Thursday, July 13, 2017

Useful Information For You to Buy Insurance Policy

The 'IRDAI Protection Of Policyholders' Interests Regulations 2017', released a couple of days ago says 

"Every insurer shall display the service parameters and turnaround times as approved by the board in its website and keep the same updated as and when the service parameters are revised by the board."

With the prevalence of employer-paid health insurance, IRDAI now insists that the policy document mention upfront co-payer limits if the policy is co-paid by the employees. 

Insurers are also now required to update on their website the terms and conditions of every insurance product that is withdrawn or modified. And update the list at frequent intervals.

It is my request to you all to 
Please Read Fine Print Before You Choose To Buy An Insurance Policy. 

There are many plans and agents of insurer focus on only those policies in which they earn higher commission. 

Agents will seldom advice you to buy a Term Insurance Policy because by selling such policy agents will earn nothing. If they sell an investment plan under disguise of higher insurance or if they sell endowment policy , agents earn huge commission. Sometime you will feel jealous to know that you will get less benefit by investing in the plan for a period say  two decades compared to an agent earn by way of commission by virtue of the simple fact that you continued the policy and invested your hard earned money in it for two decades .

Please Read Terms and Conditions of the policy you choose to buy before you pay for it so that You may not feel cheated at the time of real crisis you face.

This is published in Economic Times , link given below.

Insurance companies project the benefits of a critical illness policy, but the hidden terms and conditions are not known till one carefully studies the terms and conditions of the policy . In worst cases, many realise that the treatment cost is also not covered. 

Case Study: Bhupinder Kumar was associated with Bajaj Allianz Life Insurance since 2005. He insured himself for Rs 2 lakhs under the company's Criticare Insurance Policy. The policy commenced on September 2 .. 

Read more at:


Study Fine Print before Buying an Insurance Policy -Mistakes you should avoid while buying life insurance

If you are looking at a pure protection product to safeguard your financial responsibilities in your absence, you should buy term insurance plans.

This article is collected from Money Control site and has been Written by Sri Navneet Dubey  For Moneycontrol News. I share with you to create awareness.

Having adequate life insurance cover in your portfolio is a must. Life insurance is bought for many reasons which may not only include protection purpose but also to meet various financial goals of your life like child marriage, wedding planning and so on. 

Therefore, it becomes necessary to understand the main motive behind every L-I policy.
Here are few mistakes one should avoid while buying a life insurance for themselves.

You Must understand and know the purpose for which You Choose To buy an insurance policy

Many of us buy insurance only to save ignoring the fact that life insurance is mainly bought for protection purpose. 

Life insurance policy helps in securing your dependents and your future liabilities if something happens to you. 

Providing you tax benefit is not a primary objective of any insurance policy. It is an additional benefit which every individual enjoys once they buy a life cover to protect their family.

“The main purpose of life insurance is to provide your dependents financial help in the time when you might not be around. 

First, ask yourself why you need one, the aim should be clear. 

Once the purpose of buying life insurance is clear, you can go ahead and select the kind of life insurance you want to buy. 

There are several types of policies in the market, each catering to different needs of the customers.

You should calculate the insurance cover

Most of the time people get into the trap of buying life insurance policy which provides them highest sum assured without calculating whether they really need that much cover at that point in time or not. It is important to calculate your overall annual expenses.

“Take it as a method to protect the life of your loved ones when you are gone. Look into the future and calculate your household expenses, children’s education, and their wedding cost, your parents’ needs and other financial liabilities etc. You’ll need to consider you dependents requirements needed to maintain their lifestyle in your absence, plus any liabilities and then decide on the amount of coverage.

Therefore, you should take a cover accordingly, otherwise you may end up paying a heavy premium.

 You Should  know the policy you need

Do you need a ULIP plan which can cater your child’s education goal as well as provide protection? 

Or, do you need a term insurance to protect your long term liabilities? 
It becomes very important to know which policy you need so as to cover your financial liabilities well.

