A handy guide to start a term insurance plan

A handy guide to start a term insurance plan

A handy guide to start a term insurance plan

Health Insurance

Term insurance plans work as recourse to face different uncertainties. If you are planning to take term insurance plan, make sure to gather information about the cover amount, policy term, premium etc. The following article gives you an in -depth coverage of all things essential to start a term insurance plan. 

Subas Tiwari

Term insurance brings additional benefits such as posthumous family financial protection, tax savings, critical illness, accidental death etc. If we talk about the types of term plans, then there are pure term plans, return on premium term plans and term plans with income benefits. But first, let us understand what is a term insurance policy. 

What is term insurance?

One of the most misunderstood financial products in India is “Term Insurance”. In fact, “Insurance” in itself is not understood or appreciated enough. Most people consider insurance as just another form of savings or tax savings instrument, which can earn them safe, stable returns over the long run. Some products in the insurance space do provide this regular saving facility, but that is not the purest form of insurance.

The true and simplest meaning of insurance is – protection against risk. Now this risk may be to life or property or many other things. But in this article, let’s focus on life insurance, and specifically term insurance. It’s a policy where you pay premiums in return for a benefit to your family in case you die, and you get nothing if you survive the insurance period.

Tell this to people and most will ask, “Why should I pay annually for a product if I am not going to get anything back?” Very few understand that you pay premiums because there is a guarantee that if something happens to you, your family will be paid the pre-decided amount. Therefore, you have the peace of mind that even if you are not there; your loved ones will not have to bear a financial loss as well.

Just consider this – in the unfortunate event of one’s death, the immediate family will receive sufficient amount to maintain their standard of living. This payout can also fund their child’s education, help pay off dues and even provide capital in case the spouse wants to start a business to support the family. This is the reason term insurance is also known as a “pure risk” plan – simply because it mitigates the risk of you not being there to provide financial support to your family.

Term insurance is the oldest form of insurance and is the least expensive plan to cover the risk of death. Term plan is a no-return plan just like your medi-claim or car insurance cover. If claim is made within the insured period, the nominee will get the full sum assured as otherwise there is no maturity value or cash value for this plan. It provides coverage for a specific period or term say 10 to 30 years. Term insurance plan is a must for a person who has dependents or a family of which he is the sole bread-earner. If you have family members dependent on your income, you need term insurance.

It’s a hedge for the protection

One should not make the mistake of taking term insurance premium as an expense but treat this as a hedge for the protection and security of your loved ones. You need to compare the premiums before selecting the right company and also have to go through the exclusions in the plan. This will help you in selecting the right term plan. Looking at all the facts available, term insurance is the obvious choice for insurance for life.

Term insurance is the simplest or the purest form of life insurance. In this case, there is a provision that in the event of the demise of the insured person, the family of the deceased is paid a pre-determined amount as part of the coverage.
For example, a person bought a term insurance plan for a sum of Rs 30 lacs. The tenure or the term of the policy is 20 years. So, if the insured person passes away in the duration when the policy is valid, the family (the nominee or the legal heirs as the case may be) will be paid a sum of Rs 30 lacs.
 
Another important aspect of term life insurance is to ascertain the safety net which the family of the insured will require in the event of the demise of the insured. The calculation is done by keeping a view on the existing standard of living of the family and the funds that would be required in order to continue to live with the same standard of living. Also, to be considered are the various important events like marriages, higher education etc; and the debt that the deceased must have left behind to the legal heir(s). 

After the calculation of the aforementioned future expenses, the person can come to a definite number or the coverage which he/she may require in order to provide for the family or dependents so they can continue their existing standard of living. 
But one thing is very clear. The earlier the insured takes this policy to benefit his family after the unexpected death, the lesser is the cost of premium he/she has to pay to keep the policy alive.   

One should look at the best term insurance plan in India depending on age, income and life insurance need. The online premiums are cheaper than off-line term plans and are quite easy to avail also. In the recent past, online term plans have gained immense popularity due to their easy access. 
Some of the insurance companies are offering discounts on online purchase of term plan policies, because it saves the companies a lot of labour and man-hours trying to sift through hordes of paper/documents, which can be easily viewed online and preserve it for future use without much difficulty.
We have brought out the salient features and workings of term plan insurance online in this article (SEE BOX) for the information of our readers.

