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Monday, 28 September 2015

How to exit mis-sold or unwanted Insurance Policies?

An impressive sales pitch laced with exaggerated claims of returns can make anyone fall for the unwanted products or services. Premium amount and market-based returns are still a jargon for a layman, which is why life insurance policies rank top among the most mis-sold policies.

Though policy buyers often get a window in the form of ‘free look-in period’, but there are still many who have lost this window of opportunity as well to exit from the policies.

Here are the ways listed to discontinue such unwanted policies.

Let the policy lapse: Most of the policies, excluding unit-linked investment plans (ULIPs), can be discontinued if the premium payment is stopped within the three years of buying a policy. This is the easiest way to lose a bad policy. However, once the policy lapses, the policy holder has no right to claim sum assured and the risk cover also comes to an end.

Surrendering the policy: Traditional policies can be surrendered if the premium is paid for at least three years. The policy holder is entitled to receive a cash value in lieu of the premiums paid against the policy. For ULIPs, the surrendering of policy is possible only after the completion of five years. Since insurers levy charges on surrender, therefore, it is not always a good option to discontinue a policy.

Converting into Paid-Up Value- Instead of surrendering a policy, policy holders can convert their policies into paid-up policies. The premium paid till the minimum stipulated period, which is three years for traditional policies, will continue to cover risk but for a reduced sum assured. Such an option comes handy for policies, the premium for which has been paid for a considerable higher number of years.

Loan against policy - Another judicious use of mis-sold policies can be through taking a loan against it. One has to take care that the interest on loan does not exceed the return on the policy. Premium payments can be made through such loan, and the policy can be liquidated on maturity. The idea for taking a loan against a policy is that the returns provided by the policies will compensate the interest costs of the loan.


Saturday, 26 September 2015

'Bancasurrance can help increase India's life insurance penetration'

With less than 10 percent of India's population being insured, "Bancassurance" can help increase penetration of life insurance policies as banks are widespread and trusted partners in whom customers have confidence, an industry leader said on Wednesday.

"From customer's standpoint, bank is a trusted partner. They have more trust or confidence in going through the bank branch where they go for their banking business and buy a policy from there," said Anuj Mathur, chief executive of Canara HSBC Oriental Bank of Commerce Life Insurance Co, at the release here of a survey his company has jointly carried out with industry chamber Ficci.

"Bancassurance is a channel that can reach those customers in Tier-II and Tier-III cities," Mathur said.

The survey - "Life Insurance: A Consumers' Perspective" - is an exhaustive report having sampled over five thousand people in 30 cities to bring out the consumer perspective, which reveals lack of sufficient awareness of insurance, said Ficci secretary general A. Didar Singh.

Mathur said the focus of the survey was to provide right advice to the customer and ensure that there is an ongoing customer service available.

"I talked about orphan policies, in agency model where the insurance agent will try to get the business and after that he will not be seen around, so the policy gets orphaned," he said.

"In Bancassurance if you see, that relationship continues because the bank branch is going to be there. The branch manager may change but people will be there for customers," Mathur added.

While Bancassurance currently accounts for close to a quarter of life insurance sales in the country, schemes like the Pradhan Mantri Jeevan Jyoti Bima Yojana are helping to increase awareness of the product, the chief executive said.

The survey found that buyers of life insurance policies want to have professional assessment in helping them choose suitable insurance products, and are willing to spend time and money for it.

The survey also said more than half of the policy holders purchased life insurance policies in a planned manner.

Source:  Business Standard

Thursday, 24 September 2015

Soon ESI Scheme To Cover Self-Employed

Soon medical assistance will cover not only the employed personnel but also the unemployed laborers too. The labour ministry plans to provide medical assistance to all workers and is therefore planning to extend the coverage of ESI to benefit workers in the Northeast, establishments with less than 10 workers and self-employed workers like rickshaw pullers and auto and taxi drivers. Under this ESI scheme, the government provides full medical care to insured persons and to their families from the day they enter insurable employment.

Besides this, the scheme also provides sickness benefits in cash at the rate of 70 percent of wages to the insured person for a maximum of 91 days in a year, 90 percent of the insured person's wage as disablement benefits, 90 percent as dependent benefit and up to Rs.10,000 as funeral benefit to the dependents.


Thursday, 17 September 2015

What Does Your Family Health Insurance Not Cover?

Most Indian households do not even have a health cover at the first place. 

