Getting married? Get wedding insurance

Wedding planners say that the smallest metropolitan middle class wedding in India these days, costs upward of Rs 5 lakhs. With the stakes being so high, wouldn’t you want to cover any risk of loss?

A 29-year-old BPO executive, who is getting married next month, has decided to do so. She is taking a wedding insurance to cover all emergencies. Her family will be spending close to Rs 6 lakhs on her wedding. That is a huge expense. Her wedding planner recommended that she should take a wedding insurance cover to hedge herself against any unfortunate incident. She too thinks it’s a great idea.

Every year, lakhs of people spend a fortune at their wedding. Insurance companies have come up with innovative products to get a piece of this pie.

Wedding Insurance for instance covers against delays, accidents, food poisoning, burglary etc. As many customers are superstitious insurance companies do not market these policies aggressively. But for those who like to play safe, the policy is available through wedding planners, banquet halls or through the company branches directly.


The table given below is an example of a wedding insurance policy offered by an insurance company. The insurance package is divided into six sections.


What’s the cover?As in the above example, the insurance package is divided into six sections. Wedding cancellation and postponement is the most sought after. Majority of the people go in for this cover since it covers most of the expenses. But there are strings attached.

Cancellation or postponement must be due to a fire or related hazards to the venue. It could also be a result of an accident to the bride, groom or any of the relatives seven days before the wedding date. But if the wedding is cancelled due to a dispute between the marriage parties, the insurance company will not pay claim. Criminal acts like child marriage will also not be covered.

In case of a claim, the insurance company will reimburse the expenses for printing the cards, advances given to book the wedding venue, advances to the caterer, decorator, as also for hotel room bookings and travel reservations.

The second cover - the damage to property cover would include damage to the decoration at the home of the policyholder or at the venue. In addition, the policy will also cover personal accident. Here, at the time of taking the policy, the policyholder must declare the names of relatives who would be covered under this section. There is also a public liability cover wherein any compensation payable for damage to person or property due to food poisoning, accidents at the venue etc would be covered.

An Indian wedding is synonymous with jewellery and precious stones. So an obvious cover would be the insurance of these items against thefts. In such case though, valuation certificates and bills would be needed at the time of taking the policy.

Public sector insurance companies also offer Wedding Bells - an insurance cover that insures any expenses incurred owing to postponement, cancellation or stoppage of the marriage.

Cost mattersOne need not go in for all these covers. The insurance company offers a choice and you may opt for any or some of these covers. The premiums would depend on which covers are selected. For instance, for the cancellation cover, for a sum assured of Rs 2 lakh, the premium would work out to Rs 1,200. If you opt for the minimum cover under all categories, your premium would work out to Rs 3,421 - excluding service tax (see table).

In both these policies, any negligence, misconduct or insolvency will not be covered. Further, in case of damage to electrical apparatus, that is caused due to a short circuit or self-heating will not be covered. Any fines or levies imposed by the government will also not be covered.

If you keep these in mind, then the policy is surely a must-have, considering the large sums that are spent on marriage these days.

All about Professional Indemnity Insurance

Historically, the word ‘profession’ was associated with the occupations known as the learned professions namely clergy, education, law and medicine. With society developing into a more complex and specialised entity, occupations requiring extensive technical knowledge or training have increased manifold. The domain of professional liability has extended beyond the traditional professions resultantly.

Broadly, professional liability can be defined as the failure to use the degree of skill expected of a person in a particular field. Professional liability insurance, therefore, describes insurance covering liability arising out of the providing of professional services to others.

By law, professionals are required to perform the services for which they were hired in accordance with the appropriate terms of contract. While the first duty is primarily contractual, the second arises from the principle of tort law. A contractual arrangement is created, when a client hires a professional to perform a service. When he fails to perform the contractual obligations as promised and the client suffers harm as a result, the injured party is entitled to be restored to the position he would have occupied had the contract been performed as promised. A tort is a private wrong, as opposed to crime that is a public wrong.

A professional also has a duty to follow a recognised standard of conduct in the course of daily activities. He should use reasonable care to avoid causing injury to his clients in the exercise of such duty. Failure to comply with that accepted standard of conduct will expose a professional to liability for any damage to another person. A wrongful act is established by determining whether a prudent person, in the exercise of ordinary care, would have foreseen that the injury or damage would have naturally or probably resulted from the conduct.

