Do you remember the last time you wanted to buy a general insurance product — be it a mediclaim, a householder’s policy or an accident cover? In all probability, you had to painstakingly compare every product feature and eventually opt for a particular policy based on your needs. This was because an agent from a particular company would neither inform you on product features of another insurer’s products nor sell its products as he isn’t allowed to do so.
If Insurance Regulatory & Development Authority (IRDA) accepts the recommendations made by the NM Govardhan Committee on distribution channels, that could be history. To provide a holistic product range to consumers with comparison across products, the committee has proposed that retail insurance agents from general insurance companies be allowed to contract with multiple non-life companies and sell policies of more than one company. At present, an exclusivity clause in insurance regulation restricts an agent from working with more than one insurance company.
“Retail insurance agents are a new concept to sell personal lines of products. The committee feels this will increase penetration of general insurance retail products,” the committee recommended.
“Penetration levels of general insurance products are very low, even lower than life insurance products. The recommendation will help increase sale of general insurance policies including mediclaim covers and offer a wide range of option to his/her clients,” said an analyst.
In a parallel development, the panel set up to look into senior citizens’ health insurance aspects has suggested convergence of agents for health insurance plans. This means agents of any insurance company — private or public sector, life and general — can sell mediclaim and health plans of any other company. In effect, the agent will work as a broker for health covers. You as a customer will have a choice from a vast array of products both specialised and off the shelve.
If both the recommendations are accepted by the regulator, agents from general insurance companies will be able to sell an array of health covers both from life and non-life companies as well as offer a wide range of other non-life retail policies including accident covers, motor vehicle insurance, and householders policy.
Currently, there are 18 life insurance companies and another 18 general cover companies. Although not all 18 life companies have launched health covers, a handful of them have and a host of others are looking at launching the product. Following adoption of this norm, each of the 20 lakh life insurance agents and 10 lakh general insurance advisors will be able to sell health plans from 17 general insurance companies and 16 life cover companies. However, not all life insurers have started selling health insurance policies though all the non-life companies have more than one version of the product. The largest life insurer, Life Insurance Corporation of India, which has about 13 lakh agents has announced plans of selling health insurance plans.
To this effect it has formed a team and is working on the products, which are expected to hit the market in the next couple of months. Private life insurers have also started launching health plans.
Source:
Debjoy Sengupta, Kolkata
The Economic Times
Wednesday, May 21, 2008
MEDICLAIM RENEWAL BY INSURERS MUST BE AUTOMATIC, RULES SC
The Supreme Court has ruled that insurance companies are obliged to renew the mediclaim policy automatically unless otherwise mutually agreed between insurer and insured.
A bench comprising Justice SB Sinha and Justice VS Sirpurkar also asked the regulator (Irda) to lay down guidelines to check the imposition of arbitrary clauses of mediclaim policy and its renewal. The court said, “renewal of a mediclaim policy subject to just exceptions should ordinarily be made”.
But where a renewal is based on mutual consent, there may be no automatic renewal. A mediclaim policy in which a senior citizen is involved would stand on a different footing. It will depend upon the contract entered into between the parties and the statutes operating in the field as also the constitutional scheme, court said.
It rejected the plea of some public sector insurance companies, which had said that wherever renewal is subject to mutual consent of the parties, it might be at its whims and caprice to refuse the renewal of the policy.
“The insurance companies cannot, either in their prospectus or in the terms of policy, lay down any condition which would be derogatory to the terms and conditions approved by the regulatory authority. If the contract of insurance itself provides for renewal of an insurance policy the same may not mean that the assured has a legal right of automatic renewal, but the courts are required to strike a balance” said Justice Sinha writing the verdict. The court asked the authorities concerned to lay down guidelines in this regard.
“We would like to observe that keeping in view the role played by the insurance companies, it is essential that the regulatory authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field...” the court said. The duties and functions of the regulatory authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the central government or the general insurance companies also issue requisite circulars,” the court said.
It further said, “ We would request the IRDA to consider the matter in depth and undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking recourse to arbitrary methodologies in the matter of entering into contracts of insurance or renewal thereof, appropriate steps on that behalf may be taken”.
Source:
Sanjay K Singh, New Delhi
The Economic Times
A bench comprising Justice SB Sinha and Justice VS Sirpurkar also asked the regulator (Irda) to lay down guidelines to check the imposition of arbitrary clauses of mediclaim policy and its renewal. The court said, “renewal of a mediclaim policy subject to just exceptions should ordinarily be made”.
