask the insurance consultant to clearly explain any unclear terms in the contract. If necessary, ask the employee to clearly explain ambiguous terms right in the contract.
Buyers need to determine whether the insurance product has a refund value or not. And you should carefully review the insurance premium payment period, asking to clarify how long the premium payment period will be for the refund value to be profitable.
Buyers also need to check for insurance non-payment cases stated in the contract.
In addition, there is currently a situation where people are advised to buy life insurance when they deposit their savings at the bank. The tellers introduced the products with flattering words like… “The savings package has high profits no less than the savings interest rate. Customers also receive additional insurance benefits. The participation period is only 5 years.”
To avoid the case of participating in “involuntary” insurance, when receiving offers different from the original purpose of depositing money, people need to ask clearly and directly, “Is this savings package the same as other insurance policies?” Dangerous or not?
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