Fortunately, awareness of the need and availability of a health plan is finally driving more and more young people to seek out coverage in urban India. 70% of Indians currently looking to buy health policy want to make sure their children have coverage. A further 66% want to cover their spouse, and the average age of new purchasers is 32: young people hoping to start a family.

Raising awareness is good, even as health insurance becomes more common there are still some dangerous misconceptions that may set up new parents for an unpleasant surprise. Chief among these is the belief that a health plan will cover all their medical expenses.

Why purchase family health coverage?
Surveys of health insurance awareness in areas like Delhi and Mumbai have turned up some contradictory data. MedIndia found that 69%of Indians expect their health insurance to cover all expenses, but the Economic Times of India reported that 52% of respondents to their survey believed that insurance only pays for hospitalization.

Neither one of these misconceptions is true, but with the right insurance package, you can make sure that common emergencies norare family costs covered. The secret? OPD benefits.

What are OPD benefits?
OPD stands for Outpatient Department benefits, and they cover numerous minor medical expenses that will crop up time and again for families with children. 22 health insurance companies in India will pay for day-care hospitalization: short hospital stays that are not overnight, or are only one night. However, only nine of those 22 offer OPD benefits.

OPD benefits include day-to-day expenses like dental care, eye exams, glasses or contact lenses, and hearing aids. They also cover some preventative care, like vaccines, consultations, and diagnostics, all expenses that add up quickly for new parents. If your family plan does not include outpatient department benefits, your family could be picking up all those costs on your own.

Family plans with OPD benefits aren’t just important for couples with children: they’re essential for family planning as well. 30 percent of young Indian couples planning a family want health insurance. However, only OPD plans will cover pregnancy, childbirth, and natal care as well as vaccinations and preventative care.

Who offers Outpatient Department benefits?
Now-a-days, the competition in the health insurance industry has led to viability of almost all the features with every insurance provider. For instance, ICICI Lombard’s family health plan offers outpatient benefits at a price most young families can afford; they offer benefits like a daily cash allowance to keep a family afloat if a provider is hospitalized.

Even if you don’t have immediate plans to start a family, the earlier you buy a health coverage plan, the better off you’re likely to be. There’s a good reason 32 is the average age to buy a family plan: younger people tend to be in better health, which means a lower premium and more benefits. Buying a health policy young is the best way to ensure you can afford all the benefits you need to keep your family healthy and well cared for as soon as you need them!
Make sure that your family insurance package comes from a trusted provider that will provide you with the basic outpatient care you need to raise a healthy family. 


Monday, 14 September 2015

Things to Know Before Investing In Insurance Stocks

Insurance companies have been in the news along the passage of the insurance bill in the parliament in March 2015. Foreigners can now invest up to 49 percent in an insurance company up from 26 percent earlier which is good news for the insurance companies, according to

Key Banks:

When we talk about private banks insurer, ICICI Bank remains the largest private sector insurer of them all and HDFC Life shares a significant market share. HDFC Life has the lowest surrender ratio which is a measure of how many people terminate policies beforehand and HDFC Life and Birla Sun Life sell the maximum term policies recorded. HDFC life leads the market share for online sales at almost 5 percent, while the others are at 1 percent.

Slow Profit Growth:

We all are seeing that the Insurance companies have become profitable in the last few years. Profit for an insurance company is determined by the product mix it offers to its customers. Products always generate a loss in the first year due to high acquisition costs and turn profitable thereafter.  Acquisition costs in India are a borne upfront and hence even during high growth years, companies can report a loss.

Surge Of Annualised premium Equivalents (APE):

An Annualised premium Equivalents (APE) is a measure of new businesses gained by insurance companies. Private sector companies have been reporting APE declines of 9 percent per annum over FY12-14 but, this is about to change, as growth is expected to raise  to 14 percent in FY16-17. Favourable factors are now emerging as inflation falls and equity markets turn favourable.

We all know that when inflation falls, people save more via financial instruments like-bank deposits and insurances which are the main factor that people are expected to get insured more.

Less Insurance Penetration:

In India, the insurance sector is a very small one. This can be seen in the penetration of life insurance in the country. Total premiums of life insurance companies accounts for just 3 percent of the Gross Domestic Product (GDP). This is much lower than other emerging market economies when compared. Even the per capita life insurance premium is just $41 in India, drastically lower than the $3204 in Taiwan. However, there is scope for a lot of improvement and growth for insurance companies. As profits grow, share prices are also expected to rise.

