Advantage of Insurance Policies
1. If you are starting a new life and have no financial security, it will give you peace of mind. In case of your accidental departure, your wife and children might get the policy amount and live a decent life. Make sure not to take the easier path os Short Medical Questionaries because these put you at fault if you fail to answer the questions properly. But never invest your money with insurance company's by buying endowments or ULIP policies. the average returns from insurance policies are always lower than bank interest. mostly it is around 5% what ever the agents claim.
Disadvantages of Insurance Policies:
1. The Insurance company will dig out somthing you didnt mention in the policy application and use that to deny your claim
2. It is a mental trauma for the dear ones to run from office to office to get the certificates the company's demand to process the claim.
3. Make sure you keep all these docuements in a safe place and the place is known to legal heirs. If the your legal heirs fail to furnish any of the documents like driving licence, it is virutally impossible to get the caim amount.
4. The nominee is NOT the legal heir to the claim amount. He is merely a trusty and he is supposed to distribute the claim amounts to the heirs.
5. You will have to change your policy every time your habits change
Do's
Who is to blame for the incorrect information in the application form? The villain is often the insurance agent.
He's the one who usually fills up the buyer's details in the lengthy form.
A buyer should not think the agent is doing him a favour if he deliberately overlooks any health problem.
He's doing so only to sell the policy and will not be around to help
when the claim gets rejected due to the non-disclosure of the
pre-existing ailment.
This is especially true in case of
low-value insurance policies. Before they sell a policy, insurance
companies subject the buyer to a range of medical tests.
The larger the insurance cover, the more rigorous the medical tests. If
you are going in for a cover of Rs 15-20 lakh, the insurance company
will not mind spending Rs 1,000-1,500 to assess whether you are in fine
fettle.
Don't rely on the agent:
Don't let the adviser fill up your application form. Ask him if you get
stuck, but try and do it yourself. If for some reason you can't, go
through the form after the agent has filled it up.
Don't just sign in the boxes blindly and think your job is done. After filling it up, retain a photocopy for your own record.
When you get the policy document and a photocopy of the form that you
filled up, match it with the copy you have. This will ensure that all
the information given in the form is correct.
"It is also important to check the agent's credibility and track record
while buying a policy," says Vipin Anand, executive director, LIC.
Don't hide your health condition:
Do not hold back any information relating to your health and family
medical history. If you or any close relative has suffered from any of
the specified ailments on which information is sought, give the true
picture. Not mentioning it can lead to problems later on.
Also,
don't hide facts like use of tobacco and alcohol consumption. "By
admitting these facts, one makes it easier for the people for whom he is
getting insured," says Ramana.
Ref : http://articles.economictimes.indiatimes.com/2011-05-09/news/29520556_1_total-claims-aegon-religare-life-insurance/2
Don't avoid medical tests: Contrary to popular perception, a rigorous medical test actually helps the buyer.
If a company gets the tests done, it rules out the chances of the claim
being denied on account of pre-existing diseases. When Paurav Mehta's
father died, the insurance company rejected the claim saying he had
diabetes. Mehta approached the ombudsman, who ruled that the tests
conducted by a panel of doctors designated by the company had cleared
him and, therefore, the claim was valid.
State correct age,
occupation, income and insurance coverage: Besides the health condition,
you should also be completely honest about your age, occupation, income
and other insurance cover. Your age defines the risk, so any inaccuracy
can lead to rejection.
If your work profile involves risk, give
the true picture. Don't overstate your income so that you can buy a
large cover. You won't be around to do the fudging when the claim is
rejected.
Also, tell the insurance company about any
insurance cover that you have. This is important to remove any doubts
about a moral hazard, where an individual insures himself for a huge
amount and then kills himself so that his family gets the insurance
amount.
What if a person becomes a smoker after some years of taking the policies ?
If the policyholder has developed any habit, like drinking or
smoking, after buying the policy, he has to disclose this fact to the
company as now he belongs to a different risk pool. The company may levy
loading(increase in premiums) on the existing premium or even cancel
the policy. This is necessary as violation of this term can result in
decline of the claim in extreme cases.
6. Not all deaths are covered
What kind of deaths are not covered in term insurance?
Some important facts, which most of the people are unaware of, are
that most companies exclude “Death due to Terrorist Attack”. Although
such claims are settled on humanitarian grounds later on when the
nominee approaches Insurance Regulatory and Development Authority (IRDA)
but such exclusion is there in most companies. Other important fact,
which public at large is unaware of, is that insurance companies do not
cover death due to war or natural disaster like earthquake/tsunami.
Because in these cases, death toll is high and the claim to be settled
runs in crores of rupees which is difficult to settle by the company all
of a sudden. Therefore, these facts should also be kept in mind while
buying a term insurance.
Reference : http://www.jagoinvestor.com/2010/09/9-most-asked-questions-about-term-insurance.html
7. High rejections with new-generaton Insurance Companies
The rejection ratio (rejected claims as a percentage of the total
claims received and pending during the year) of some companies,
especially those which started operations a few years ago, is alarmingly
high.
Aegon Religare rejected 45% of the claims (see table).
Future Generali, IDBI Federal and DLF Pramerica rejected one of every
fifth claim raised. In comparison, LIC has a rejection ratio of 1.1%
(see graphic).
