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Thursday, 25 June 2015

Here are path breaking insurance initiatives for common man

Modi government has unveiled life and accident insurance schemes that offer cost effective coverage to masses.

All Indian citizens are eligible to avail of insurance irrespective of their social and financial profile. 

Here is a snapshot of those schemes: 

Pradhan Mantri Surakhsa Bima Yojana (PMSBY): Under this scheme, a policy holder will be eligible to get a cover of Rs 2 lakh towards accidental death or permanent disability. Now you would wonder, how to get this cover? How much is the premium amount and to whom should it be paid? 

It is extremely easy. You just need to have a bank account. You can simply approach your bank to avail the policy. The bank will deduct the premium amount of Rs 12. Most banks are already sending SMSs to their account holders about it. 

In this case, you do not even need to approach the bank. Just send the SMS to the bank as per the instructions given in the bank’s SMS and you will get the confirmation, instantly. It is just a matter of few minutes. 

Is there any age limit? Yes, all Indians in the age between 18 and 70 years can get coverage under the scheme. 

The scheme will be administered by public sector general insurance scheme or any private sector general insurance scheme empanelled by the government and the bank. Most banks already have a tie-up with general insurance schemes. 

Pradhan Mantri Jivan Jyoti Bima Yojana (PMJJBY): This scheme offers life insurance coverage of Rs 2 lakh. The modus operandi is the same as the PMSBY. You need to have a savings account with a bank. Are you wondering why all these insurance schemes are linked to bank accounts? It is an amazing way of ensuring financial inclusion and taking the banking facilities to each and every family in the country. 

If all the people in the country get bank account, it will inculcate habit of savings and in the long run, it always helps to have savings in hand. 

This scheme provides a life insurance cover of Rs 2 lakh. The premium amount is a bit higher at Rs 330 per annum. Any Indian citizen in the age bracket of 18-50 years can avail of the coverage under this public life insurance scheme. 

Life Insurance Corporation (LIC) is the lead insurance company providing coverage under this scheme. However, there are several other private sector insurance companies which are empanelled to provide the services. 

Atal Pension Yojana (APY): It is a path-breaking social security scheme for people who have not been covered under any social security scheme. People working for the Central and State governments are eligible for pension schemes. Similarly, those working in the private sector are also able to save for retirement through provident schemes. But there are millions of people who work in the unorganised sector and for them; there is no pension scheme in place. They run a very high risk of financial insecurity, since most of them are also not aware of savings instruments and investment routes. 

For them, Atal Pension Yojana will be a radical way of ensuring financial security in the old age. The best part is that the Central government will also contribute the same amount deposited by the plan holder. For instance, if a plan holder contributes Rs 500 towards this scheme, the government will also deposit the same amount. Though there is an upper limit of Rs 1,000 contribution from the end of the government. 

Anyone in the age bracket of 18-40 years can avail this scheme. After reaching the age of 60 years, the plan holder will be able to get a pension of Rs 1,000-5,000 per month. 

More than 100 million people have already enrolled for the above schemes in a span of a few days of launch. In the coming times, these schemes are expected to cover most people in the country and begin a new era of financial inclusion and social security in India.

Monday, 22 June 2015

Secure Your Gadget

Any accidental damage, whether it be a broken screen, damaged touchscreen or a short circuit due to moisture, is covered under gadget insurance. If someone snatches your smartphone or you happen to drop it somewhere, the insurance cover will also reimburse you. You will, however, not get a compensation for the entire amount, but it will be based on the depreciation value of the gadget. For instance, most insurers offer 10 per cent depreciation on the invoice value for up to six-month-old devices and 25 per cent for an older device.

You can choose from a host of policies. For example, PickMe India offers a basic plan of Rs 599 for smartphones priced under Rs 10,000. The premium can go up to Rs 1,999 for smartphones worth Rs 55,000. These plans cover accidental damage, liquid spillage, burglary and fire, and even allow free pickup and drop facilities. PickMe offers services for all handheld gadgets such as mobiles, cameras, watches, laptops, MP3 players, tablets and even data cards.