Advantages/benefits of term plan insurance

  • Term insurance is the cheapest form of insurance.
  • It’s simple to understand.
  • Select the length of the term for which you would like coverage, say up to 35 years. So, payments are fixed and do not increase during your term period.
  • During the early years of a term policy, the premium will usually be significantly lower than for cash value life insurance.
  • In case of an untimely death, dependents will receive the benefit amount specified in the insurance agreement directly on filing the claim with supporting documents.
  • You can customise term life insurance with the addition of riders, such as Child Benefit or Accidental death.
  • Another popular feature of term insurance is the return of the premium. They may give the benefit of returning 100 per cent of whatever you have paid.  

Disadvantages/limitations

  • There is a downside in that, if the insured person happens to outlive the tenure of the policy, all the amount paid in the form of premiums will be forfeited by the insurance company without any benefits to the insured or to his/her family. Essentially all the premium will go down the drain, except for tax benefits he/she would have availed on the amount paid as term insurance premium.
    • There is one major hurdle that prevents people from purchasing a term insurance plan; it tends to create a mental block as it deals with the death of the person taking a policy. But it is morbid, as the rationale behind buying car insurance is exactly the same as buying a term insurance plan. 
      If a person meets with an unfortunate car accident while driving, he/she has to pay damage charges to the other party or the insurance provider will compensate him/her. On the other hand, if the person is a relatively safe driver and avoids any accident, the premium acts more like a hedge (cover) against any event which might/might not occur.
  • Consumers resort to consulting their agent as they either do not have the time to go through the brochure of this product or they believe that the agent is in the trade and hence should know more of the product- so it is easy to ask him questions and get answers from him without counter-verifying with the insurer. Unless one is aware of the features of the insurance plan himself/herself, do not expect the agent to explain the plan in detail (some of the agents do not give proper advice to their clients and run behind commissions).
    • Term insurance provides coverage only for a limited period of time.
    • Premium rates are guaranteed only until the end of the term. Depending on the policy, premiums may be level for a period of 1, 5, 10, 15, 20, 25, or 30 years and then cease without any renewal option, or offer a fresh cover at the end of the plan period at a higher premium rate.
  • Deteriorating health can trap you in a policy with rapidly increasing premiums.
  • No insurance company offers term plan insurance over 75 years of age, which means it is not very beneficial to the insured after attaining 75 years. 

Tips to get on a term insurance plan

First decide the cover amount

Choosing the cover amount is the most important thing to do before buying a term insurance policy. It depends on the individual, how much minimum cover he needs. Going by the thumb rule, salaried people should take a cover of 10 times of their annual income and at the same time keep increasing it with increasing income. You can also calculate the cover amount online. There are many online tools available in which you can calculate the cover amount as per your income and profession.

Deciding policy term is very important

Selecting the term of the policy is the second most important task in the selection of a term plan. If you are taking the policy at a young age, then choose the longest-term policy. This will also give you an opportunity to buy the policy at a lower premium.

Online or offline?

You can buy the term policy through an agent or online. You may also have to pay a lower premium if you do it directly through the company’s website or aggregator website. At the same time, if you take it from the agent, you will have to pay a higher premium.

Choosing the company

Choosing a good company is very important before buying a term insurance policy. Before taking a policy from any company, check its claim record ratio. Along with this, also know the financial position of that company and keep in mind the company’s service, method of payment, etc.

Choice of rider

Even after a term plan, there is also a possibility that the policyholder may become a victim of disability due to an accident or he may lose his hearing. In such a case, a rider should also be taken for financial security. However, for this you have to pay an additional premium.

Some more important aspects of term insurance

The public, consisting of the common man, the office-goer, the professional are mostly aware of life insurance products in the insurance sector. But many don’t know or aware, is the topic of discussion in this article. May be, the professionals and the babus in the corridors of power, will have the benefit of knowing this product, which is term plan insurance.

Most of us know that there are 24 life insurance companies operating in India out of which Life Insurance Corporation of India corners almost 70 per cent of the total life insurance business. There is no best investment product anywhere; the answer is a relatively better product based on offering benefits with reasonable costs. 

Types of term insurance plans

There are basically three types of insurance plans available in the market. They are:

(1) Traditional or conventional plans

Traditional plans are mostly saving products and give guarantee of sum assured and also give bonus every year depending on the profitability of the company. The investment options are with the insurer and they take a call where to invest on the plans available in the market.