Violation of duty towards a client by a professional can result in a contract action, or a tort action, or both. A breach of contract arises when the professional fails to perform the services agreed to. When he fails to perform as expected either a contract or tort cause of action may arise. However when his performance causes damage or personal injury, a tort action is most likely to arise.

The professional liability coverage needs of different professionals differ according to the possible consequences of their professional acts or omissions. Consequently, professional liability policies differ in the types of loss they cover. The principal consequence of a physician’s negligence is physical or psychological injury to a patient.

Insurance with Investment

Providing an insurance cover to investors in mutual funds has become a fad. Though the idea was initiated by DSP ML back in 2005, others were quick to follow.

Recently Birla Mutual Fund came up with 'Birla Sun Life Century SIP'. Investors who invest via the systematic investment plan (SIP) in 18 of the equity schemes of this asset management company (AMC) will be entitled to a life insurance cover and the insurance expenses (premium) will be borne by the asset management company (AMC). The caveat: the investor must be between 18 and 45 years of age when applying for the scheme and the minimum SIP amount must be Rs 1,000.

So how much will the insurance cover be? The amount of insurance cover for the first year will be 10 times the SIP investment made by the investor. For example, if an investor has a monthly SIP of Rs 5,000, he will be entitled to coverage of Rs 50,000 (Rs 5,000x10) in the first year. In the second year, it goes up to 50 times and 100 times from the third year onwards.

However, the insured amount is limited to a maximum of Rs 20 lakh.

Reliance Mutual Fund has come up with an insurance scheme which benefits the fund house as much as the nominee of the insurance policy. Termed as 'Reliance SIP Insure', the AMC will make the required unpaid SIP payments (up to Rs 10 lakh) should the investor die during the tenure of the SIP.

As a result, the investor's long-term financial planning and objective of investing are continued as per the targeted time horizon even if he dies. Sounds great but this holds only if the SIP is for a period of at least three years with a minimum monthly payment of Rs 2,000. Here the age at the time of investment should be between 20 and 46 years.

DSP ML covered five schemes and investors between 18 and 43 were eligible with a minimum SIP of Rs 2,000. But the tenure was quite long: 6, 11 and 16 years. Under this plan, the monthly SIP installment amount multiplied by the number of months remaining for the scheme to end would be given to the nominee. That was the variable plan. Under the fixed plan, an amount equal to 240 the monthly installment would be paid anytime during the tenure should the investor pass away.

Kotak AMC in 2007 launched its Kotak Star Kid Plan whereby only a child could be made the nominee and this insurance was solely applicable to Kotak 30 and Kotak Tax Saver. The SIP tenures were 5, 10, 15 or 20 years. In the case of death, the balance SIP amounts to be invested would be paid to the nominee with the maximum insurance benefit restricted to Rs 10 lakh.

The age at the time of entry is higher than the other schemes, at 23 years. But then again, since it is targeted at one's child it seems fair enough. But it does have a maximum age limit for entry: 45 years, irrespective of how many children you have by then.

Source: insuremagic

Centre-sponsored health insurance scheme for BPL families soon

TIRUNELVELI: Getting advanced medical assistance with government aid from a well-equipped private hospital for the below poverty line families of the district is no longer a dream as the recently introduced Rashtriya Swasthya Bima Yojana will come into force here within next 30 days.
The objective of this health insurance scheme is protecting BPL households with unorganised sector workers without any age limit from 700-odd ailments that involve even hospitalisation with a cost of up to Rs.30,000 per annum for a nominal registration fee of Rs.30. The coverage extends to the head of households, spouse and up to three dependent children or parents.
An annual premium of Rs.700 to be paid by the beneficiaries would be shared by the Centre (75 per cent) and State (25 per cent) governments and hence the beneficiary families would have to bear only the nominal registration charges.
Since the district administration has already completed the exercise of preparing the electronic list of eligible BPL households to be provided to the insurer, United India Insurance, according to a pre-specified format, it would be soon posted in each village prior to the enrolment and the date and location for enrolment would be publicised in advance.
Mobile stations equipped with the hardware required to collect biometric information (fingerprints) of the members of the household would be set up in public places like schools.
Based on the information collected from the BPL families smart cards with a photo of the family head will be printed.
Smart card
The smart card along with an information pamphlet describing the scheme and the list of hospitals would be issued on the spot once the beneficiary pays the registration charge of Rs.30.
On showing the smart card in the select hospitals the patients could avail themselves of the medical assistance.
In Tirunelveli district, one of the two districts in the entire State (the other district is Kancheepuram) selected for this programme, distribution of smart cards was expected to commence within 30 days, informed District Collector (In-Charge), G. Srinivasan, who explained the salient features of this Centre-sponsored health insurance scheme in the district planning committee meeting here on Wednesday.

