Are there any plans in India that provide Maternity and New Born covers?

Cost of maternity treatment is rising but until now very few policies provided benefits either for maternity treatment, or complications arising out of maternity, or even cover for the new born baby.

Consider these facts:

1.      Pregnancy related claims have the highest claims frequency (0.726%) of all diseases among females.  

2.      This is particularly high for Females in age group of 26-35 years accounting for about 2% of all claims.

3.      Most of the pregnancy related claims fall in the Rs. 25000- 50000 bracket.

These don’t include out of pocket costs that families have themselves paid. Insurers have now started offering maternity benefits as part of the policy or as an add-on.  Another important thing to note is that is if you don’t have maternity cover, you may be denied treatment for any condition that may arise due to complications during child birth. Hence the cover goes beyond the immediate child birth.

Below is a comparison of polices that offer Maternity and New Born covers. The premiums and benefits shown is for a family of three with the eldest member being 30 years of age opting for five lakhs cover.

Most Maternity covers have a waiting period, so it is better to have this cover well before you plan to start your family.

You can get a complete comparison of Health Insurance polices with Maternity and New Born cover at www.policylitmus.com.

What to do when your Employer provided Healthcare is not enough?

As the health care cost in India rise, lot of employers are cutting back on the amount health cover they provide to employees and their families.  The employer provided health cover is often not adequate to meet the needs of the family. The typical health cover required by a family of four in a tier-1 city is around 5 lakhs.  Most employers on the other hand provide a cover of about 2-3 lakhs.  With a cover of 2-3 lakhs, you have a 60% chance of overshooting this amount in case of hospitalization. What can you do to enhance your cover?

TOP-UP Plans

The best way to address this supplemental need is thru a Top-UP plan(Also known as High-Deductible Plan). This is how a top up plan works. Let’s say you have a cover of 2 Lakhs from your employer under Policy A, but as a family of four in a metro your need is 5 lakhs of cover. You can opt for a top-up policy, say Policy B, that covers you from 2 lakh onwards upto 5 lakhs. This is lot cheaper than buying an additional 3 lakhs mediclaim  cover.

Let’s look at various scenarios in this case.

Scenario 1: Total Claims is 1.5 Lakhs in the year.

In this case your employer policy, Policy A, pays for the costs. You haven’t reached the 2 Lakhs limits so the Top-up Policy doesn’t kick-in.

Scenario 2: Total Claims is 3 Lakhs.

In this case your employer policy, Policy A, pays for the first 2 Lakhs. As you have reached the 2 Lakhs limits, the Top-up Policy kicks-in. The top-up policy now pays for 1 Lakh.

Scenario 3: Total Claims is 7 Lakhs

In this case your employer policy, Policy A, pays for the first 2 Lakhs. As you have reached the 2 Lakhs limits, the Top-up Policy kicks-in. The top-up policy now pays an additional 3 Lakhs taking your total claim amount to 5 lakhs. At this point you have exhausted your top-up option. So you need to pay the remaining 2 lakhs.

Should you have got a higher top-up? Next week I will address the question of how much insurance you need.

Availability

Top up plans are a relatively new phenomenon in the market started about five years back. There are limited choice in terms of the deductible and cover you can choose. Good news is that it is growing.

Insurers offering top up plans today are:

1. United India Insurance Company

2. HDFC ERGO General Insurance

3. Apollo Munich Health Insurance

4. ICICI Lombard General Insurance

5. Bajaj Allianz General Insurance

6. Star Health Insurance

7. Chola Insurance

You can get details of the Top plans and premiums at policylitmus.com

Author: Amitava Deb

6 mistakes to avoid while buying Insurance

Buying insurance is NOT a mistake. It is important to insure, because it purchases peace of mind. Not having insurance is much like taking a family vacation in your car and not carrying a spare tyre. The mere possibility of a flat is enough to ruin your peace of mind. Millions buy insurance, and promptly forget about it: till a claim arises. Many thousands of claims are rejected because of the common mistakes made when buying insurance. Here are the six most common ones.