(2) Unit linked insurance plans  

ULIP plans are market-related and the risk of investment is borne by the policyholders. Policyholders have the right to choose the investment option available in the plan i.e. from 100 per cent in debt to 100 per cent in equity.  ULIP products are more complex than traditional plans.

(3) Term insurance plans

First, think about why you want to buy a term insurance plan? Of course, like everyone else, you also believe that nothing will happen to you. We, too, would wish the same for you. But the harsh truth is that this life is highly uncertain. There is always an element of concern or risk which leads you to ask the “What if?” question. You must buy term insurance to answer this very question as the entire financial trauma arising out of that question will remain unanswered.

Have you ever realized the value of a term insurance plan? Don’t just take a term plan just because everyone is going for that or that you might be considered as a prudent wise man! But do a cross- check whether your family can be benefited easily if required so in future. So, feel the necessity and then proceed further to choose the best product.

What is claim settlement ratio?

This gives us an idea about the claim solving ability of the insurance company. If claims are intimated and the insurance company settles those, claim settlement ratio would be good. In simple words, claim settlement ratio is the number of claims settled by the insurance company out of every 100 claims it has received. Higher claim settlement ratio implies that majority of claims are getting settled. Higher the claim settlement ratio for the company, the better rated the company is in the eyes of the public.

Claim settlement ratio 

One should go with the company who has a better claim settlement ratio and a good reputation. So that after the death of the insured, his family does not have to face much trouble to get the money. In simple words, with better claim settlement ratio, you can understand the ability of the company to pay the amount to insurer’s family. How many policies were settled successfully and if company denied paying the amount showing some reason, then you will ask in how many policies and claim amount was done? So, it’s better to stay with the company who generally or mostly paid out all insurance claims.

Care to be taken while taking a term plan policy

Generally, 99 per cent of insurance business are canvassed by agents only- mostly by our uncle, aunty and relatives, etc. Don’t believe any one while filling the form. Most of the time people just sign the policy document and then leaves the rest of the details to be filled in by the insurance agent. You are the best person to fill up your personal details. Any wrong information which you might think as a negligible factor can be pointed out later by the insurer to your family to find a reason for rejection of claim in favour of the nominee/legal heirs.

How online term insurance plan works?

The latest buzz in term plan industry is the online term plans. You can simply provide the data online and subscribe to your term plan instantly with a lower premium. The insurance companies extend cheaper premiums on on-line term policies as it saves them a lot of paperwork and physical labour of verifying the documents. But the problem here is, most of the term plans do not involve a proper procedure to check individual’s health condition and other factors. Due to that, it is very risky to subscribe to a term plan although the premium is lowest. Your family might be in trouble in future. So, it’s better to pay the premiums and subscribe the same term plan through agent/sales officers by following every procedure clearly. Companies can have a better and clear record about your insurance to track in future.

One can go online and calculate the premium, then can start the process of buying the policy and submit details such as name, age, tenure, sum assured and medical information which can affect the premium. After all this, one gets a premium quote and then it is paid online. 

After the premium is paid, there are few things which are yet to be completed. The proposer will get a mail from company or get a call from company that some representative of the insurance company will come to the residence and collect the important documents; the documents are also required for Know Your Customer (KYC). Based on the age and given information, the insurer can decide if one will have to appear for medical test or not. If there is anything wrong in medical examination which can affect the premium (and consequently can increase company’s risk of insuring), then they can increase the premium (loading) or choose not to offer the policy. One can then decide to continue with them by paying the additional premium or cancel the policy.

Importance of bike insurance, Two-wheeler insurance

Importance of bike insurance, Two-wheeler insurance

Why you should go for a bike insurance

Bike Insurance

Research says, India witnesses over five lakh road accidents annually with most of the incidents involve two-wheelers. In such a situation, it is important to protect our two-wheelers and ourselves. If you’re wondering, what it requires, go through the below piece where we are telling you about taking a two-wheeler insurance policy.

                                                                                                                                                               Subas Tiwari

 There are two types of bike insurance-third party liability insurance and on damage insurance. A third-party insurance policy covers you when your bike damages other vehicle. If your own bike gets dented then it is the on-damage insurance that comes to rescue. Third party liability insurance is a mandatory policy and also called TP insurance. A person needs to take this policy following the Motor Vehicle Act. And you stand a chance to get a traffic challan if you’re not a policyholder of third-party insurance. Good part is that, in both the kind of insurance policies, the company pays for any theft of the vehicle.