Source: The Hindu

PF Act likely to cover firms with 10 employees

New Delhi, July 2 More than five million people employed in establishments that have 10 or more workers but less than 20 may soon come under the purview of the Provident Fund Act if the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) clears a proposal to this effect at its meeting scheduled for Friday.
Being covered under the Act would entitle the workers to an employer contribution of 12 per cent of the basic pay, which the employers have to shell out over and above the present salary bill and would lead to mandatory savings.
The CBT of the EPFO will meet to consider extending the coverage of the PF Act to smaller establishments in order to provide social security to the workers employed there.
As of now, the Act covers only establishments with 20 or more employees. In the case of co-operatives the number is 50.
The new plan is to bring down the threshold limit for coverage from 20 to 10 for ordinary establishments and from 50 to 20 in the case of co-operative societies, a CBT member said
After the CBT approves the change, the Ministry of Labour will move a PF Act amendment proposal in Parliament to amend the provision of coverage, he said, adding that it may happen during the monsoon session because there is political unanimity on the subject.

Source: Ambarish Mukherjee

EPFO decides to break SBI monopoly over its funds

Even as the Rs 240,000-crore Employees’ Provident Fund Organisation (EPFO) is creating a short-list of professional fund managers to replace its sole investment manager--- State Bank of India---work has also begun on abolishing SBI’s 56-year monopoly over EPFO’s banking business, thanks to growing differences between the two financial bigwigs in the past couple of years.
In a recent meeting, the EPF board’s finance & investment committee (FIC) has decided to approach 10 top banks on the basis of ‘their branch spread’ and ask them what facilities they can offer to EPFO, considering the huge quantum of funds involved. Just like the move towards multiple fund managers last year was triggered by the realisation that sub-optimal investments by SBI may be responsible for the dipping returns on its portfolio, the move to replace SBI as its banker comes after the bank failed to come up with a ‘satisfactory’ treatment for EPFO’s funds that remain idle in the bank’s coffers.
Employers contribute their workers’ monthly PF contributions to local SBI branches, which then submit challans to the local PF office and transfer the funds to EPFO’s investment account, usually with a time lag. “On a day-to-day basis, amounts as high as Rs 150 crore could be idling in SBI vaults till they reach EPFO’s accounts. For over two years now, we have been asking SBI to give some kind of returns on these funds, as they are being deployed in the bank’s operations,” a FIC member told FE.
While SBI had cited RBI guidelines for its inability to share returns on idle funds with EPFO, it had offered to pay interest equivalent to what is paid on savings accounts. But it took a while for EPFO to realise this didn’t add up to much. Savings accounts are credited interest on the basis of the minimum balance in the latter half of a month. So, if idle funds are transferred to EPFO’s investment accounts during the time, EPFO would get zero interest.
To counter this, EPFO asked SBI to pay interest on daily running balances rather than on a monthly basis. However, SBI said this can’t be done as per the savings account rules. At the last meeting with EPFO’s financial advisor to resolve the impasse, SBI officials proposed a combination of liquid mutual funds and overdraft facility
Attributing SBI’s inflexible attitude to its monopoly status, the FIC chairman said that ‘bringing competition is... the only remedy.’ As per the FIC decision, the EPFO will now approach the top ten banks....

Source: Financial Express

Allahabad Bank ties up with Tata AIG

Allahabad Bank on Wednesday tied up with private life insurance company Tata AIG for providing mortgage term insurance facilities to housing loan customers of the bank.
Tata AIG Chief distribution officer Joydeep Roy said that customers would be offered reducing term life insurance designed to cover mortgage loan obligation of the insured member against death during the term of the coverage.
In case of an unfortunate event like death of the mortgage loan borrower, the insurance cover would provide for repayment of the housing loan.
“The family will get back the property,” he said.
Allahabad Bank Executive Director J P Dua told reporters here that the tie up for mortgage insurance would be an added advantage for the customers of the bank.
As per the agreement, the bank would extend Tata AIG’s housing loan cover through its network of 2,154 branches across the country.

Source: DNA, Business Standard, Financial Express, TelegraphIndia