The Hindu Business Line : National Insurance offers cover for educational loans

THE National Insurance Company (NIC) has submitted a proposal to the Kerala Government for providing insurance cover to those students who avail themselves of educational loans.

This comes at a time when sanctioning and repayment of educational loans has run into a controversy in the State with reported cases of suicides by applicants after they were refused loans on varying grounds.

Mr M.P. Ramkumar, Senior Divisional Manager, NIC, Thiruvananthapuram, said that a high-level meeting between the Chief Minister, Mr Oommen Chandy, and heads of nationalised and cooperative banks held earlier this month had deliberated on the issue. The meeting had resolved to prepare a proposal for extending cover to educational loans.

The Chief Minister urged the banks to consider reducing the interest rates levied on educational loans. The applicable rates ranged from 10-11 per cent. But representatives of banks told him that they could not take a decision on their own.

They had also suggested that the rates could be revised if the option of revenue recovery was extended to these loans as well. The Chief Minister is reported to have further requested banks not to press the condition of loan aspirants having scored a minimum 50 per cent in the qualifying examination.

The Maharashtra Government has already implemented an insurance scheme, titled Amarta Shiksha Yojna, for beneficiaries of educational loans. The NIC is the implementing partner.

Mr Ramkumar also said that the proposed scheme for Kerala will straightaway offer cover to the parent/legal guardian against the unfortunate event of accidents resulting in permanent total disablement or death. It also covers the eventuality of death during surgical operation in hospital or within seven days of the surgical operation.

The insurance policy will cover educational expenses such as institution fee, hostel rent, boarding expenses, cost of books, periodicals and uniform, examination fees, compulsory donation for festivals, picnics and study tours, and other expenses recommended by the Head of the Department/Institution.

The scheme enables the student to continue with his education even in the face of permanent total disablement/death of the guardian. In case it is the student who suffers permanent total disablement or even death due to accident, the bank/guardian can claim the assured amount.

The premium rates are nominal, ranging from Rs 40-45 per Rs 1 lakh sum insured per student.

But the policy excludes from its scope present disability of the insured, attempt to suicide or suicide, death due to accident while under the influence of intoxicating liquor or drug, or arising or resulting from the insured committing a breach of law with criminal intent.

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