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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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...