But where a renewal is based on mutual consent, there may be no automatic renewal. A mediclaim policy in which a senior citizen is involved would stand on a different footing. It will depend upon the contract entered into between the parties and the statutes operating in the field as also the constitutional scheme, court said.
It rejected the plea of some public sector insurance companies, which had said that wherever renewal is subject to mutual consent of the parties, it might be at its whims and caprice to refuse the renewal of the policy.
“The insurance companies cannot, either in their prospectus or in the terms of policy, lay down any condition which would be derogatory to the terms and conditions approved by the regulatory authority. If the contract of insurance itself provides for renewal of an insurance policy the same may not mean that the assured has a legal right of automatic renewal, but the courts are required to strike a balance” said Justice Sinha writing the verdict. The court asked the authorities concerned to lay down guidelines in this regard.
“We would like to observe that keeping in view the role played by the insurance companies, it is essential that the regulatory authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field...” the court said. The duties and functions of the regulatory authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the central government or the general insurance companies also issue requisite circulars,” the court said.
It further said, “ We would request the IRDA to consider the matter in depth and undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking recourse to arbitrary methodologies in the matter of entering into contracts of insurance or renewal thereof, appropriate steps on that behalf may be taken”.
Source:
Sanjay K Singh, New Delhi
The Economic Times
Tuesday, May 20, 2008
Your health cover’s best left floating
The incidence of chronic diseases has been on the rise all over the world in recent years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment, too, has been rising.
This is where medical insurance can come in handy. By spending a small sum on a healthcare policy on a regular basis, you can undergo expensive medical treatment without having to worry about your precious savings getting eroded.
As in any booming economy, India’s economic growth is being driven largely by the middle classes. Notwithstanding the increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.
A relatively new type of health insurance plan called the floater health insurance plan helps you get the maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.
The policy covers medical expenses incurred as an inpatient during hospitalisation for more than 24 hours, including room charges, doctor surgeon fees and medicines, etc. This policy also covers expenses 30 days prior to hospitalisation and 60 days post hospitalisation.
So, what is the difference between the regular health insurance plans and Floater health insurance plans?
We can study this with an example. As the table shows, a family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs 7,580. The same family will have to pay only Rs 6,024 if they opt for a floater policy.
In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.
In the example above, when the claim amount increased in the daughter’s case, only the amount up to her respective sum insured would have been paid. In case of the floater plan, however, the full claim would be paid since the total sum insured of the family was Rs 3,00,000, wherein all members of a family were covered under the same plan for a single premium. The sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.
There is an upper limit in floater health insurance plan coverage, of Rs 3 lakh.
Floater plan has some additional benefits, such as:
- Free health checkup coupon for the senior most member of the insured family
- An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one-time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available
- No health check up required up to the age of 45 years (as on last birthday).
- Income tax benefits under section 80D, which from the current financial year has increased from Rs 10,000 to Rs 15,000 as deduction from the total income; Rs 20,000 for senior citizens.
Policy exclusions
All health policies have the following exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days of the commencement of the policy cover are not covered. This clause does not apply to subsequent renewal (without a break) of this policy.
The floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill. Therefore, the floater policy can be an effective cost-saver. As the age increases, you should start looking to migrate to individual sum insured policies.
Source: DNA Money
This is where medical insurance can come in handy. By spending a small sum on a healthcare policy on a regular basis, you can undergo expensive medical treatment without having to worry about your precious savings getting eroded.
As in any booming economy, India’s economic growth is being driven largely by the middle classes. Notwithstanding the increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.
A relatively new type of health insurance plan called the floater health insurance plan helps you get the maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.
The policy covers medical expenses incurred as an inpatient during hospitalisation for more than 24 hours, including room charges, doctor surgeon fees and medicines, etc. This policy also covers expenses 30 days prior to hospitalisation and 60 days post hospitalisation.
So, what is the difference between the regular health insurance plans and Floater health insurance plans?
We can study this with an example. As the table shows, a family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs 7,580. The same family will have to pay only Rs 6,024 if they opt for a floater policy.
In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.
In the example above, when the claim amount increased in the daughter’s case, only the amount up to her respective sum insured would have been paid. In case of the floater plan, however, the full claim would be paid since the total sum insured of the family was Rs 3,00,000, wherein all members of a family were covered under the same plan for a single premium. The sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.
There is an upper limit in floater health insurance plan coverage, of Rs 3 lakh.