Likewise, Protection 365 has tied up with public sector insurer The New India Assurance Company, while Ingram Micro has teamed up with another state insurer, Oriental Insurance Company. Apart from the regular features, Protection 365 offers data backup and bacterial removal services, and allows the customer to get their devices repaired twice a year. Ingram, on the other hand, offers plans in the Rs 499 to Rs 4,599 range for gadgets priced up to Rs 80,000. The company's Cover Plus provides an additional cover of Rs 1,000 for misuse of the device in case of a theft, and its Mobile Bill Protection plan pays bills of up to Rs 3,000 per month for three months in case of a job loss. It will soon launch policies for laptops, watches and cameras. Syska Gadget Secure is yet another company that offers complete insurance solutions for handheld devices. Just log on to any of the company websites and opt for the policy that best suits you to secure your devices.

While all this may sound like a smart solution to secure your smart devices against damage or theft, you need to know a few things. One, insurance is available for newly purchased gadgets. Two, you will get a four- to 15-day window from the date of purchase to buy a policy by providing a copy of the invoice. Some companies may also ask you to upload images of the device.

Three, the claims process isn't easy. For instance, if you happened to damage your phone because of carelessness, it will not be covered under insurance. But if someone bumped into you and the phone got damaged, it will be repaired without any questions. Similarly, if you forgot your device at a public place, it won't be covered. But if someone snatched your phone, it will be. You will need to fill in the form that came with the policy documents and submit it. Once you receive a go ahead from the insurer, you can take the phone to the service centre for repair. In most cases, you make the payment and the insurance company reimburses it to you once you submit the documents. The customer, however, has to bear 5-10 per cent of the repair cost.

Wednesday, 17 June 2015

Maggi brings cheers to General Insurance Companies

The saga of Maggi's raging fiasco in India has paved way for another vibrant business stream for the general insurance industry in India. Surprised, what is that? Yes, more and more companies in India are going all the way for getting product recall insurance for their products. Well, it is rightly said - better late than never.

Product recall insurance is not new to the corporate world. But it was mainly popular in the four-wheeler vehicle industry and some other industries which are capital intensive and where the product value is quite high. Often, we come across news about car companies calling their cars back due to some technical glitches. The companies include Toyota, Hyundai and even Mercedes and several other car manufacturers. These companies take product recall insurance, in order to cover cost of recall and other associated costs related to the process.

Food industry, at the other end, was never bothered about this type of insurance. The industry is such a huge one. But, at the same time, we have to take cognisance of the fact that the value of product is relatively very low. Plus, in India, there are hardly any major incidents of product recall in the food industry. Although after the Maggi controversy, things are changing and that too at a fast pace.

Food and beverages companies have understood that after Maggi, vigilance agencies and media will start examining many other products - and their products could be amongst those. This is why, general insurance companies in India are flooded by product recall insurance related enquiries from the food and beverages companies.

Product recall insurance is a part of product liability insurance. With Maggi throwing doors open for insurance companies, it is likely that many other sectors will wake up to the call.

For instance, companies from the pharma sector could be amongst the ones reviewing their product liability insurance arrangements.

There is no second thought that a Maggi kind of disaster can devastate the reputation of company very badly and it can bring serious consequences- even threatening the existence of a company. Product recall insurance can help cover some bit of the tangible losses caused by such controversies. Although it is quite clear that the loss of reputation and goodwill can never be recovered under such circumstances.

The case in point is that an ad-hoc action against Nestle is not the end but a beginning of new regulatory structure which effectively governs food and beverages companies. After Maggie, we do not even know what are we consuming and what all it has?

Meanwhile, food and beverages companies are seeking all the ways to cover their risks and control their liabilities towards product recall. Insurance companies have all the opportunity to leverage this incident and develop an all new market.

Monday, 15 June 2015

How to decide how much insurance to buy?

It is important to know and understand insurance policies with respect to your finances before you commit to one. 

One critical determinant insurance advisers point out is the human life value, which is nothing but a method of calculating life insurance based on the contribution that an individual makes and would have made to the family in case of a sudden demise keeping in mind the present inflation and bank rates. 

It is an estimate of insurance cover required as on date to protect the income earners' economic value to their families including their future earning potential and capacity.  The amount of insurance one should purchase depends on the policyholder’s economic value or the HLV. To illustrate, let’s say A has monthly income of Rs 10,000. After deducting Rs 5, 000 for his personal expenses he provides Rs 5,000 to his family every month. 

