Sunday, 29 July 2018

No pollution papers Can't Claim insurance !!

Pollution under Control (PUC) certificate will soon be made a mandatory document to make an insurance claim, as per an order of the Supreme Court. Vehicle insurance claims will not be paid for any accident if the PUC certificate is found to be invalid on the day of the accident. The General Insurance Council will soon draft a clause to be added to the insurance policy document that will say that if the PUC certificate is not available at the time of the accident, the policy will not be paid. The Insurance Regulatory and Development Authority (IRDA) has instructed insurance companies to not to give vehicle insurance policies without the PUC certificate.

Insurance claims will not be paid for any accident if the PUC certificate is found to be invalid on the day of the accident.

Insurance companies have a hard time to identify and verify the PUC certificates as they do not have a centralized database that includes PUC certificates. Meanwhile, insurance companies argue that enforcing  PUC certificates should be done by the Road Transportation Authority (RTA) and should not be imposed through them.

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Wednesday, 25 July 2018

While Buying A Term Insurance Plan Keep These Points In Mind

A term plan is meant to replace the income of the policyholder in case of death. So, buy a cover till the age of 60-65 years. A policy that ends when you are in your 5os will not be of much use.

If we talk about our future, the life cover should be big enough to encompass all outstanding liabilities and future goals. Though our love one get the benefits of our policy. For instance,the tenure of the policy should not end when you need it most. Also, don't commit mistakes that can lead to the lapsation of the policy or rejection of the insurance claim. After losing a loved one, nothing can be more devastating for a family.

Here are some major issues to keep in mind when you buy a term Insurance plan:

Provide correct details

An Insurance contract is based on the principle of utmost good faith. It becomes null and void if the insurance company discovers that the policyholder has given incorrect information in the form. The premium for non-smokers and teetotalers is lower but don't get tempted to tick 'no' in the application form. Concealment of lifestyle habits or medical conditions can lead to rejection of claim later on. If you smoke or drink, mention that. If your family has a history of diabetes, don't hide the fact. It will bump up the premium by a few thousand rupees but will not jeopardize the Insurance claim by your nominee. Remember, every year about 2% of life insurance claims are rejected. 

Insist on medical test

Term plans are high-value covers so companies usually put buyers through extensive medical tests before issuing them a policy. However, In some cases, a company may not insist on a medical test but probably ask the buyer to give a declaration of good health. In case of early death, the company may try to show that the buyer had lied and was already ailing when he bought the policy. If the buyer goes through the medical tests, then shifts to the company and the doctor who conducts the examination. They will not be able to dispute the insurance claim by the policyholder's nominee. As a rule of thumb, buy only if the company does a full medical test. Also, after three years of issuance, no insurer can deny the claim or challenge the disclosed information.

Go with cheapest form of Life Insurance

Pure term is the cheapest form of life insurance because it has no investment component. For as little as Rs.8,000-10,000 a year one can buy a cover off Rs.1 crore.But the low premium alone should not be the deciding factor. Buy from an insurance company that has a squeaky clean reputation in claim settlement and a healthy record of customer orientation. What's the point of buying a cover that costs Rs.1,000-2,000 less but you are not sure If your family will get the insurance claim after you are gone?

Get the tenure right

A term plan is meant to replace the income of the policyholder in case of death. So, the Insurance Policy should cover him till he intends to work. This can vary from 55 years to 65 years, or even longer in some cases. Ordinarily, a person should take a cover till the age of 60-65 years. It's no use buying a plan of 15-20 years which will end when the policyholder is in his 50s. A person's insurance needs are highest at that stage of life. Buying a new policy in your 50s will be very costly .The person might even be denied the cover if he is not keeping good health. Some companies also offer very long-term covers that extend up to 80-90 years. A large cover that extends till that advanced age helps people leave behind a legacy for their heirs. But it also creates grounds for a moral hazard. In some unfortunate cases, the insured person may be denied urgent medical attention by the family so that they can get the insurance money.

Periodicity and mode of payment

Once you have bought a term plan, don't let it lapse by missing the renewal premium. One way to ensure against missing the premium is to give an ECS mandate to your bank. Even if you forget, your bank will pay the premium. But it could still lapse if there are not enough funds in your account. A better option is to give standing instructions to your credit card issuer for paying the premium when it gets due every year. That way the premium will be paid in time and you will only have to settle the credit card bill.
Most insurers give buyers of online term plans the option to pay the premium annually, halfyearly, quarterly or monthly. The monthly option is the costliest, but the out flow is very low and therefore very attractive for buyers. Unless cash flow is a constraint, it is best to opt for the annual premium option. This reduces the chances of you missing a premium because instead of 12 (or 4) times a year, the premium is due only once in a year.