What the third-party insurance covers

Third-party insurance covers you when your bike damages someone’s property, someone’s car, bike or if anyone gets hurt or god forbid if someone dies in an accident with your vehicle. The policy will meet whatever legal expenses are incurred due to the above situations. Also, the insurance company will pay for you if a case goes to the court and the same asks to pay any fine. Kindy note that, an insurance company can pay a maximum of Rs 7,50,000 in the above-mentioned cases.

Third party insurance has a section of “Personal Accident Cover for Owner Driver”. The insurance company gives Rs.15 lakh if the bike driver dies in an accident while driving. S/he can claim this amount when the person has a valid registration certificate and driving license. This amount comes in the form of personal accident cover. However, there is an easily obtained, comprehensive rule, under the third-party insurance that comprehends all policies. Where the vehicle owner’s family can claim for compensation from the insurance company.

Choose add ons carefully

In a comprehensive insurance policy, companies provide many add on benefits. You can opt those match your need. In this policy, you will get the facility of zero depreciation cover, engine and gearbox protection cover, key and lock replacement cover, helmet cover, 24×7 site assistance add-on, etc.

Take insurance for a long time

By taking an insurance plan for a long time, you can also save a little money and you can also get rid of the hassle of renewing it every year. Apart from this, you can take advantage of the no-claim bonus throughout the term of the policy. Even if you have made a claim during this time period.

 The following figures tell you the importance of insurance:

  • Two-wheelers constitute more than 80 per cent of all vehicle sales in India
  • For every 1000 Indians, more than 100 owns a two-wheeler
  • About 13 per cent of these vehicles are stolen every year
  • Which accounts for more than 300 such vehicles per day

What does the motor vehicles act says about an insurance?

Chapter XI of the MV Act, 1988 deals with Insurance of Motor Vehicles with Third Party Risk & Clause 146 deals with “necessity of insurance against third party risk’.

Third party liability insurance

As of now, the MV Act mandates that all two-wheelers are to be covered under the third-party liability which shelters liability for injuries and damages to others, that you (the vehicle owner) is responsible for. This is also called Limited Liability Insurance which covers the insured and the owner/driver of the two-wheeler/pillion rider against third party liability arising out of an accident, which causes damage or loss to the third party or its property as well as death/disability of the owner/driver arising out of the accident. However, to fix the quantum of premium for third party liability cover, the IRDA rules will apply.

Insurance for comprehensive cover

While MV Act does not provide for covering insurance for other types of risks including, theft, fire, etc, as also damage to the owner’s vehicle, almost all the general (non-life) insurance companies are offering the comprehensive cover as an optional cover, which is not mandatory.

Why cover the vehicle for comprehensive cover?

A comprehensive policy covers the following:

The comprehensive cover (also called package policies) assures the following benefits-

On total or partial loss/damage to your two-wheeler

  • Against natural calamities such as-
  • Fire
  • Explosion
  • Self-ignition or lightening
  • Earthquake
  • Flood
  • Typhoon
  • Hurricane
  • Storm
  • Tempest
  • Inundation
  • Cyclone
  • Hailstorm
  • Frost
  • Landslide
  • Rockslide
  • Against manmade calamities such as
  • Burglary
  • Theft
  • Riot
  • Strike
  • Malicious Acts
  • Accident by external means
  • Terrorist activity
  • Any damage in transit by road, rail, inland waterway, lift, elevator or air

What are not covered in your policy (exclusions)?

  • Normal wear & tear
  • Breakdowns
  • Consequential loss
  • Loss occurred due to invalid driver license (expired license)
  • Loss occurred on account of drunken driving and/or drugs intake
  • Loss due to Civil War, War, etc
  • Claims arising out of contractual liability
  • Use of the vehicle otherwise than in accordance with ‘Limitations to Use’

(as and when driven by a person other than owner/driver and/or as stated in the ‘driver’s clause)

  • Any accidental loss or damage and/or liability caused/sustained/incurred outside the geographical area

(The list is indicative and not exhaustive)

What are optional add-on covers?

The following additional covers are available on payment of extra premium-

  • NIL Depreciation Cover (Nothing payable in case of partial loss; depreciation available to a maximum of 50 per cent on various metal, plastic, fibre or rubber parts in the event of total loss)
  • Loss of accessories (electrical/electronic)
  • Loss of driving license
  • Daily cash allowance (during the period of post-accident repair)
  • Engine protection
  • Tyres & Tubes
  • NCB Protection
  • Anti-Theft Device

Grievance redressal mechanism

Our study revealed that only a few insurance companies have posted a robust GRM system in their website. So, they are summarised below for our readers.