Annually that translates to Rs 60,000. So, in order to keep the current finance available to his family he will need to roughly make an investment of Rs 9, 00,000, which at a risk free rate of return of, let's say, 7 per cent would give Rs 63,000. Hence, A’s HLV would be Rs 9, 00,000.In this scenario inflation has not been factored but in reality that also needs to be considered apart from any tax implications on the income. 

This method can help in terms of deciding your life cover.

Thursday, 11 June 2015

Does going for a long-term insurance cover for bike make sense?

Two thirds of the 10 crore two-wheelers on Indian roads are not insured. This despite the fact that driving a vehicle without thirdparty liability insurance is illegal. What's more, a comprehensive cover for a 150cc bike with a declared value of Rs 30,000 costs just Rs 1,000-1,200.

A two-wheeler rolls out of showrooms with cover thanks to a mandatory clause and offers from auto dealers and brokers. But by the second year, most fall out of the insurance net. To combat non-renewals, the Insurance Regulatory and Development Authority of India (IRDA) had, last year, allowed long-term two-wheeler insurance policies with a tenure of up to three years.

Now, India's largest general insurer New India Assurance has become the first to launch products with two to three year tenures. More insurers are expected to follow suit. Buying a longer tenure policy is not mandatory, but an option. One benefit is that you need not worry about renewing your policy annually.

 A break in renewal can prolong a policy purchase process in future. Once the policy lapses, most insurers insist on inspecting the vehicle before renewing it or issuing a fresh policy. Moreover, insurers are bound to offer upfront discounts on the own damage component premium.

"The insured will get a 30% discount on the three-year cover. The insured will also be entitled to no-claim bonuses post the tenure," says G. Srinivasan, Chairman, New India Assurance. The company offers discounts of 20% and 30% on two-year and three-year policies respectively (see chart). You could also save on premiums if you buy a long-term third party liability cover as IRDAI hikes third party cover tariffs by 20% every year.

The flipside? "If market premiums go down in future, the insured will be locked into a higher rate. He will also not be able to improve the quality of cover during the tenure of the longterm insurance," says Arvind Laddha, CEO, Vantage Insurance Brokers.


Tuesday, 9 June 2015

Smart Tips to Buy Best Travel Insurance Plans in India

All set for your next travel destination but did you take some time out to plan for a travel insurance? Most people do not bother taking a travel insurance plan before any trip. The fact is that a travel insurance plan can act as your saviour in case of any unwanted event occurring during your journey. There are many more benefits that you will get on investing in a suitable travel insurance plan. Nowadays, the numbers of unwanted incidents have increased. Robbery, thefts, and terrorist attacks are some of the usual threats during a travel plan. You never know how bad it can affect you while you are in a new place for vacations. Travel insurance is a helpful tool which can protect you from these unwanted incidents during the tenure of the trip and it can even provide a good compensation when you need it during unforeseen events or emergencies. These days travel insurance has become one of the topmost items in the priority list of a travel itinerary. Tourism sector in India is growing at a fast rate and there are number of players alluring customers by providing customized travel plans. With the advent of many online insurance web aggregators, buying an appropriate travel insurance plan to match your tour package has never been so trouble-free.

Online Travel Insurance
Buying travel insurance online is a simple process as it takes only a few minutes. Within a few clicks, you can easily do the comparison for the best travel plan with the help of its listed features and related details. Comparing is the best and simplest way to get best travel insurance plan. As premium is the main factor to consider, with the help of an online insurance web aggregator, you can calculate the premium of different plans being offered by companies. You can also use an online calculator for calculating premium and invest in the best one.

Things to Keep in Mind
Here are some effective tips that will assist you in finding and buying the best travel insurance policy, online, for all your vacations-

> Prior to searching for a travel insurance plan, you should first decide your destination where you would like to spend your holidays. After finalizing the destination, search for trustworthy travel insurance companies online and ask for different plans and quotes that they are offering. Instead of searching numerous insurance companies online, you can take help of an online insurance web aggregator that would do all the work of finding and suggesting a suitable plan on your behalf.

> For old people, it is advisable to select the plan which covers emergency and medical expenses along with the hospitalization and ambulance charges.

> If you are a frequent traveller, then you can easily get some discount on travel insurance plan.