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Source: Economic Times

Tuesday, 17 July 2018

Why You Should Consider Cancer Plans

The dreaded C-word is in the d news after actor Sonali Bendre disclosed that she has cancer. Earlier, actor Irrfan Khan had made his fight against the disease public., adding to the awareness about cancer and its treatment. However, the level of preparedness for managing the financial aspect of the treatment remains low. This despite a clutch of life insurers actively promoting policies that offer targeted protection against cancer. Recently, health insurer Star Health also launched a policy aimed at cancer survivors. "The sensitivity towards buying insurance to cover this disease is low. Distributors do not sell these policies as much as they promote policies with a savings element,". 

Cancer is now responsible for almost one in six deaths globally. Though medical advancements have increased the chances of early detection and successful treatment, the treatment costs are huge. This is where cancer policies can play a role. The sum insured can be as high as Rs.60 Lakh. These policies cover  cancer right from the early stages to the advanced ones. Future premiums are waived  off on detection for three to five years depending on the plan to ease the burden on policyholders.

The claim settlement process is simple, as these are fixed benefit policies that handout a pre defined sum on diagnosis. As a regular health insurance cover reimburses only hospitalization costs, the cancer policy payout can be used to meet any recuperation-related expenses as well as to make good any shortfall due to loss of income during treatment. Also on offer are increased sum assured options under premium variants, where the cover increases by 10% for every claim-free year. Income benefit is another feature that can be of help during the recovery phase, Particularly If the health condition is debilitating enough to force a break from employment. Despite the benefits, the policies have met with moderate response. "In  India  a number of cancer products have been launched and uptake of cancer cover over time may increase  with Increasing awareness levels, higher incidence of the disease, improving medical support and higher cost of treatment,".

Unlike life insurers' cancer covers. Star Health's Cancer Care plan extends cover to those who have been diagnosed with cancer (stage 1 or 2). Launched as a pilot, the product covers the risk of recurrence, metastasts, second cancer as well as second malignancy unrelated to first cancer, apart from regular hospitalization expenses.

Beware of the exclusions
Study the exclusions and restrictions before you take a call. Cancer policies from life insurers restrict coverage for early-stage cancers to 20-25% of the sum insured. Later-stage cancer claims will be eligible for the entire sum assured minus claim paid cut, if any, during initial stages.

However, some plans also provide a sum assured of 150% in case of major stage cancer. Check if any particular cancer and recurrent claims of cancer affecting the same organs are excluded. Aegon Life's policy, for instance, does not cover skin cancer.

The policies come with waiting and survival periods of 180 days and seven days respectively.
Standard exclusions like pre-existing  illness apart, Cancer caused by sexually transmitted diseases, HIV, or AIDS or arising out congenital condition and contact with radiation or radioactivity, are not covered under these policies.

Therefore, you will have to make a choice on the basis of your health condition as well as family health history. Also ensure You have a basic health insurance policy in place to cover hospitalization.

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Thursday, 12 July 2018

Get Set to Bank with LIC as Insurer Gets IDBI Stake Nod

The Insurance Regulatory and Development Authority of India (IRDAI) has agreed to the Life Insurance Corporation (LIC) of India's proposal to hike its stake to 51% in IDBI Bank from 10.8% at present. The permission is subject to the corporation bringing clown its holding to 15% in future.

The IRDAI board, which met in Hyderabad on Friday, cleared the proposal put for-ward by the LIC. It will now have to be cleared by the state-owned insurer's board. According to sources, the corporation believes that having a bank within the group will help increase its share of business through the bancassurance route. An official said, "Private life insurers with a bank within the group generate nearly half their business through the bancassurance channel. In the case of LIC, it is less than 3 %." 

LIC, with assets under Management of over Rs 30 lakh crore, has been priding itself as the largest financial institution in the country. The insurer had first made a pitch for a banking licence over 16 years ago when SBI got its life insurance licence. Subsequently its housing finance arm LIC HFL had put in an unsuccessful application for a bank licence. The corporation was a founding investor in Axis Bank in the '90s and had also picked up a 28% strategic stake in Corporation Bank. However none of these investments served the desired purpose.

HDFC Life, ICICI Pru Life and SBI Life are among the private insurers that get a sizeable portion of their business through banc assurance. While LIC will be allowed to take control of the bank, the regulator is not changing its rules and requires the insurer to bring down its holding to 15%. The board has not specified the time frame. The Reserve Bank of India's (RBI's) norms too require that promoters of private banks bring down their shareholding to 15%. However, the RBI also does not have fixed deadlines.