What is your grievance?

  • Any partial or total repudiation of claims by the insurance company
  • Any dispute in regard to premium paid or payable in terms of the policy
  • Any dispute on the legal construction of the policy in so far as such disputes relate to claims
  • Delay in settlement of claims
  • Non-issue of any insurance document to consumer after receipt of the premium
  • Any other grievance (not specified above)
  • Tier-I- call the Company’s toll-free number or customer care number and lodge your grievance. Follow this up by sending e-mail and hard copy to ensure that your complaint is on their desk for their first-look.
  • Tier-II– If dissatisfied with the reply, escalate to the Company’s AVP or company’s customer service desk at apex level-follow the same as above.
  • Tier-III– If the issue still remains unresolved, then approach the insurance ombudsman pertaining to your jurisdiction for the redressal of your grievance. Access to irdaindia.org & www.gbic.co.in/ombudsman.html )

What the government could do?

  • The irony is- almost all the insurance companies are doling out similar policies with almost the same inclusions and exclusions- leaving the consumer more confused than ever. He is forced to choose that policy which charges reasonable additional premium for add-on covers to bring out the BEST POLICY for consumer benefit!
  • IRDA could mandate to bring out a standardized comprehensive cover covering all major aspects of some vital covers (which are now in the add-on list) such as anti-theft device which would be compulsorily offered by insurance companies while selling a comprehensive policy to the consumer

Important to know

  • Go for policy cover for a longer period (to avail discount)
  • Go for policy purchase online (discounts are available)
  • Go for vital additional covers such as engine protection, zero depreciation and anti-theft device (to ensure additional protection on payment of a small price)

Related

How personal accident insurance helps face a distress better

How personal accident insurance helps face a distress better

Health Insurance

Many people opt for different financial policies and covers to guard against difficult times. Among the myriad choices, we have personal accident insurance scheme to choose from. The policy is helpful in protecting from financial troubles caused by accidents. Also, it helps the family to recover financially in the event of death. It is a type of policy that helps in recovering from economic loss due to accidental disability or death. 

Before we look into the benefits of personal accident insurance here are some alarming statistics. As per the Road Accident Report for 2019, a total number of 449,002 accidents took place in the country during the calendar year 2019leading to 151,113 deaths and 451,361 injuries. However, a personal accident insurance policy covers more than road accidents. For example, it includes gas cylinder blast to electric shock, sliding at the bathroom, injuries caused while at the gym, and drowning, fire accidents etc.

Types of Personal Accident Insurance

The personal accident insurance can be broadly classified into two categories – Group Accident Insurance and Individual Accident Insurance.

  • Group Personal Accident Insurance  

As the name suggests, the business owners or employers buy group personal accident insurance to cover their employees. Depending on the size of the organisation, and the number of employees, the insurance companies offer a discount on the premium. This serves as an incentive for the employees as financial safety is taken care. A group personal accident policy is an excellent incentive for the employees as it assures them financial safety in the event of any mishap at the workplace.

  • Individual Personal Accident Insurance

This is an individual policy that guards the policyholders against the accidental damages. It usually covers accidental death, loss of body parts and other disabilities resulting from an accident.

What is covered?

Accidental death- In the event of death due to an accident, the policy holder’s family (or nominee) gets accidental death compensation of Sum Insured Value just before death (usually 100%+ no claim bonus). Some insurance policies also provide for reimbursement by way of payment of lumpsum on education expenses of two kids under the Education Fund.

Accidental permanent disability- It covers a policyholder in the case of loss of one or more limbs due to an accident or one or more parts of his/her body gets dismembered. The insured person is liable to get a certain amount as reimbursement of treatment cost (usually 100 to 125 per cent of the Sum Insured).

Accidental permanent partial disability- One can avail the benefit of the policy in the event of loss of one index/thumb finger or one ear or loss of vision in one eye or loss of one hand/arm/leg- partial damage of permanent nature which is irreversible. Here, the compensation is a calculated percentage of the Sum Insured.

Accidental temporary disability- When the policyholder gets severe injuries that have made him/her temporarily disabled/physically disadvantaged (physically challenged). In this case, he/she is entitled to get a lump sum compensation for the number of days where he/she is not able to work.