Floater plan has some additional benefits, such as:
- Free health checkup coupon for the senior most member of the insured family
- An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one-time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available
- No health check up required up to the age of 45 years (as on last birthday).
- Income tax benefits under section 80D, which from the current financial year has increased from Rs 10,000 to Rs 15,000 as deduction from the total income; Rs 20,000 for senior citizens.
Policy exclusions
All health policies have the following exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days of the commencement of the policy cover are not covered. This clause does not apply to subsequent renewal (without a break) of this policy.
The floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill. Therefore, the floater policy can be an effective cost-saver. As the age increases, you should start looking to migrate to individual sum insured policies.
Source: DNA Money
Allianz eyes 10% emerging market growth in 2008
Frankfurt: Europe's biggest insurer Allianz is aiming for top-line insurance growth of at least 10 per cent in emerging markets this year, Allianz board member Werner Zedelius told Reuters in an interview.
"Our goal is to add at least 10 per cent per year in our growth markets and we've managed it up to now. We're doing everything we can to make it again this year," said Zedelius, responsible for business in 26 markets in Europe and Asia.
Allianz set a target in 2006 to earn 15 billion euros ($23.40 billion) in premiums from emerging markets, mainly central and eastern Europe and the Asia-Pacific region, within three to five years.
At the end of 2007, premiums were 12.8 billion euros, a 24 per cent increase over the previous year, with Asia-Pacific contributing 8.8 billion euros and eastern Europe 4 billion.
"We will probably reach our goal sooner rather than later," he said.
Emerging markets developed positively last year and Allianz also added some acquisitions, such as Russian insurers Rosno and Progress-Garant, which also boosted premiums.
"We more than met all our targets for sales and earnings," Zedelius said.
Prices for potential takeover targets still varied across emerging markets, Zedelius said.
"We are mainly focused on internal growth but we also look selectively at acquisitions," he said. "There will certainly be some buying opportunities also in the future," he said.
Allianz's growth market businesses steered clear of investments in subprime-related assets but they have noted some uncertainty among retail investors in some markets in the wake of the crisis.
For example, new business suffered in the first quarter in India, but generally the company has seen no big declines.
Allianz is pushing for long-term growth in China, where it earned more than 300 million euros in premiums in 2007.
It plans to raise the number of agents there to 40,000 in 2009/2010 from 11,000 now and is also expanding geographically, though the regions where it is already present have a combined population of around 250 million people.
"We've just received a licence for the Beijing region, which I definitely wanted to have ahead of the Olympics to show: We are now in the capital."
Allianz has focused so far on life insurance in China, which contributed about 290 million euros in premiums last year, with sales helped by cooperation agreements with banks ICBC and Agricultural Bank of China.
Zedelius said he was concerned for the safety of Allianz staff in Sichuan following last week's devastating earthquake in the region, noting that one employee was still missing.
"We don't expect significant claims for Allianz, however. We're still small in property insurance and while we may have some cases on the life side, that's what we're there for."
In Japan, Allianz has already reached its target for 2008, just six weeks after starting life insurance sales, Zedelius said.
In India, Allianz has more than 10.7 million policies outstanding. "That's an incredible number for a company that didn't even exist in 2001," Zedelius said.
Premiums there totalled almost 1.8 billion euros last year, about 1.4 billion of which were in life insurance.
Zedelius said Allianz was in concrete talks about its expansion into asset management in India but declined to give details.
Source: Reuters
"Our goal is to add at least 10 per cent per year in our growth markets and we've managed it up to now. We're doing everything we can to make it again this year," said Zedelius, responsible for business in 26 markets in Europe and Asia.
Allianz set a target in 2006 to earn 15 billion euros ($23.40 billion) in premiums from emerging markets, mainly central and eastern Europe and the Asia-Pacific region, within three to five years.
At the end of 2007, premiums were 12.8 billion euros, a 24 per cent increase over the previous year, with Asia-Pacific contributing 8.8 billion euros and eastern Europe 4 billion.
"We will probably reach our goal sooner rather than later," he said.
Emerging markets developed positively last year and Allianz also added some acquisitions, such as Russian insurers Rosno and Progress-Garant, which also boosted premiums.
"We more than met all our targets for sales and earnings," Zedelius said.
Prices for potential takeover targets still varied across emerging markets, Zedelius said.
"We are mainly focused on internal growth but we also look selectively at acquisitions," he said. "There will certainly be some buying opportunities also in the future," he said.