An additional 40.2% stake for IDBI Bank will cost LIC Rs 9,229 crore at the current share price of nearly Rs 55. However, the investment by the corporation will be higher as part of it would go into fresh equity. Earlier, LIC had picked up a 28% strategic stake in Corporation Bank, which is now currently clown to 13% Although this is in the nature of a strategic investment, the money will come from policyholders' funds. LIC has a paid-up capital of only Rs 100 crore. What seems to have swung the decision in favour of IDBI Bank is that there are no major legal changes required fix its acquisition.

On the other hand, the government cannot bring down its stake below 51% in nationalized banks without amending the Bank Nationalisation Act. 

Source: Times of India

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Thursday, 5 July 2018

Transfer Your Risk Using Insurance

If your car had no brakes, most of you would prefer not to risk driving it. Brakes are those  safety  nets that  allow us to peacefully go about  our  business without being overly worried about what would happen to our financial commitments (which We would have ordinarily honoured in our  life time) to our dependents, if we were to pass away unexpectedly.

Since the risk one faces is unlikely to go away, we need to work towards managing or containing the risk so that in the event of a contingency, our lives can proceed with  the least  possible damage. One of the most effective ways to manage risk is to work out how much you can brave and then outsource the remaining part to an insurance company.

Insurance is the most critical decision to be made in money management. It performs the role of reducing the unpredictability of day-to-day life. It provides us with the financial strength of dealing with unforeseen acts as a shield to our earning capacity. Buying insurance refers to the  process of transfer of risk to the insurer.

Few commonly bought insurance plans are:

Term Plan- It is the most appropriate product for pure risk cover.

Whole Life Plan - It's  ideal for paying duties and estate taxes payable by the beneficiaries at the time of death of life assured

Endowment plan - It offers life cover for the person insured and investments. It is most widely used for meeting the education needs of children.

Unit linked policies- These provide risk cover and also has an investment component. They offer choice of different asset allocation.

Annuities- It provides lifelong payments to annuitants till  they are  alive  (something like  pension).These are normally taken to supplement income during retirement.

Health insurance:· It ensures that  expenses due to hospitalization (hospital stay as well as medical 
costs) are compensated to a certain extent. It becomes costlier and at times difficult to get as one gets older.

Motor  insurance- It protects from financial costs incurred because of damage to car due to traffic collisions and other reasons and also car theft to a certain extent. The kind of insurance needed and the amount of cover are the key decisions to be taken.

Taking an insurance plan is not mandatory and therefore, it needs to be bought if there's a need. 

For example, an individual with no dependents need not take a life cover. In addition, people who have enough reserves for the dependents to fall back upon, need not take additional cover.
Calculating the right amount of risk cover on a client's life is an exercise in customization. It involves taking stock of one's assets (excluding those deployed for personal use), one's goals and its priorities, one's liabilities, one's lifestyle and the kind of job one does. Also, it involves out-guessing the probabilities of an occurrence at some point in time. Too much of insurance could dent the current cash flows and too little might end up looking inadequate at the time of happening of the event, against which one is trying to safeguard.

Also, planning for a rainy day or contingencies is an extension of risk-cover. At least four to five months of expense need to be set aside for meeting any emergency needs. Keeping money aside for any emergency ensures that the other short, medium and long-term goals are not jeopardized.

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Tuesday, 19 June 2018

Grossly Under Insured Indians Are Living Dangerously !

Even if we assume that many customers buy more than one policy, on an average an Indian is certainly not covered beyond Rs.4 lakh.

How many INDIANS are covered by Life Insurance?

According to Irdai's Hand - book 2016-17 (Table 9A), 32.81 crore of policies are in force in the books of life insurance firms in India. Even if we assume that a few lakhs of policies were revived during the year, the total number of in-force policies will not be more than 33 crore.
Since many customers are in possession of multiple policies, the total number of people possessing at least one in-force policy will not be more than 30crore.If we consider those people who are covered by group policies and PMJJBY policies and not by individual policies, even then the number of Indians holding  at least one in-force life insurance policy is not likely to exceed 40 crore (with PMJJBY covering 5.35 crore Indians so far).

