TWENTY THINGS THAT EVERYONE SHOULD BE
AWARE ABOUT LIFE INSURANCE.
By, Dr. Ashok
Chandran
While many of us know about
Insurance, the startling fact is that India’s insurance penetration at just
3.76% of the GDP is “extremely low” against comparable Asian countries such as
China, Malaysia and Thailand as well as the global average, according to the
central government’s Economic Survey of 2020-21
India’s insurance penetration grew from 2.71% in 2001 to 3.76% in 2019 which is
much lower than other global economies. India’s life and non-life insurance
penetrations in 2019, at 2.82% and 0.94% respectively, are also significantly
lower than the global average of 3.35% and 3.88%, respectively.
Insurance protection is all about
staying protected for the unknown future. Your family’s protection starts with your
awareness about the existence of risk and the nuances of Insurance. Here is a
list of terms and things to know for choosing the right Life Insurance cover
and for ensuring smooth claim settlement.
1) 100 percent disclosures in
proposal, like Smoking, drinking, medical history, Income, family medical
history, Covid History etc.
2) Fill and read the proposal
form personally to ensure accurate data.
3) Ensure All premium payments on
time.
‘Premium’ is the amount to be
paid to the Insurance company to keep your policy active.
4) Update Nominee Name and
address, especially if Nominee passes away.
5) In case of death, file a claim
immediately without any delay.
6) Do medical check-up at the
time of buying a new policy.
7) Understand Policy Clauses and
Exclusions.
8) Inform your family members
about your policy.
9) Keep the Policy Bond/Document safely
and accessible to the family.
10) Understand, Claim settlement
ratio by policies, while comparing Insurers.
11) Understand Amount settlement
ratio: It is important to consider amount settlement ratio in addition to claim
settlement ratio by policies, else insurers will clear low value policies and
reject high value policies, and this could be misleading.
12) Claim rejection ratio:
The claim rejection ratio or
claim repudiation ratio is important as the claim settlement ratio may be
misleading when there are high volumes of claims under process and not rejected
at the time of such calculation for a particular period.
13) Assets under management: With
a larger AUM the company can invest and get better returns. A larger customer
base also helps manage risks more accurately. The capacity to settle claims on
time also increases.
14) Solvency ratio:
The solvency ratio is a
measurement of a company's cash flow and its liabilities. In simple words, it
helps you know whether or not the company has adequate funds to manage its
short-term and long-term liabilities.
15) Have a Will mentioning the
nominee as the beneficiary of your Insurance, especially if he is not an
immediate blood relative like father, son or spouse.
16) Go with MWP option wherever
appropriate.
Section 6 of the Married Women's
Property Act (MWPA), 1874, provides that a policy of insurance effected by any
married man on his own life and expressed on the face of it to be for the
benefit of his wife, or of his wife and children, or any of them, shall ensure
and be deemed to be a trust for the benefit of his wife.
MWP protects and ensures that the
woman gets all the maturity proceeds independent of the financial liabilities
of the Proposer.
17) Define an Insurance objective
before choosing an Insurance product, like Income replacement, covering
dependent family members, Insuring a family Life goal, Housing Loan liability Protection,
retirement planning, corpus/pension creation, tax benefit, Interest protection,
leaving behind a legacy, Pure Term/whole life/saving, etc. This helps you
choose the product wisely and Insure adequately. A professional Insurance
Advisor plays a key role in helping you articulate your objectives and
recommending the right product as per the need analysis.
Remember that inadequate
Insurance is as good as No Insurance, So Insure with a clear Objective, and not
just for having some name sake Insurance.
‘Sum Assured’ is the amount to be
paid by the Insurance company to the Nominee
‘Maturity Benefit’ is the amount
to be paid to the insured for surviving the policy term.
‘Policy Term’ is the period for
which the policy provides life coverage.
‘Premium Paying Term’ is the
period for which premium has to be paid to the insurance company.
Your clear Insurance objective
helps defining the Sum Insured, Policy Term and Premium Paying Term, and
Maturity Benefit.
18) The earlier you buy an
Insurance policy, the cheaper it will be. Younger people get Insurance cover at
a very low premium and does not feel the pinch of the premium amount.
19) Probability of getting an
Insurance cover: Get Insured whenever you are healthy and eligible. The chances
of getting the Insurance is higher, if one does it before age related, infection,
weight related, Critical Illnesses, or lifestyle diseases come up. There are
many people who are unable to Insure themselves due to various health and
weight related reasons.
Save your Medical Records:
Discharge Certificate in case of Hospitalisation, X-rays/Scanning Reports, Histopathology
Report, Vaccination Certificates Etc. You may need them for the purpose of
Insurance.
20) Choose a professional
Insurance Advisor, like you choose a doctor for your family. Your Advisor helps
you articulate your needs accurately and choose the best suitable product.
Finally it is the Advisor who stands by your family, while you are not there,
to fulfil the promise of the policy.
Review of your Insurance
Portfolio atleast once in a year. Apart from the annual review consult your
advisor whenever there is a major life change or significant change in
circumstances.
Not Investing sufficiently is a
small crime, dying without adequate Insurance cover is unpardonable and a Big
lifelong punishment to the family. Insure and Be Secure.
Dr. Ashok Chandran is a full
time IRDA Registered Insurance Advisor and can be reached, for Consultations
and Insurance Portfolio Review, on Mobile: 9821157708 or E-mail: ashok@ac.co.in
We are on a Mission to Transform a Million Lives by 2030
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