Allianz's growth market businesses steered clear of investments in subprime-related assets but they have noted some uncertainty among retail investors in some markets in the wake of the crisis.
For example, new business suffered in the first quarter in India, but generally the company has seen no big declines.
Allianz is pushing for long-term growth in China, where it earned more than 300 million euros in premiums in 2007.
It plans to raise the number of agents there to 40,000 in 2009/2010 from 11,000 now and is also expanding geographically, though the regions where it is already present have a combined population of around 250 million people.
"We've just received a licence for the Beijing region, which I definitely wanted to have ahead of the Olympics to show: We are now in the capital."
Allianz has focused so far on life insurance in China, which contributed about 290 million euros in premiums last year, with sales helped by cooperation agreements with banks ICBC and Agricultural Bank of China.
Zedelius said he was concerned for the safety of Allianz staff in Sichuan following last week's devastating earthquake in the region, noting that one employee was still missing.
"We don't expect significant claims for Allianz, however. We're still small in property insurance and while we may have some cases on the life side, that's what we're there for."
In Japan, Allianz has already reached its target for 2008, just six weeks after starting life insurance sales, Zedelius said.
In India, Allianz has more than 10.7 million policies outstanding. "That's an incredible number for a company that didn't even exist in 2001," Zedelius said.
Premiums there totalled almost 1.8 billion euros last year, about 1.4 billion of which were in life insurance.
Zedelius said Allianz was in concrete talks about its expansion into asset management in India but declined to give details.
Source: Reuters
Choosing a no-frills insurance plan
If you are looking for a no-frills insurance plan that covers you against risk to life, then a plain-vanilla term assurance plan may be your ideal investment.
It provides basic life cover to an individual and compensates dependants for the loss of an earning member of the family, in the event of his death.
For individuals, term assurance is the first type of life insurance to be bought before they plan for any other kind of investment.
Of late, individuals taking home loans or other large obligations have started to opt for a term insurance policy along with the loan, in order to secure their family against the loan obligation in the event of their death. With expanding choices, premiums on term assurance policies have become very competitive.
A term policy can be taken to cover an individual alone or his/her spouse (joint life) or to cover business partners. Term insurance plans are non-participating policies. Therefore, if the insured survives the term, he will stand to receive no maturity value at the end of the term.
Term insurance is intended to compensate your family for loss of income. Assuming Avinash, aged 25, earns Rs 5 lakh per annum and his yearly financial commitments total Rs 3 lakh, he has to plan for the sum assured based on the requirement. In this case, if the dependant can earn a return of 7 per cent per annum, he has to buy a plan for Rs 40 lakh.
A point to remember here is that most insurance companies offer term plans for a maximum period of 25-30 years and cover is provided till the age of 65 years.
Apart from one policy for income replacement, an individual can take separate policies for the other financial goals such as education and marriage of the dependant children. Separate policies can be taken for these and discontinued if the goal is reached.
Types of term insurance
Level Premium: Under this option, your risk cover and premium remain the same throughout the policy term. This type of option is considered to be best if one prefers to plan for income replacement, after one’s time. In the event of death, a lumpsum payment is made and the same can be invested to secure monthly income for dependants.
Decreasing cover: The sum assured gets reduced every year and becomes nil at the end of the term. These plans are ideal if linked to your home loan or to any other business loan. As the loan outstanding reduces, the cover will fall accordingly.
Single Premium: Several insurers allow you to pay a lumpsum premium at one go. This may factor in a good discount to your regular premium and is ideal if you have an irregular income stream and cannot commit to regular premia over time.
Riders
Term policies also allow you to add other riders or benefits on payment of additional premium. A few key ones are:
Critical illness benefit: If one is diagnosed with any illness covered by the policy, a lump sum is paid and the critical illness rider then ceases to be in operation. However, the basic sum assured continues to be in operation.
The general rule is that if one survives for 30 days after the critical illness, the entire sum insured, including critical illness, is paid.
In comparison to general insurance, here the entire cover is paid, irrespective of the actual money spent on treatment. Some insurance companies offer a cover that is as high as Rs 50 lakh under this benefit.
Accelerated Sum Assured benefit: On diagnosis of any one of the critical illnesses, the sum insured is paid and the basic policy terminates without any value.
Accident death benefit: In case of demise by accident, an amount equal to the sum assured is paid in case of accident, or if death occurs within 90 days from the accident.
Choosing term plans
Some insurance companies offer return of premium and others offer plain products. It is advisable to take plain products and save on the extra premium, which can be invested in other avenues.