1.       Not enough research:  A lot of insurance is hard sell; sold and purchased hurriedly. This leaves little time to check the suitability or need. Motivated comparisons, wrong illustrations and untrained distributors add to the confusion. It makes sense to be sure of your need, and then do a little research on what are the best options available. Research the distributor’s competence, competitive products and the companies on offer. Compare Insurance policies before you decide to buy one.

2.       Too much or too little: Buying too much is rare. Most people end up buying too little. What is the appropriate amount of insurance one must have? In the case of property (say motor, or home) it is usually simply the current value of the asset. In case of life, a rule of thumb is ten times your annual income. Health Insurance is more complicated and a lot depends on your lifestyle and ability to pay premiums. Health premiums are eligible for a tax rebate. First check out what the premiums up to the current tax limit will buy for you, adjust thereafter based on your needs.

3.       Not reading the contract/documentation: This is so common as to almost be the rule. We rarely if ever open the document and read the conditions: even a cursory glance will reveal that the contract is written to protect the insurance company. Most insurance contracts have a cooling period; usually a couple of weeks. During this period you can return the contract for a full refund. Read your rights and also ensure that your obligations are met. Many a claim is rejected because some obligation on your side is not fulfilled to the letter.

4.       Inform your family about the details: Insurance protects you and your assets. It makes sense to inform your family about the details. There have been instances where claims have been rejected because of late intimations of loss.

5.       Read the application form and fill it out yourself: Insurance applications forms are complex and carefully worded. It is wise to tell the truth and if in doubt all the details. The more complete the answer the less the scope for a claim rejection. It has happened that the distributor may enter a wrong answer in spite of you wanting to be truthful, hence fill out the form yourself to avoid nasty surprises when filing for a claim.

6.       Not buying from a professional: Insurance agents are a dime a dozen and come in all shapes, sizes, and longevities. This profession has more than its fair share of dodgy, untrained fly-by-night operators. Buy from a professional who is sincere to his profession and cares about your needs.

Made any of these mistakes and suffered the consequences? Made a new mistake? Let us know and we shall share those as well. 

Amit Kumar

6 Steps to take if your life insurance company rejects your claim

Nothing can be more traumatic than an life Insurance claim getting rejected. Primary feelings are a sense of betrayal and helplessness.

But do not lose hope; here is what you can do.

1.       Know your Rights: These are an extract of your rights as a policyholder/claimant:

a.       After you submit a claim, the company shall raise requirements all at once and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.

b.      A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications required. If the company requires an investigation, it shall initiate and complete such investigation not later than 6 months from the time of lodging the claim.

c.       Under certain circumstances, companies are liable to pay interest on delayed claim payments. 

It is possible that you may not have in your possession documents that the company insists on your producing. This could also be one reason that the company delays/denies claims. You must inform the company in clear terms that you do not have these documents and the reasons for the same.

2.       Check the date of commencement of the policy: Insurance companies cannot reject claims under policies that have completed more than 2 years from the date of commencement, unless they can prove fraud. It will help to read Sec 45 of the Insurance Act.

3.       Check the Proposal Form: A copy of the proposal/application for insurance is part of the policy document. Check if all information was correctly provided at the time of taking out the policy.

4.       Write to the company: If both of the above are in your favour, write a letter to the company asking for a review of the claim decision. Most companies have committees that review appeals from claimants. These committees generally comprise of senior staff and they tend to have a more “open” view. Make sure your application reaches this committee.

5.       File a complaint with the Ombudsman: If the value of your contract with the insurance company is Rs 20 lacs or less, you can approach the Ombudsman. The Ombudsman is a quasi-judicial body that hears appeals against an insurance company. This service is free and there is no need to appoint lawyers or other legal personnel. Ombudsman awards are binding on the Company.

6.       Approach the Consumer Court: A large number of decisions by consumer courts have helped aggrieved policyholders and claimants.

