Date of Commencement

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Definition:

The date of commencement is the date specified in the policy schedule on which the risk cover on the insured's life commences.

Description:

In simple terms, the Date of Commencement is when the policy comes into effect. It is also referred to as the risk commencement date. The risk covered under the policy starts after the realisation of the premium payment. The policy begins to cover the risk only after compliance with the conditions as specified by the insurance company.

If the life insured dies after the payment of the premium but before the date of commencement of the policy, the premium paid will be returned to the nominee of the life insured. But if the life insured passes away after the date of commencement of the policy, the sum assured plus any guaranteed additions will be paid to the nominee.

Example:

Ravi took a term plan for Rs.1.5 crore and declared Rajat, his son, as the beneficiary/nominee. He paid the premium on 31.01.2022, and the date of commencement of the policy was 1.2.2022 (after the insurer received the premium payment). Ravi purchased the policy based on the annual premium payment mode. After paying the premium for 5 years, Ravi passed away. As per the claim benefit payable under the term plan, as Ravi died after the policy's commencement date, his son Rajat will receive the sum assured as the death benefit.