Medical reimbursement for health complications that have arisen from the accident- Many personal accident policies also provide reimbursement for medical complications that have arisen due to an accident, like treatment of mental trauma (cost of medicines or cost of psychiatric counselling sessions), and so on.

To learn more about the benefits and how to apply for personal accident insurance, get the April 2021 digital copy of Consumer VOICE.

Related

How to get the best insurance for your pets

How to get the best insurance for your pets

Health Insurance

Have you heard of pet insurance in India? If not, there here is some good news for all pet lovers in India. Pet insurance, which is already a flourishing industry abroad, is also beginning to take off in India. Given the rising cost of purchase, grooming and medical care for pets, it may be time to cover the risks. Care and concern for pets has seen a massive transition over the years. Many insurance companies in India have realised this need and have thrown open the gates for pet insurance. A pet insurance is akin to other insurance policy that cover the expenses incurred at the time of any emergency. A pet insurance covers everything from veterinary bills for treatment/ accidents to loss or theft and death of pets. It also covers third party liabilities risks in the event of loss.

Features of pet insurance

  • Customized plans – Customized pet insurance plans are available for pets such as dogs, cats, birds, etc.
  • IRDA approved – The pet insurance plans are approved by IRDA (Insurance Regulatory and Development Authority). There are various types of pet insurance schemes that fall under this plan, such as: cattle, dog, horse and cat insurance etc.
  • Sum assured – Generally, the sum assured for pet insurance products like dog insurance, ranges from Rs. 15,000 to Rs. 30,000. This depends on the breed and other related factors.
  • Add-on cover – Some insurance providers offer add-on covers for the base policy, such as for the loss of show entry fee. This cover is offered for the forfeit of entry fee for dog shows when the pet cannot make it to the show due to an injury or illness.
  • Third party liability – Some pet insurance policies offer third party liability cover, in the event that your pet bites/ attacks a third party or causes damage to third party property.
  • Types of cover – There are three types of pet insurance cover, namely, lifetime cover, time-limited cover and money-limit cover. Lifetime cover protects the pet and its owners against any critical/ long-term illness. This includes diseases such as eczema, arthritis, etc. The policyholder who opts for a lifetime pet insurance policy, will receive a specified amount each year towards treatment of the pet. Time limited pet insurance policy offers financial protection to a pet only for a specific period after a pet has contracted an illness or suffered an injury. Money-limit cover offers financial benefits to pet owners to meet the medical expenses of their pets. There is no time limit for this policy and it can be used until the money limit is reached.
  • Premium – Generally, the premium to be paid for the pet insurance policy in India is equal to 3 – 5 per cent of the sum assured.

To learn more about pet insurance and how is it done and the companies that cover pet insurance, do get a copy of the March 2021 Consumer VOICE English magazine today!

Related

Importance of Health Insurance in India

Importance of Health Insurance in India

Health Insurance

In this fast paced life with high levels of pollution and unhealthy eating habits, one needs to protect oneself. If there is a medical emergency, will you use all your savings ? You will have to if there is no medical cover. It is important to invest in a health insurance as you don’t know when you may need medical attention.Health policies allow you to opt for quality healthcare.Thus, policy holders can access medical treatment of the covered perils without any hassle.

If you have not covered yourself and your family under a family health insurance plan, a medical emergency can leave you broke. So, why do you have to wait for an emergency to occur when you can keep yourself protected. The rising medical costs again emphasise the need for every individual to be protected under a health plan.

Here are some point to consider why you should choose a health insurance:

Financial Security

The aim of every individual or family is to be financially secure. This is only possible if you save enough and getting medically insured is an equally important part of it. If you do not have a health policy, your savings will be hit. Health plans help you manage your emergency medical expense.

Lifestyle factors

Recent times have seen a major shift in the lifestyle of individuals. We don’t have time to take care of ourselves and neglect small signs of any health issue. All these things can lead to serious health problems in the future. Hence, a health policy is necessary as it includes regular medical tests, covers a range of medical treatments, and provides medical services at the best healthcare facilities.

Early disease incidence

We hear of younger people suffering from diseases such as arthritis, cardiac issues or muscular pains. Buying a health insurance allows you to avail free annual health checks ups therefore saving you from developing serious health problems.