Of course the choice to approach a regular court always exists, and you may want to seek those remedies.

It is useful to also know the claim paying history of companies before you purchase a policy. Visit us to know more. If you still have a query, please contact us.

Amit Kumar

Insuring your Child? Five Harsh Facts.

Insuring your Child? Five Harsh Facts

Have you bought or are you planning to buy an Insurance Policy for your child? Your objective is almost certainly to create a nest egg when she becomes a major or probably inculcate the habit of saving and thrift. Before you put down the first premium, check the following:

1.       Is your child earning an income?

Insurance is a substitute for economic value. If your child is not currently earning an income, he does not (sorry to say this) have any current economic value.  You may say that he has potential economic value, which only means that he has a potential insurable interest, but none now. Ergo, he need not be insured. To fulfill his potential he needs economic support, which is provided by you: you need insurance.

Of course, there are children who earn incomes: child TV stars for example. They need insurance because they represent economic value.

2.       No Risk Cover Before the age of 5, or 7 or even 8:

It is pretty difficult for an insurance company to assess risk for small children. Most insurance companies will not offer risk cover before your child is at least 5 years old. Even if you do buy a policy, you have to check if on submitting a claim, the insurance company will return the entire sum assured. Some companies may stagger the claim payout in the initial years (technically called a “lien”), or just return the premiums paid (with or without interest).

3.       Automatic Vesting:

All child policies in India have a mandatory “auto vesting” clause. What this means is that the moment the child turns 18, the policy owner (i.e. the person who purchased the policy and paid all premiums till then) loses all control over this asset. While you may argue about the pros and cons of this clause based on your current emotional situation, any clause which does not have an escape clause must be carefully evaluated.

4.       Child Policies are all savings oriented policies:

Does that tell you something? Insurance companies do not issue pure risk policies on children precisely because the following two principles are keenly followed:

·         Insurance can be sold to only those that earn an income

·         Mortality risks in children is not easy to assess

(Purists will argue that there are other reasons like inability to manage a contract and so on, but the above 2 reasons exemplify the argument).

5.       Premiums are cheaper if the age is below 18:

Many would argue that this is a positive. However consider that if your objective is not to en-cash on anything untoward happening to your child, a lower premium rate is irrelevant. If your objective is only as stated above (nest egg creation/inculcating thrift), there are possibly other ways you must explore before you buy life insurance. Life insurance as a savings tool is not always terribly efficient.

Many child insurance policies on sale today in India do not cover mortality risk of the child but are policies that are meant for adults: the child is usually the beneficiary. Since children can be the beneficiaries of almost any life insurance policy, you may want to check competing products to see if the one on offer has any specific advantage. Child Insurance policies can also be surprisingly inflexible, with some offering pre-determined money-back installment schedules based on a parent’s current view on the child’s future occupation. All child insurance is an emotional sale, and insurance company agents know that. As a person financially responsible for the wellbeing of those you care for, it is important to adequately insure yourself first.

We at www.policylitmus.com know that purchasing insurance is not an easy task, which is why we have compared over 900 products from 50 companies to make this choice easier for you.

Amit Kumar

Why are so many people victims of Insurance misselling?

Blame yourself!

Almost everyone knows someone who has bought a policy and has regretted it. Sometime back I had conducted a quick, informal 5-question survey that threw up some interesting results.

Almost all of those who were surveyed, knew the person who had helped them purchase (usually their agent); most of them could remember the premium commitment they had made, somewhat lesser numbers were unaware of the details of the product they had purchased (those who scratched their heads and came up with vague replies like LIC or Money-back or ULIP were marked as people who could not remember details). A few cavaliers could not name the company they had purchased from (Customers of LIC were honorable exceptions when it came to remembering the company).

I summoned up the courage to ask them the final question: if they knew enough about payment schedules and bonus rates and fund apportionment and claim repudiation ratios. Replies were fairly colorful; suffice to say that the survey wound up at that spot.