>  Your insurance plan and its features may differ as per your destination. Most of the insurers are providing coverage for personal injuries but coverage eligibility is lost in case of adventure trips like sea diving, rafting, mountain climbing, etc.
> There are different insurance plans for business trips which usually provides coverage for loss of business valuables and other related things, etc.

>  Insurance plans for students provide financial coverage and assistance in case of uncertain events during their overseas visits for education.

>  If you buy a family insurance policy, then the insurer would offer compensation to your family in case of flight delays, loss of luggage and other similar situations depending on the insurer.

>  It is advisable for you to avail guarantee from the insurer that it will refund tourism amount if you cancel the trip due to any unforeseen incident.

> Before applying for the travel insurance plan, be ready with your insurance checklist.

>  Pet insurance policies are also available for the travellers who want to take their pets along with them on the trip.

Travel insurance plan is a vital part of traveling to a foreign country, especially for those who are going there for the first time. The first-time traveller should make sure that they are buying a comprehensive travel insurance plan after researching and short listing a suitable plan online that covers all the phases of the trip.


Saturday, 6 June 2015

Maggi row: Food companies show interest in product recall insurance

Insurance companies are getting higher number of inquiries for product recall insurance sold to corporates following the Maggi noodles controversy.

The 'product recall' cover is an add-on to product liability. Insurance companies recommend this cover to manufacturers because, besides covering the cost of recall, it is seen as a feature that limits product liability. Until now, food companies in India were not so much bothered about product liability because of the low value of items.

"Product recall insurance was initially popular among the automobile industry. Then there was demand from the pharmaceutical industry. We are now seeing interest from the food industry," said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance. "Indian companies are now being conscious about product liability," said Singhel.

Praveen Vashishta, chairman, Howden Insurance Brokers, a UK based insurance company, said, "I am sure that there will be more enquiries in coming days but not sure how much of them will actually translate into purchases."

According to Vashishta, it is rare for a food & beverages company that is catering 100% to the Indian market to take out a product recall cover. "Those who export to the US or to Europe invariably take this cover as the regulators are very strict. Besides, the insurance company also provides crisis management advisory services, including appointment of a public relations agency," he said.

According to Ketan Kale of JKT Independent Insurance Brokers, high-profile events usually increase awareness. "We have seen it during the Satyam case. The incident increased awareness of the directors and officers policy and today the cover is a commodity with almost every company going for it," said Kale.

This specialized cover being sold to corporates is designed by international broking firms based on such covers sold internationally. In India, the most significant instance of product liability in the food industry took place in 2003 when chocolate-maker Cadbury faced charges that it was distributing chocolates with infestation. The FDA had ordered seizure of all Cadbury's Dairy Milk chocolates. The incident caused huge losses to Cadbury and compelled the company to redesign its packaging. However, even after the incident, sales of product liability cover did not pick up significantly.

It is not just the presence of toxic substances which trigger a recall. In the US, one of the top causes of recall are undeclared allergens in the food with milk being one of the largest unreported allergen. The other causes of recall are the presence of salmonella and other bacterial infections.


Monday, 1 June 2015

New India launches householder’s insurance

 New India Assurance, the country’s largest non-life insurer, has launched a low cost householder’s contents insurance policy. The policy, named Griha Suvidha, will provide protection to a householder’s contents against fire and allied perils including riot, strike, floods, earthquake, terrorism, burglary, housebreaking, theft and accidental damage to contents including jewellery and valuables.

The plan comes in four options where fire, burglary and housebreaking could each be insured for a sum insured of Rs 1 lakh, Rs 2.5 lakh, Rs 5 lakh and Rs 10 lakh. Valuables and jewellery can be insured from Rs 50,000 up to Rs 4 lakh. Breakdown of domestic appliances options are Rs 50,000, Rs 75,000, Rs 1 lakh and Rs 2 lakh. The total premium is Rs 1,125 for option one, Rs 2,120 for option two, Rs 3,880 for options three and Rs 7,175 for choosing the sum insured of Rs 10 lakh.

The pre-fixed sum insured are on a first loss basis. First loss basis is a concept where the under insurance clause in the event of a claim shall not be applied on the subject matter of insurance until and unless the value of the entire property proposed is much more than the value of the property at the time of loss. The product insurers the house on a full sum insured basis.

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