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Life insurance is a financial security for your family in case anything was to happen to you tomorrow. This importance of insurance has been stressed by various financial experts and is known by one and all. Yet, when it comes to taking a policy, investors are still shrouded with various misconceptions in their minds. Here’s clarifying some of the most common ones, to help one make better decisions and plan a much secure life.

Myth 1: I am still young. I don’t need insurance now.

Fact: The truth of life is that you never know when a calamity could strike. Thus it is never too early to get a life cover.  Besides the earlier you get insurance in your life, the cheaper it would be, as premiums increase with age.

Myth 2: Insurance needs are the same for all.

Fact: Insurance needs vary from person to person and they greatly depend on age, number of dependents, lifestyle expenses and annual income. For example, a single unmarried youngster would have lesser financial responsibilities and may just require a simple life cover, whereas a mid career individual may have additional responsibilities towards children, loans, etc… and thus require a plan with an asset protection. Catering to this diverse need of investors, insurance companies offer a range of products to suit individual needs.

Myth 3: Life Insurance is expensive. I can’t afford the regular premiums.

Fact: A life insurance cover is not all that expensive, when you consider the financial protection it offers in return. Pure life covers/term plans in fact are quite cost effective and premiums could be paid as per ones convenience, either monthly, quarterly or annually. Online term plans recently introduced by many insurance companies are much cheaper, owing to the absence of any agent in the buying process. IRDA’s cap on charges by insurance companies, have also made Unit Linked Plans cost lesser.

Myth 4: Life insurance is a financial product that is useful only to save taxes.

Fact: Most often agents sell insurance products as tax saving products rather than focusing on the element of protection they offer. The tax benefit on the insurance plan is an added advantage and not the prime reason why a plan should be bought. Insurance primarily protects your family and dependents if an unforeseen event were to happen.

Myth 5: Insurance is complicated to understand.

Fact: The market is flooded with products and their terms and jargons could seem pretty intimidating to most individuals. However, in reality, insurance and its working is easy to understand.  Insurance companies and their agents are most willing to clarify all doubts and queries which a policy buyer/holder has in mind. So in case of any concerns or issues you could approach them.

Myth 6: Claims from insurance companies are always delayed

Fact: Insurance companies don’t intentionally delay claims. They are required to carry out adequate checks and verify all documents to ensure the claim is genuine. The IRDA guidelines mandate insurance companies to settle claims within 30 days of receipt of all documents. In case the claim requires further verification, the insurance company has to complete its procedures within 6 months from receiving the written intimation of claim.

Myth 7: Life insurance is a waste of money as I seldom get back the premiums I have paid.

Fact: The primary aim of insurance is to protect your loved ones and ensure sure their financial well-being in case of an unforeseen event. Insurance is not an investment product but a contingency product where the benefits are applicable only in case such an event actually occurs. Though most of us like to believe that nothing is going to happen to us, it nevertheless is advisable to be prepared in case of any eventuality. The premiums that you pay go towards this financial protection that you would be giving your family.

If you don’t know the correct way of making an insurance complaint, chances are that you will not get a resolution. There is a process that you must follow in order to get a satisfactory response from your insurance company.

Here is a step by step guide on how to register an insurance complaint:

1^st Step - The first step is to have a clear understanding of what your insurance policy does and does not cover you for. To be able to do this, you must read the policy document carefully and also read the exclusions.

2^nd Step – To make a complaint, contact your insurance company with complete details like your policy number etc.  Make sure you also send your complaint in writing either by email or by post, and keep a copy of this complaint.

3^rd Step – In case your insurance company does not respond to your complaint within 15 days of lodging it, you can escalate it to the IRDA.

IRDA is the insurance regulator which is the governing body for all insurance companies in India.

IGMS to register an insurance complaint to IRDA

IGMS is an Integrated Grievance Management System which you can use for registering any insurance complaint, if your insurance company does not address your complaint first.

Click Here to Register Insurance Complaint on IGMS

After logging on this site, a policyholder needs to create a profile. 