We all know why we buy. I can say with a fair degree of certainty that it is almost always never for the right reason. Why is it that when we pay that first few thousands as premium we do not find out what we are getting into? If we buy for the wrong reasons and then cannot even remember what we bought, can we be called victims of misselling?

Think of the time you purchased your last smartphone, or television, or when you planned your family vacation. Remember how you had agonized over the choices, pored over the details, asked your friends, compared on the internet and generally made life hell for those around you? Now think of the time you plunked down the first premium for your insurance.

If you feel that this only applies to you, pause, you are in good company. Our inability to do a little research before we buy insurance is widespread in the population. Industry captains, smart entrepreneurs, government clerks, you name them, and they are in the list. It is obvious that an agent will spot this advantage and move in. Can you then blame him for selling you a dud? The fact is we cannot escape the responsibility of our own inaction.

This does not in any way condone the behavior of an agent who mis-informs and makes a sale. At our end, a little research, however, goes a long way. You can still oblige your tax advisor, or your friend, or save tax or whatever else is your reason for buying. But there is no reason for you to not make an informed decision on buying Insurance.

Amit Kumar

Best Health Policies after Retirement In India

Best Health Policies after Retirement In India

For quite a few of us, our employer provides medical cover and often bears the cost of medical insurance.  But once you retire you are on your own. One of the first things that hit you is that you need to find is a health insurance cover.   And to our surprise (really!!), suddenly the premiums for most insurers have taken a sharp turn north after the age of 60.  Your health may not have changed much in a year but insurers are keenly aware you now don’t have the power of a group to negotiate.  

I have collated a list of the Best Health Insurance Policies over the age of 60.  For the purposes of comparison I have taken a 61 year old retiree in Pune looking for a cover of 4 lakhs.    For the purposes of our comparison we take policies that offer guaranteed renewal at least up to the age of 80 (About 10 years beyond the average life expectancy in India).

We compare the policies and insurers on:

1.  Premium

2. Sub limits

3. Co-Pay

4.  Servicing Aspects(like claims payment speed and customer satisfaction)

5.  Hospital Network

Premium:  

This is probably the first criteria that people look at.  So let's look at the five most economical plans for senior citizens.

Health Premiums for 61 yrs old couple in Pune. Source www.policylitmus.com

From the comparison above, you can see the premiums vary quite substantially. The most expensive of the top 5 being 90% higher than the most economical. In terms of benefits there is not a whole lot of difference. Most of offer the basic hospitalization, Pre and Post Hospitalization benefits, Ambulance and health check-up.  All that you seems to get for about Rs 14000 extra in Apollo’s Easy Health – Standard is Ayurvedic treatment up to a maximum of Rs. 25000 and Donor Expenses. In case of Tata AIG, you pay an extra 18000 for the same benefit. You decide if this is worth the extra premium.

United India’s family Medicare and Bajaj’s Health Guard offers renewal up to age 80. The rest have lifelong renewal option. If you happen to live beyond 90 years, Future Generali will actually reduce your premiums.

you should find out  the best health Insurance plan for your specific case.

Sub limits and Co-Pays:

Insurer’s and notorious for hidden terms and conditions that you become aware of once the time comes to make a claim.  Of all the terms and conditions there are two you should pay careful attention to. They are sub limits on hospitalization expenses and Co-Pays. These caps can often leave you out of pocket for a substantial amount. Here is a snapshot of how these plans compare on hospitalization sub limits.

While the comparison is self-explanatory, I would like to point out a few key things.  Among the Plans compared Apollo’s Easy Health – Standard has no sub limits.  Rest of the plans have Rs 4000(1% of sum Insured) as the room rent limit.  This amount may be suitable if you are in tier-II city or if you go for a shared accommodation but may not be enough if you want to go for private room in a high end national chain hospital.

