I am a single parent and I have a car loan that I am paying regularly through EMIs. My daughter is a minor and there are sufficient investments and support structures already in place for her. But is it possible to designate the proceeds of my life insurance towards repayment of the car loan, in case something happens to me, as I don’t want my daughter to bear the burden of repaying the loan?
—Rishabh Saxena
Yes, you can designate your life insurance proceeds towards a loan. To enable this, you need to assign the policy to your financier. Once a policy is assigned, the right of proceeds goes to the assignee and not the nominee. You need to fill an assignment form with the insurer to get this implemented.