Indians are grossly underinsured

So how many people are insurable today? According to most estimates, the figure will be around 80 crore. So, 40crore Indians have not yet been brought under the ambit of life insurance. In developed countries, at least 90% people are covered by life insurance. Besides, they enjoy various other social security benefits.
Now, the more important question is whether Indians who are considered as insured are adequately insured. If we take the Handout's Tables 9A and 10A together (in respect of linked and non-linked life policies), we get the figure of sum assured per policy. The average sum assured is just  Rs.3.01 lakh. Even if we assume that many customers buy more than a policy on an average an lndian is certainly not covered beyond Rs.4 lakh.

What is the value of that money today?

If we keep the money in a bank (that is what the dependants of a deceased policyholder generally does), it will not fetch more than Rs.228,000 a year or about Rs.22,300 per month! To run a family of three to four members with that money is extremely difficult. When a government social security scheme such as PMJJBY is offering an insurance cover of Rs.2 lakh per person, the much more affluent Indians are getting themselves insured for Rs.3-4 lakh only. That means, on an average, Indians are grossly under insured even today.

Too many people buying Ulips

Life insurance industry has brought a plethora of useful insurance products for all life stages and for all market segments but customers have not yet made full use of these products. Far too many customers are buying only unit-linked insurance policies (Ulips) which help in accumulation of wealth. Most Indians primarily need life insurance as savings and protection tools. As more than 90% Indians work in the unorganised sectors, they need to build their risk-free savings corpus through life insurance. They also need protection products like pure term insurance.  Although LIC continues to get more than 99% of its business by selling traditional products, the private companies as a whole got 42% of their business by selling Ulips only in 2016-17. A leading private insurer got more than 79% of new business from Ulips. The problem with Ulips is that as soon as people get good returns from their investments, they surrender the policies (the surrender charge being negligible)and insurance cover ceases to exist for them. Term insurance is a good product but that gives money only under one contingency death. People need to buy other insurance products which provide money (without any uncertainty)in other contingencies  as well. So, it is pretty dear that Indians are grossly under insured and that means they are living dangerously.

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Thursday, 7 June 2018

Guide To Buying A Term Insurance Plan- Compare Features, Not Just Premiums !

A term life insurance plan protects your financial dependants in case you die, a health insurance is a must for every individual given the rising incidence of ailments and high medical costs.

You may not be as fit in your 50s as you were in your 20s. That’s a fact of life: as you grow older, your body shows signs of wear and tear and you need more medical care than before.

Research shows that heart ailments and cancer account for over half of casualties among Indians. In fact, India has the highest rate of cardiac arrests in the world and every 13th new cancer patient is from India, research suggests.

A health insurance policy pays for your hospital bills and life insurance provides timely financial support to your loved ones after you die. Both are important covers to have and we tell you who needs these policies, how much and how often one needs to review the cover.

LIFE COVER (Who needs it and when)

Not everyone needs Life Insurance. Children and young adults who are not working and retired individuals come under this category and that’s because they don’t have anyone depending on them financially. The working class that provides for children and often older parents that needs life insurance; in fact buying life insurance needs to be a priority for this generation. 

How much cover do you need

India, the younger you are, the higher cover you need. “The thumb rule says 10 times the annual income, but the actual need could be between 10 and 25 times".

A cover of 10-25 times your salary may look huge to you now, but if you factor in the time value of money, you will realize it won’t be all that big many years down the line. “If you are a salaried individual, insurers can give a cover up to 20 times your annual income. So, opt for a higher cover early on. Then you need not review your life cover often. A relook is needed when you have a baby or once in 10 years".

HEALTH COVER (Why do you need it)

Everyone needs Health Insurance and that’s because the cost of medical treatment is High. “While diseases may not be much of a concern for young people, accidents can still happen. They need health insurance to financially protect themselves against hospitalization due to accidents or even infection.

Such cases of hospitalization can work up a neat bill. For instance, dislocation, sprain and strain of joints and ligaments that needs surgical intervention or fracture of the leg needing surgery can cost up to Rs.4 lakh in metro cities and up to Rs.2 lakh in non-metros.

Which plan should you buy

If you are single and working, you can start with an individual policy. Once you get married, increase the cover by buying a floater policy. “A floater policy works best for a family in the same age group. But if there is a large age gap between the spouses or if parents need health insurance as well or if a family member suffers from ailments like diabetes, then individual insurances for these members may be better”.Infants and young children can be added to a floater policy.

How much cover do you need

A health insurance policy is a must but it’s equally important to understand how much you need to buy. It’s also important to get this right because as you grow older you may contract ailments and then it’s an uphill task to get insured. It’s always a good idea to have your own health policy but how much will depend on various factors.

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No pollution papers Can't Claim insurance !!

Pollution under Control (PUC) certificate will soon be made a mandatory document to make an insurance claim, as per an order of the...