United limits the reimbursement amount for major Surgeries to Rs 2,80,000. This may not be such a things if you go to one of the preferred network hospitals of United India Insurance.  The hospitals is the preferred network agree to charge as per United’s agreed rate list. This allow to save up your sum insured for future needs while not having to pay out of pocket.

 Only United’s Family Medicare and Bajaj’s HealthGuard have the requirement of Co-Pay.

Service Parameters:

Network Hospitals: 

One thing that you must consider is whether the insurer has cashless facility in the hospital of your choice. When you have a medical emergency you cannot worry about arranging cash or run around to get reimbursement from the insurer later. In my opinion if the insurer hasn't bothered to have sufficient cashless facility in your city, the insurer doesn't deserve your business.  Please check to ensure that the Insurer has cashless hospitals in your city.

Other Features:

In conclusion I would say that if you are in a tier –II city, Future’s health Suraksha is a good option. If your preferred hospital is a top end national chain in a tier-I city, Apollo’s Easy Health – Standard offers a plan with no sub limits.

Amit Kumar

Who is a good Insurance Agent? (And where do I find him?)

Who is a good Insurance Agent? (And where do I find him?)

A good Insurance agent is difficult to find.

Hogwash! You may say. Every street and every office has more than one. At least everybody that you know and his uncle are Insurance Agents.

Check the list below and see if the chap you know (or heard of) meets the criteria to be a good Insurance agent.

□Pride in his Agency: There are three professions in the world which use the word “solicit” to source customers: Lawyers, you know who, and Insurance Agents. Don’t know about you, but my sympathies lie with the agent.

 He who presents his ID with a smile, and takes pride in his profession will stay with you longer and sell you the right stuff. A good agent will start his first interaction by sharing his own profile, his achievements and successes within the industry or his company, and how long he has been working.

Unfortunately, the ones that we often meet are the ones that will announce surreptitiously that he is (also) an agent. Stay away from them.

□Persistent but Never Pushy:  Most agents are persistent, some are obnoxious. A good agent is persistent, but never pushy and always polite. What is the difference? Good agents seek an appointment and time, so that they can be sure of explaining what they have to say. They believe that if a customer refuses to buy, it is because they have failed and not that the customer is an idiot. Somehow, they also seem to understand when a “no” is final.

 If your agent is fond of skipping details or is busy trying to shove a form under your nose for a signature, look again for someone else.

□Knowledgeable: A good agent’s starting point is to ascertain your needs and then attempts to find a product that will fulfill those needs. They know their company’s products and more than a little about the competition.

If your agent cannot name at least two competing products and why his product better fulfills your need, you can be sure he is in the wrong business. Ask for the product brochure and an illustration, so that you can verify at leisure. Agents who do not leave company literature may have something to hide.

□Rebate: Good insurance agents will be offended if you ask for a premium rebate, and may prefer to walk out if you insist on it.

If he does offer you a rebate, he is either not serious about his profession, or may compromise on service, later.

If you can tick all the four boxes for your agent, you are on to a professional and satisfying relationship.

Where do I find him?

You guessed right! Finding this paragon is not exactly easy, but they do exist. But that is a subject for our next blog!

We at policylitmus.com  provide the best Insurance comparison results for all types of insurance without needing you to give out any personal details.

Amit Kumar

What Ails the Life Insurance Industry?

The Insurance industry, specially the Life Insurance industry in India has been going through a bad time. Revenues are declining at about 6% every year, customer retention is low and profitability is a long way off for many. Why should this happen in a country with a growing population where less than 10% of the people have life cover?  Is it all the regulator’s fault as a large section of the industry would have us believe? 

In my opinion there is a fundamental gap between what the general public needs and what the insurers want to sell.  Life insurance is needed to cover two risks; one is dying too young and other is living too long.  You cover the first risk through term insurance and the latter through an annuity pension product.  The premiums for term plans are low and it takes more effort to make a sale. So the insurer puts less emphasis on these products.

