Page 39 - Life Insurance underwriting Ebook IC 22

HUF: It is defined under the Hindu Law as a family that consists of all persons lineally
descended from a common ancestor, including wives and unmarried daughters.

Karta
 The Karta has to be the oldest male in the family.
 If he passes away, his wife cannot become the Karta. His eldest son will take his
place.
 If he chooses not to, he can give up his right and the next son in line can take his
place.
 The Karta generally manages the family property, which is regarded as the joint
property of all the coparceners.

Coparceners

 All the male members are referred to as coparceners.
 Hindu coparcenaries include the sons, grandsons and great-grandsons of the
holder of the joint family property. By virtue of their birth, they acquire an interest
in the property.

Members

 The female members are simply called members.
 When an unmarried daughter marries, she becomes a member of her husband's
family and does not remain a member of her father's family/ RU F

Tax laws pertaining to HUF

 Separate entity: Under the Indian income tax laws, HUF is treated as a separate
entity and an insurance policy bought through an HUF gets tax rebate for HUF.
 Deductions and exemptions: An HUF is eligible for all the deductions and
exemptions as described under the tax laws.
 Policies from HUE income: Neither the 'karta' nor any other member of the HUF
can take policies to be financed from the HUF income, seeking the benefits only
for himself or his immediate dependents.
 Nomination: a policy affected under HUF does not have the provision for
appointment of nominee etc. as HUF will be the owner of the policy.
 Premium: payment of premium will always be through HUF funds.
 HUF income: since the HUF is a separate entity, it can earn income from
investment of the HUF's funds, business profits, house property, capital gain etc.,
except income from salary. HUF income is separately assessed and taxed.
 Insurance cover amount: generally, a multiple of 10 is applied to the income of
an HUF to arrive at the total financial eligibility for policies sourced through HUF.

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