Source: Silicon India

Thursday, 10 September 2015

Increasing life insurance frauds forcing insurers to make medical tests compulsory

Increasing number of frauds in small cover term insurance policies is forcing life insurance companies to stop selling them and make medical tests mandatory. Private life insurer HDFC Life Insurance, the market leader in term plans, has stopped selling term policies below Rs 50 lakh besides making it mandatory for prospective buyers to undergo medical tests.

Munish Sharda, MD & CEO, Future Generali Life Insurance, said, “We don’t have an online term plan but offer offline term plan (sold by agents). We have seen challenges in some areas and segments on account of non-disclosure of the existing diseases and also because of misrepresentation and fraud. We have strengthened our due diligence process and have made medical tests mandatory for policies coming from fraud prone areas.”

 A senior official at HDFC Life said that as part of our risk monitoring process, we take suitable corrective actions in order to ensure that the risks that we underwrite are in line with what is assumed in the price we charge. This is a common practice in the industry.”

Ashish Vohra, senior director and chief distribution officer, Max Life Insurance, said, “In our case, medical tests were made mandatory around three years ago. There is a certain component of fraud in the industry. There are examples, where we have caught incorrect representation both in term plans and savings plans driven by middlemen who have put together a false file. We invest in front end controls and underwriting to pick up cases where frauds could be higher.”

Source: IIFL

Tuesday, 8 September 2015

Are You Adequately Protected Through Life Insurance?

In spite of nearly 24 life insurance companies, hundreds of products, lakhs of agents, brokers and thousands of bank branches and almost 15 years since the insurance industry was opened up to forge in and private players, a typical Indian household continues to carry risk of life protection or the risk of dying too early. Either a large portion of the population is still without insurance or is grossly underinsured. The financial risk of dying too early can be met through adequate life insurance but there exists a big gap in terms of actual protection. The mortality risk is highly under-penetrated. 

Since 2011, the global re-insurance provider Swiss Re has been publishing a study on “Asia-Pacific mortality protection gap featuring multiple markets including India. The recent 2015 report finds the gap between ‘actual’ and ‘required’ protection level to be big and increasing.  

How big is the gap: As per the report – “The mortality protection gap for most markets has widened. Collectively, the size of the gap reached $57.8 trillion in 2014 from $42.1 trillion in 2010.” China had the biggest gap in Asia-Pacific in 2014, amounting to $32.1 trillion compared with $18.6 trillion in 2010.  

Indian gap: The size of the mortality protection gap in India is significant, at $8,555 billion in 2014 and having grown by 11 per cent per annum between 2004 and 2014. India stands at second position followed by Japan and South Korea.  

The reason attributed for India to become the second-largest gap country over the past few years are higher growth in the labour force and wages. Overall, India has a life insurance penetration of 2.6 per cent of GDP in 2014, lower than Asia’s average of 3.5 per cent but higher than that of emerging markets with 1.4 per cent.  

In India, the protection margin is at 92.2 per cent. The report explains how big is the protection margin with an illustration – “The ratio of 92.2 per cent in 2014 reveals that for every $100 needed for protection, only $7.8 of savings and insurance is in place, leaving a massive protection gap of $ 92.2.” in simple terms it means, only 10 per cent of protection need is met by savings and insurance. Under-insurance and the means to meet an unexpected financial event is high.  

Reasons: India has the highest protection margin in the region as growth in savings and life insurance coverage has lagged behind economic and wage growth, the report identified them as probable reasons. It clearly shows, life insurers haven’t been able to sell ‘sum assured’ to the extent required. “Population and wage growth are key drivers behind the increasing gap in many markets. At the same time, while insurance penetration has increased further, this has proven insufficient to rein in the trend of a widening gap,” adds the study. 

However, the report also identifies that “In major emerging markets (eg India and China), the growth of insurance coverage has been faster than economic and demographic growth, thus resulting in a narrowing of the protection margin between 2010 and 2014.” 

Industry action: In Indian market, Swiss Re, as per the report, undertook initiatives with local players in employing the use of online channels to distribute term life insurance. Term insurance plans are low-cost, high-premium plans. Although a must-have for someone with financial dependant, most agents do not push them as commission earnings are low in them because of low premiums. Further, individuals lack awareness and clarity on term plans and view them as something where its ‘premium lost’, on surviving the term of the plan. Most insurers have therefore been using the online channel and promoting purchase of term plans from their websites. Interestingly, persistency on such policies is high compared to non-term policies. 