The details of your complaint are passed on to the respective insurance company.

After registering your complaint, you will get a confirmation email with an IRDA token no. This token no will be used by IRDA and the Insurance Company for tracking the complaint on IGMS.

If you are not satisfied with the resolution provided by Insurance Company, then you can further escalate it for a review by the IRDA for a potential violation of Regulations.

The best part is that all the transactions between your Insurance Company, including any remarks by the IRDA are visible to you.

You can also access IRDA Grievance Call Centre (IGCC) through

Toll free number 155255 for voice calls

Email id - complaints@irda.gov.in 

Also Read - How to make a Life Insurance Claim

Riders are a great way to customize your insurance policy and protect yourself against specific risks. One such optional benefit offered by most insurance companies, is the Waiver of Premium rider. As the very name suggests this rider, waives payment of future premiums for a specific term, subject to certain conditions. Here is a quick guide to help you understand what this rider actually entitles you to and when you should opt for one.

 Waiver of Premium - The Basics

Accidents and unforeseen events may cause injuries or disablements, which could hamper your work and regular stream of income.  At such times when it becomes difficult to maintain your policy, waiver of premium rider comes to your rescue. The rider entitles you to waiver of future premiums in the event of loss of income arising out of any disablement (sometimes even death), and prevents any policy lapse. The key features of this rider are as follows.

•Premiums would be paid by the insurance company, for as long as you remain disabled, or for a certain period of time, as per the terms and conditions of the policy.

•Ensures the policy is in effect even if you experience a loss of income due to death/disability.

•Ensures maturity benefits of policy will be available to your survivors, in case of death.

•The rider stays valid till the term of the base plan.

•Premiums paid under this rider are eligible for tax benefits under Section 80C.

 When Does a Waiver of Premium Make Sense?   

The Waiver of Premium rider is an additional protection for you and your family available at an extra cost. The rider is ideal along with policies that offer a maturity benefit, or plans that seek to build a corpus for a long term financial goal. In the event of any death or disability, the rider ensures continuity of the policy, and the maturity benefit so received helps to meet the financial goals that you have planned for. Let us take the case of children’s plans to explain this.

Saving and accumulating wealth is of primary importance to build a large corpus for children’s education/marriage. In the event of any unforeseen accident or disability, any loss of income could lead to lapse of policy and thus a situation where the corpus for the financial goal cannot be built.

A Waiver of Premium rider opted along with a children’s plan ensures the policy stays in force to accumulate wealth for the child’s future, and earns returns or benefits on the investment made in the policy. So even in the event of any death or disability, your policy is taken care of. It works its way towards building a corpus for your child’s education or marriage, making it available at the time when it is actually required. Most children’s plans offered by insurance companies come with an inbuilt waiver of premium rider, if not they, could be individually opted for too.

 Terms and Conditions of the Rider

The general terms and conditions under which a Waiver of Premium is payable varies from policy to policy and from company to company. In general the typical conditions under which the rider is payable is as follows.

•The disability must result within 180 days from the date of accident occurrence

•Written notice of any claim for the benefit shall be served to the company within 120 days of disability date.

•The payment of the disability benefit and the continuation thereof shall be subject to submission of proof as required by the insurance company.

 Exclusions on the Rider

All insurance companies clearly mention when the rider is applicable and what conditions constitute a disablement. One needs to check with the insurer about the complete scope of the rider before taking the plunge. In general, Waiver of Premium is not applicable if the disability is caused by:

•Attempted suicide or self inflicted injuries while sane or insane

•While the Life Assured is under the influence of any narcotic substance or drug or intoxicating liquor

•Engaging in aerial flights,  including parachuting and skydiving, other than as a fare paying passenger on a licensed passenger-carrying commercial aircraft operating on a regular scheduled route

•The Life Assured committing any breach of law

•Due to war, whether declared or not or civil commotion

•Engaging in hazardous sports / pastimes, such an s boxing, caving, climbing, horse racing, jet skiing, martial arts, mountaineering, boat racing, underwater diving, etc…

The principle of Utmost Good Faith is also known as Uberrimae Fides. It means that both the insurance policyholder and the insurer need to disclose all material and relevant information to each other before commencement of the contract.