“If you are looking at pure protection product to safeguard your financial responsibilities in your absence then you should look at Term Insurance Plans. 

In case, it is for Children education, marriage etc. Where you require growth oriented products then ULIPs are a better option.

ULIP is a combination of insurance and investment & basically giving dual benefit of growth and protection. 

Here policyholder can pay a premium monthly or annually. A small amount of the premium goes to secure life insurance and rest of the money is invested in market instruments. 

And in case, the purpose is only to get guaranteed benefits then one should opt for endowment plans. 

Endowment plans invest in low risk instruments and offer guaranteed maturity benefits but the returns offer by these plans are quite lower as compared to ULIPs.

You Must know the premium paying term

For every insurance plan you have to pay a certain amount of premium. Every plan has different-different premium paying terms (PPT’s) as per the policy. Knowing the PPT will let you know the exact amount you are going to pay for that particular insurance cover. Also, you can calculate returns which you may get on your survival if it’s a non-term plan.

You Must  know the claim settlement ratio of Various Insurer to Choose the best . Some Insurance  companies provide fabricated false data on this settlement ratio . You have to Cross Check it.

One of the important factors to choose the insurer is knowing the company’s claim settlement ratio. You should know whether the company is reliable and settle one’s insurance claim on time or not? 

Claim settlement ratio is the ratio of approved claims to the total number of claims filed. Therefore if you know the claim settlement ratio, you can make a better decision on selecting the insurer and the kind of life insurance policy.

Here are a few key pointers to keep in mind while purchasing health insurance with global cover 
(The writer is Founder and CEO of VR Wealth Advisors.)-
Collected from Money  Control site

  • • The plans cover only in-patient hospitalization treatment and exclude all other pre and post hospitalization expenses and OPD treatments.
  • • Treatments in US and Canada are excluded. To avail insurance in these countries you have to pay extra premium.
  • • These covers have 10-20 percent co-payment clause, which means the insured has to pay for the entire amount initially, post that once the person comes to India the company will pay 80-90 percent of the total cost.
  • • There is a waiting period of 2-4 years for all pre-existing diseases and illness.
  • • The cost of policies with global cover is almost 3-4 times the cost for domestic health insurance policy.
  • • Insured needs to intimate the health insurance company before travelling abroad for treatment in case of planned hospitalization, and the same needs to be certified by the doctor in India.
  • • An emergency overseas treatment requires a certification from a medical practitioner at the place of treatment that the case is one of emergency. The claim is admissible only in event of this certification.
  • • The claims are usually settled on a reimbursement basis as it is difficult for insurers to maintain a global network of associated hospitals. This means the expenses have to be incurred by the patient or his family initially, which will be later reimbursed by the insurer.
  • • The insured is exposed to the risk of adverse movements in exchange rate as the claim is settled in Indian Rupees and the customer pays for the treatment in foreign currency.
  • • Overall, the benefits that these policies offer are sharply defined and there are stringent terms and conditions, where the policyholder may not be able to derive the maximum benefit that the plan offers.




New rules to protect policyholders _
Published in Livemint on 12th July 2017

The insurance regulator has notified new rules to protect policyholders’ interests. It is definitely a big step towards policyholder protection, but a lot remains to be done. To know details of new guidelines issued by IRDAI , please visit website of IRDAI.

The Insurance Regulatory and Development Authority of India (Irdai) has notified new rules to protect policyholder’s interest. You can read the full notification here. 

While the regulations work towards ensuring that insurers settle all kinds of claims on time by defining the penalty on delays, there is much left to be desired in addressing better disclosures for the customers. 

We take you through some key provisions of the notification and also bring you experts’ views on what more could have been included in it.

There is clear provision for imposing Penalty on Insurer for late payments

If an insurer delays claims payments, it has to pay a penalty that’s 2% over the bank rate, which is specified by the Reserve Bank of India, as on 1 April of that fiscal. 