Government action: Lately, government had announced schemes for general public providing life cover, accident cover and pension. One of them is Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which is a one-year renewal group term insurance plan proving a life cover of Rs 2 lakh up to the age of 55. It remains to be seen, what impact it will have in bridging the gap. 

End note: The report highlights something which was known to all which is that under-insurance is high in India. But, the quantum is something one needs to look at seriously. As a thumb rule, one should own life insurance (in terms of sum assured) of at least ten times of one’s annual income. Add, future liabilities such as child education, marriage expense and home loan liability to arrive at actual figure. Review every five years to take care of inflation. And the best way to have enough cover is through term insurance plan. Visit insurer’s website and buy it online if your agent doesn’t help you. Use tools on sites to calculate actual coverage.

The report certainly points out the potential for insurers but as a consumer, anytime is the right time to get fully protected and spend quality time with family without financial worries.

Source: Business World

Friday, 4 September 2015

Can Your Travel Insurance Claim Get Rejected?

It's one of the ultimate travel nightmares: something happens in your trip that leaves your belongings lost, stolen, or damaged. It's even worse when the items that are lost or damaged happen to be the expensive ones. Travel insurance is one way to set your mind at ease, but is it possible that your claims can be rejected?

As a matter of fact, travel cover claims get rejected often, and it's important as a consumer to make sure you know what circumstances are used against people when they put a claim in on lost or damaged goods during their travels.

Here are some of the ways your online travel insurance claims can be rejected and what to do to avoid that.

Drinking Can Cost You
Vacation seems like the perfect time to have a cocktail, but this can be used against you in your claim later, so you will want to be careful with your alcohol intake. Any loss or damage that occurs while you are drunk or under the influence of drugs will mean the claim will be denied.

Of course, your insurance companies aren't expecting you to stay sober your entire vacation, but they do find that any damage that occurs as a direct result of you being under the influence isn't their responsibility to pay for. Your best bet is to keep your belongings stowed safely somewhere if you plan to drink excessively.

Keep Valuable Items With You
One way that a claim can be denied is when the insurance companies decide that proper care wasn't used for your valuable items. Hiding things in your room like cameras or jewelry is not what they view as good care. They can deny a claim saying you left them where they could be found easily and you will be left without their help to replace the items. You also don't want to leave them in cars where the bag they are in is visible. They say that isn't good care.

The best way to keep your items safe, or to keep yourself from being denied for these reasons, is to otherwise keep your valuables with you at all times, or to have them locked up in the safe at your hotel. Either of these methods will help lower the chance of anything happening to your belongings where you would need to make a claim, and it will help insure that you won't be denied if something does happen to them.

Get a Written Statement in the Deadline
Most insurers will want you to follow a certain procedure when something is stolen and that includes getting a police statement done as soon as possible. For many companies, you may only have around twenty-four hours to get a police report done and filed in order for them to accept your claim. As soon as you find your valuables gone, you should call the police and get the process started.

Keep a copy of your insurance policy with you as it contains all of the deadlines. My online travel insurance from ICICI Lombard allows me to keep a copy of my policy right on my phone and tablet. Make sure you keep a record of who you spoke to with the police and that everything has been accurately written down.

Know Your Policy
It's your responsibility as the consumer to make sure you have read over everything within your policy. This way you will know what you are and aren't covered for. Some claims will be denied simply because the policy you got doesn't cover the items you did the claim for.

This is also a good practice when it comes to injury or illness claims. If you policy doesn't cover injuries that happen during certain activities, then it might be best not to sign up for those activities. By knowing your policy, you can better protect yourself against a claim denial.

Don't Embellish
Whatever you do when making a claim, do not embellish your losses in any way. For some it may seem like a good idea to make the losses seem worse than they are, but this could get you into a lot of trouble if you are found out. People who do this can be charged with insurance fraud and could end up with fines or community service.

What to Do if Your Claim is Denied
If you had a genuine claim that didn't fall under any of these circumstances for denial, there are ways to try and repeal it. Check your policy to see what the referral procedure is as outlined by your insurer. You will have one or two more avenues to try and get your claim settled.

Source: Business Insider

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