It is important to remember that taking insurance gets more expensive as you get older, therefore locking into a term plan early in your life makes sense. Premiums for term insurance policies are based on a number of factors, including age, gender, state of health and lifestyle.
Some insurance companies offer a discount on the premium for a non-smoker.
Therefore, it may be best to do some comparison shopping based on your requirements and select the provider who offers a competitive rate.
Tax benefit: The premium paid on your policy is eligible for tax benefits under the overall investment limit under section 80 C. In the event of death, the money received from the insurance company is tax exempted under section 10 (10D).
The premium paid for accelerated sum assured is exempted under section 80 D.
Hence, plan your requirement and select a term insurance policy as soon as possible because when it comes to term policies, early initiation translates into straight savings on your premia.
Source: Business Line
It provides basic life cover to an individual and compensates dependants for the loss of an earning member of the family, in the event of his death.
For individuals, term assurance is the first type of life insurance to be bought before they plan for any other kind of investment.
Of late, individuals taking home loans or other large obligations have started to opt for a term insurance policy along with the loan, in order to secure their family against the loan obligation in the event of their death. With expanding choices, premiums on term assurance policies have become very competitive.
A term policy can be taken to cover an individual alone or his/her spouse (joint life) or to cover business partners. Term insurance plans are non-participating policies. Therefore, if the insured survives the term, he will stand to receive no maturity value at the end of the term.
Term insurance is intended to compensate your family for loss of income. Assuming Avinash, aged 25, earns Rs 5 lakh per annum and his yearly financial commitments total Rs 3 lakh, he has to plan for the sum assured based on the requirement. In this case, if the dependant can earn a return of 7 per cent per annum, he has to buy a plan for Rs 40 lakh.
A point to remember here is that most insurance companies offer term plans for a maximum period of 25-30 years and cover is provided till the age of 65 years.
Apart from one policy for income replacement, an individual can take separate policies for the other financial goals such as education and marriage of the dependant children. Separate policies can be taken for these and discontinued if the goal is reached.
Types of term insurance
Level Premium: Under this option, your risk cover and premium remain the same throughout the policy term. This type of option is considered to be best if one prefers to plan for income replacement, after one’s time. In the event of death, a lumpsum payment is made and the same can be invested to secure monthly income for dependants.
Decreasing cover: The sum assured gets reduced every year and becomes nil at the end of the term. These plans are ideal if linked to your home loan or to any other business loan. As the loan outstanding reduces, the cover will fall accordingly.
Single Premium: Several insurers allow you to pay a lumpsum premium at one go. This may factor in a good discount to your regular premium and is ideal if you have an irregular income stream and cannot commit to regular premia over time.
Riders
Term policies also allow you to add other riders or benefits on payment of additional premium. A few key ones are:
Critical illness benefit: If one is diagnosed with any illness covered by the policy, a lump sum is paid and the critical illness rider then ceases to be in operation. However, the basic sum assured continues to be in operation.
The general rule is that if one survives for 30 days after the critical illness, the entire sum insured, including critical illness, is paid.
In comparison to general insurance, here the entire cover is paid, irrespective of the actual money spent on treatment. Some insurance companies offer a cover that is as high as Rs 50 lakh under this benefit.
Accelerated Sum Assured benefit: On diagnosis of any one of the critical illnesses, the sum insured is paid and the basic policy terminates without any value.
Accident death benefit: In case of demise by accident, an amount equal to the sum assured is paid in case of accident, or if death occurs within 90 days from the accident.
Choosing term plans
Some insurance companies offer return of premium and others offer plain products. It is advisable to take plain products and save on the extra premium, which can be invested in other avenues.
It is important to remember that taking insurance gets more expensive as you get older, therefore locking into a term plan early in your life makes sense. Premiums for term insurance policies are based on a number of factors, including age, gender, state of health and lifestyle.
Some insurance companies offer a discount on the premium for a non-smoker.
Therefore, it may be best to do some comparison shopping based on your requirements and select the provider who offers a competitive rate.
Tax benefit: The premium paid on your policy is eligible for tax benefits under the overall investment limit under section 80 C. In the event of death, the money received from the insurance company is tax exempted under section 10 (10D).
The premium paid for accelerated sum assured is exempted under section 80 D.
Hence, plan your requirement and select a term insurance policy as soon as possible because when it comes to term policies, early initiation translates into straight savings on your premia.
Source: Business Line
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