What the insurers want to sell instead are products that involve a large element of investments along with insurance (ex: endowments and ULIPS). These have much larger premiums and hence generate more money for the insurer. While the stock market was doing well, it was easier to sell these.  In reality most of these products neither offer adequate protection nor do they offer enough return on investments.  This reality has now caught up with the insurers.  No amount of pushing and aggressive sales can obfuscate this reality. After all you cannot fool all people all the time.

So why do Insurers not switch to selling products that people need?  One part of the answer lies in the mind-set of the Insurer and the other part is a problem of distribution. Most industry executives believe that one cannot build a profitable business through term products. They have been too used to large premiums during the good years of the last decade. It is difficult to admit and accept the new reality of lower revenues and a smaller organization. It is much easier instead to flog your sales force and blame the regulator. But there is no running away from this reality. A brave executive who accepts this reality and will work with it can build an organization that will cater to people needs and provide sustained profits. While the revenue per sale may be lower there is a vast untapped market to be exploited. Done correctly it will provide people with much needed protection as well as profits for the insurers.

The second problem is one of distribution. As the premium tends to be low for term insurance, the agent needs to expend much more effort to gain the same amount of compensation. The solution lies not in higher commissions and glossy sales pitches but in a looking for alternative channels like online sales.  The insurance industry needs to learn what the car industry learned a long time back: aggressive in-your-face sales is not often the best option.  Conversely, a product that people need will sell even without pushy sales.  Good online channels should provide the customer with all the information he/she needs to make a decision and allow the customer to decide on the merits of the product. 

Any sustainable business needs to cater to needs to the people. If insurers re-align themselves to the needs of the people, people will be willing to pay for their needs being fulfilled. That in my opinion is the only path to a sustainable business.  

Visit policylitmus.com for details on all life insurance products in India.  

Amit Kumar

Buying a Life Insurance Policy: The Search for a Satisfied Customer

Buying a Life Insurance Policy: The Search for a Satisfied Customer

For most people in this world, buying life insurance policy is the last thing on their mind. And if and when they do it is mostly for the wrong reasons! Let me list down, in no particular order, some of the main reasons why people do buy.

  It is near the end of the tax filing period.

·         Some agent has finally worn down our consistent efforts to stay away from him.

·         We are impressed by the advertisement efforts of the insurance companies, swayed by the wonderful people who live in wonderful houses and generally do little except think of buying insurance.

·         Some of us buy because it is as a result of a quid pro quo: for example the bank relationship manager will help us pass a loan, or swing a deal.

This list could go on - but here is the killer: the policies that are bought are almost always investment oriented policies. With little exception the person who has sold it to us has promised astronomical returns and in the bargain also tugged at our heart strings, reminding us of our duty to our family and our responsibility for educating our children, or marrying them off, or what not. Months after purchase, those promised returns are a mirage and the agent has vanished. Unfortunately for all of us, the policy contract comes many days after we have parted with our money. Little wonder that Insurance customers are a dis-satisfied lot.

What then is the solution?

First of all, look at your need. Before you buy any investment oriented policy, make sure you have enough term insurance. Term insurance policies have no survival benefit, and are therefore extremely cost effective. Any person who earns an income and has dependents must have term insurance. The thumb rule is that the cover should be at least 10 times your annual income. If you still have spare funds, only then should you consider investment oriented policies.

No matter what policy you buy, it is important to beforehand know what you are getting into. If it is a term policy, price is important, and so is the Insurer’s customer satisfaction score and his ability and willingness to pay claims on time. If you are looking for investment oriented policies, in addition to ability and willingness to pay claims, his past performance, history of bonuses declared, and so on are also important. You may also want to know if he has a reasonable presence in your area, and if he is known for sound business practices.

The next step is to look for a good agent or buy online if that is possible. In another article you will find information on what to look for in a good agent.

Do a little research, find out all the policies in the market that fit your need, Compare Life Insurance Polices and buy the one that suits you the best. If you know what to expect, you will not be disappointed.

Amit Kumar