Reference : http://articles.economictimes.indiatimes.com/2011-05-09/news/29520556_1_total-claims-aegon-religare-life-insurance
8.
After a few years you will find out that in endowsments is like digging your mony underground.
It will loose its value fast and the so called bonuses are not worth even peanuts at the so called maturity date in the future
Ref : http://www.vinayahs.com/archives/2012/01/13/i-just-found-out-that-my-lic-jeevan-anand-policy-sucks-what-should-i-do-please-help/
Your relatives will have a difficult time providing all the documents in the time limit they prescribe
see the mail below from hdfc life when I enquired them about any policy my brother had.
Greetings from HDFC Life!
This is with reference to
your e-mail communication, we regret that we are unable to trace out the
policy details from the information provided by you. We will be glad to
assist you with your query. To do so, please write to us with the
concerned policy number / Client ID alongwith the Year of Birth in order
to assist you better.
The
Claimant needs to intimate the company at any of our Branch office
about the death/illness of Life Assured through an intimation letter.
Alternatively he/she could fill in the death claim statement or critical
illness/disability claim intimation form. The intimation should ideally
contain:
Policy number/s.
Name of the Life Assured.
Date, Cause and place of death/ Diagnosis/ Disability.
For
a death claim, intimation should be submitted alongwith the death
certificate issued by the Municipal Corporation/Government and Original
Policy Document.
For Critical Illness and Disability claim, intimation should be submitted alongwith the copies of Medical records.
The
Company on receiving the intimation letter shall send a letter to the
claimant with the list of documents required to process the claim along
with the relevant claim forms.
Once the decision to accept the claim
is taken, the company will send the discharge voucher to the claimant.
The claimant should ideally submit the discharge voucher within 7 days
from the date of receipt. He needs to return the duly filled &
signed discharge voucher to the Branch. Advance Discharge Voucher is
taken from the claimant, hence once there is acceptance of claim; cheque
is sent to the claimant.
Terms and conditions:
1. All the
requirements should be submitted at branch within 30 days from the
receipt of the letter containing the list of documents. If possible the
documents that are in vernacular language should be accompanied with the
translation.
2. All Forms should be complete and all relevant questions needs to be answered.
3. The documents should be dated & signed by claimant and respective officials and it should be stamped wherever required.
4.
A copy of Identification proof, Residence proof of the beneficiary
& Death certificate needs to be verified in original on receipt of
the claim documents and copies of these have to be sent to Claims for
processing.
Document Check list:
1. Death Claim Form.
2. Original policy documents.
3. A Copy of Death Certificate issued by the Municipal Corporation/Government.
4. A Copy of Medical Certificate with the Cause of Death.
5. A Copy of Postmortem report, if carried out.
6. A Copy of Cremation or Burial Certificate.
7.
A Copy of all medical reports including admission notes, discharge
summary, daily progress sheets, prescriptions, pathological reports and
any other reports (This will include illness diagnosed in the past and
at the time of death).
8. Doctors/Hospital Certificate.
9. Usual/Family Doctors Certificate.
10. Employer’s Certificate.
11. Legal Evidence of Title (In case there is no nominee).
Note: The Documents numbered 3 to 7 must be seen as original by our Branch Operations Officials.
Kindly visit our website
www.hdfclife.com to know our branch addresses across India.
1) If an insurance claim is rejected, write to the grievance cell of the insurer.
1) If the answer does not satisfy you or there is no response, write to
the insurance ombudsman. There are 12 ombudsmen in the country.
3) This should be done within a year of the claim being rejected. Also,
the matter should not be pending in any court, consumer forum or with an
arbitrator.
4) Submit a written complaint either personally or by post to the ombudsman's office.
5) The ombudsman will examine your plea and then call both parties for a
hearing. Within 30 days, he will send his recommendation on the matter
to both parties.
6) Attach all relevant documents with the
complaint. You also need to give a written consent to the ombudsman for
acting as a mediator.
7) If the recommendation is acceptable to
you, write within 15 days to the ombudsman, who will then pass an award
within three months of the date of complaint.
8) The final award is binding on insurance companies, but you can approach a consumer forum or a civil court.
Ref : http://articles.economictimes.indiatimes.com/2011-05-09/news/29520556_1_total-claims-aegon-religare-life-insurance/3
Useful Provisions
1. “Married women’s property act”
As most of the people think that
nominee gets the money always. We know that creditors gets the share
first, remaining as per the WILL, if no WILL then it goes the legal
heirs. Here the nominee just a person who entitled to receive the money
but could NOT use them.
Since most of us won’t create WILL that easily while in good health,
it is better to get the policy under “MWP act”, then the insured amount
will goes to wife and Children ONLY(should also be a nominee). This I
believe supersedes WILL , legal heirs and creditors. Even court cannot
do anything on this insured amount (if it is under MWP act) . So even if
the deceased person has 1 crore in debt and his insurance amount(under
MWP act) is 5 crores, even court cannot do anything to settle the debt
from this insured money.
One catch is we have to ask for insurance under MWP act when we open
the policy (during proposal stage). I have bad experience with Online
policy where there is no option given about this act in their
application form and once the policy is issued they are saying that they
cannot modify it.