For instance: 

in case of Life Insurance, after a claim is made, the insurer needs to ask for all the documentation within 15 days and take a decision on the claim and make the payment within 30 days. 

This is the norm even now. And, if a claim has to be investigated further then the insurer gets up to 90 days for investigating. If the insurer decides to pay, it has to do so within 30 days from when the decision to pay was taken.

 Insurers will attract penalties for not adhering to these timelines. 

New guidelines also clarifies that if a claim is ready for payment but the payment cannot be made due to reasons of proper identification of the payee, the insurer will still pay a penalty. 

For settlement for maturity proceeds and annuities, insurers have to notify the policyholder in advance or send post-dated cheques or transfer money to the bank account so as to pay the claim on or before the due date. 

For surrenders, free-look cancellations and withdrawal request, the insurers will have to pay within 15 days of receiving the request, or the last necessary document. A delay in this case will also invite penalty.

“Earlier there was some ambiguity in the way penal interest for delayed settlement of claim was calculated.

But now we have brought about clarity in the rate at which it has to be calculated and the duration for which it has to be paid.

“Now, if an insurer is supposed to settle the claim in 30 days, but takes 31 days, then it needs to pay interest for 31 days and not just 1 day,”.

This would lead to faster settlement of claims.  

“The timeline mandated for investigation of a death claim has been reduced to 90 days from 180 days. This, along with a penalty on delays, will help in speedier settlement of death claims.

“But this alone may not solve all the problems regarding settlement of claims. For instance, the industry has to look at ways of simplifying surrender requests.

For non-life policies also, there is now a limit of 30 days to settle claims—after insurers get all the documents, including surveyor’s report . And if insurers don’t follow the timeline, they have to pay a penalty. In health insurance, if a claim needs to be investigated, the insurer will need to complete it within 30 days and settle the claim within 45 days from the date of receipt of the last necessary document, or pay a penalty. 

For other non-life policies where a surveyor is appointed, the regulations have laid down timelines to appoint the surveyor and submit the report. 

Further, the surveyor’s report needs to be given to the policyholder if she asks for it—which is important because a surveyor is appointed by the insurer to investigate claims and is the basis on which an insurer takes the decision on a claim. “The notification also mandates insurers to categorise exclusions that are standard, specific to policy, those that can’t be waived and those that can be waived on payment of extra premium. This is important because in motor insurance there are many exclusions such as depreciation or engine loss that can be covered by paying extra,

“This will also make people aware of add-on covers that take on such exclusions. In motor there are about 20 add-ons that people don’t know much about,”. 

The notification outlines features and other terms and conditions that needs to be stated explicitly in a policy. For instance, in life insurance an insurer needs to state things like the type of policy, features, information on premium payment, riders, exclusions, policy conditions for surrender or discontinuance, revival of the policy and the grievance redressal mechanism. 

Insurance Regulatory and Development Authority (Irdai) has given the insurers till 31 December to make such changes in their policy documents. 

The notification also states that distributors will provide all the material information regarding the policy, and that the insurers will have to obtain a certificate from the policyholder certifying that the proposal form and policy documents have been fully explained and that the policyholder understands the policy. 

There are still many Deficiencies in guidelines which need some improvement 

The notification is missing the ‘key features document’, which aims to simplify the salient features of a policy. Irdai, in its draft released in February 2017, had asked for this document, which would carry the main features of the policy in simple language and in bold and attractive print. This document was intended to make policyholders aware of the most important features. 

However, “The insurers are jointly working on introducing a simple key features document that will help customers understand what they have bought, including their obligations, in a simpler language,” .

“The regulation doesn’t recognize verbal complaints but it’s important that verbal complaints also get recorded and measured. There should be an onus on the insurers to deliver a renewal notices  particularly in health insurance.

For instance, if a policyholder does not pay health insurance premiums on time, she loses all the benefits with regard to the waiting period and has to apply for a fresh policy. “Also, health insurers shouldn’t be allowed to add exclusions when insurances are renewed,” 


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