Under Section 45 of Insurance Act 1938 states that if within 2 years of commencement or revival of the insurance policy, the insurer get to know that there has been a non-disclosure or misrepresentation of material facts, then the insurer can call the policy null and void.

Introduction

It’s now been more than a decade since the opening up of the insurance sector in India to the private sector and for foreign players. The past decade has seen considerable growth in the insurance sector and has seen the introduction of a large number of innovative products – a natural and positive outcome of increasing competition. The insurance sector plays a very crucial role in the economy of any country – it increases avenues for savings of individuals, protects the future of individuals and spreads risks of institutions by forming a large pool of fund. The sector also contributes significantly to the capital markets and assists in large capital infrastructure developments of our country through their funds.  

The insurance industry in India is divided into 2 basic sectors – Life Insurance and Non-life Insurance (also called General Insurance and even called Property and Casualty or P&C ). Both these sectors are governed by Insurance Regulatory and Development Authority (IRDA) of India which is a government body which frames the rules for the entire industry and all insurance companies have to abide by them. IRDA is the policy maker for the entire insurance industry in India and also serves as the custodian of consumers rights.

As the name suggests life insurance companies cover the risks associated with the life of a person and non-life insurance companies cover other risks associated with our daily living like health, our vehicles, travel and home insurance to name a few. Non-life insurance sector also covers a lot of other risks in the corporate world – from simple office insurance to insuring entire factories and industrial equipments. Over a period of time life insurance policies have started incorporating an investment component along with the basic insurance cover so that your money grows while it remains invested with the insurance companies – details about these types of policies will be taken up in detail in the forthcoming posts in this series. But non-life insurance companies have so far been restricted to pure risk cover itself.

History of insurance in India

There is a lot that can be written on the history of insurance in India, but it would take up a lot of your time and make this a long article. Those interested may read it by clicking here. To put it in short, the insurance sector had only government owned entities till a decade back. LIC (Life Insurance Corporation of India) was the only life insurance provider. In the general insurance space there were players like National Insurance, New India Assurance, Oriental Insurance and United India Insurance which offered solutions. All this changed in the year 2000 when private players were allowed to start operations. A host of private players entered this market and have been aggressive ever since. As of now we have 23 life insurance companies and 24 general insurance companies. There are a number of new players who are awaiting regulatory clearances and approvals to start their business in India in both the life and general insurance sectors.

Current market Scenario

LIC is by far the biggest life insurance company in India both in terms of market share and their presence in India – it is the only government owned entity. Most of the private players, in both life and non-life sectors, have started business in India with the partnership of established insurance players in the world. The expertise of these global players help the Indian insurance company’s perform much better as they can replicate the learning gained from other markets over a large period of time. The foreign partner in any insurance company in India is not allowed to own more than 26% of the shares in Indian insurance company as per IRDA regulations. We have seen big financial groups in India like SBI, ICICI and HDFC enter this pace and become aggressive players. Other famous corporate groups like the Tatas, Birlas and the Ambanis have also formed insurance companies.

List of Life Insurance Companies

While LIC has been around for a long time and is an extremely profit making venture, some of the private players have just about started making profits on a year-on-year basis. It will take some time before most of them break even. The life insurance business has a long gestation period and it may take more than a decade to break even – so all players would be ready for the same.

List of Non-Life Insurance Companies

The core business of almost all non-life insurance companies in India are loss making. It is only through investment income that these companies report profits. This is not a desirable scenario and we should see a lot of upward price revisions in the coming years – some this has already started. With an entry of every new player we see a effort to grab market share and drop premiums. This has been the status of the general insurance companies for quite a few years and as a result the premium collected are not proportionate to the risks and claims are either greater than the premium collected or very close to it. Gradually, we are witnessing some companies taking steps to correct this anomaly.