Increase in medical expenses

Healthcare expenses are extremely expensive, and it is estimated that the cost of medical expenses will rise further with the rise in inflation.One has to protect oneself against rising medicals costs and stay financially secure. So having a health plan is a paramount to purchase.

It is recommended to consult a trusted health insurance advisor He should be able to provide you with unbiased advice and help you avail the best plans. You can also compare various policies on the websites to get a clear understanding.

Related

Did you know that your health information is confidential?

Did you know that your health information is confidential?

health

Whenever a doctor cannot do good, he must be kept from doing harm.

~ Hippocrates

In August this year, Andhra Pradesh State Consumer Disputes Redressal Commission had warned doctors and hospitals to not share patient information with anyone unless required by a court of law. Warning of legal consequences if they acted contrary to this, the commission had also stated that ‘maintaining confidentiality of a patient’s medical aspects is absolutely necessary and that it is not only part of a doctor’s professional conduct, but also a Constitutional obligation.’ Let’s look at some of the cases that brought this contentious subject into the spotlight.

 Dr Prem Lata, Consumer Awakening

Former Member, CDRF-Delhi

The case in question was against State Bank of India (SBI) wherein the latter had rejected a request of settling a loan against policy claim. The judgement was arrived at on the basis of ‘unethically obtained’ medical information by SBI.

A two-member bench comprising Justice Noushad Ali (president) and P Mutyala Naidu had allowed the claim of G Vijaya Kumari of Vijayawada against SBI Life Insurance Company.  The bench observed: “It is trite to note that of late, almost every doctor/hospital is observing a professional obligation and the mandate of Constitution with impunity. They are sharing medical records of patients routinely with insurance companies, without realising consequences.”

Case Background

G Vijaya Kumari had filed a case against SBI Life Insurance Company as they had rejected her request for settlement of a home loan (from SBI itself) through the insurance claim that was due to her after her husband’s demise. The insurance company had rejected her claim on the basis of investigation wherein they claimed to have found out that the applicant had ‘suppressed material information’ at the time of obtaining the life-insurance policy.

Kumari’s husband Seshagiri Rao had borrowed Rs 22 lakh as housing loan from SBI and covered the loan with the same bank’s insurance policy. He had also mortgaged his property. Later, Rao was diagnosed with cancer and died. Distressed, his wife pleaded with the bank to settle the loan against the insurance claim and return the pledged property papers to her. However, her claim was rejected by the company on the grounds that Rao had not disclosed true facts while buying the insurance policy.

It is interesting to note that the insurance company, despite maintaining in its records that Rao had suppressed material information, had issued a certificate of good health to him and approved the insurance policy.

After thoroughly studying the case and hearing all the parties, the state commission observed that while selling policies the insurance companies did not really care as to whether or not the intending purchaser was eligible for the policy – whether he or she was concealing ‘material information’, as was being contended in this case. Instead, they surpassed basic rules, lured customers through advertising and agents to meet sales targets. When it came to settlement, they would look for every possible excuse to dismiss the same. The bench pointed out that the insurance companies invariably engaged their so-called investigators, who in turn approached doctors/hospitals for records. “These doctors/hospitals are obliging to them as a matter of course. The present case is one such instance,” the bench said.

It its final judgement, the commission not just directed SBI to settle the loan against the policy claim and return the pledged property documents, but also asked the bank to compensate Kumari with one lakh rupees and pay Rs 25,000 towards the cost of litigation. The commission also reprimanded doctors/hospitals for sharing patients’ personal information with commercial establishments and asked them all to adhere to the regulations of Medical Council of India (MCI).

Another Case

An interesting case was decided by the National Consumer Forum in February this year. Life Insurance Corporation of India (LIC) had rejected a claim requested by the kin of PR Sumanagala post his death, on the basis of his medical records and a medical attendant’s certificate.

LIC rejected the claim stating that “the insured was a diabetic patient for the past 15 years and was undergoing irregular treatment.” To justify their claim, the company produced a discharge summary and the treatment records supplied by the Holy Ghost Mission Hospital where Sumanagala had died. They also produced a medical attendant’s certificate that confirmed acute renal failure as secondary cause of death and long-standing diabetes as the primary cause. On the other hand, Sumanagala’s wife continued to insist that her husband was totally healthy when he had taken the policy and that they learnt about his condition only after he was admitted to the hospital.

Interestingly, the company could not produce any evidence – treatment records, doctor’s statement, prescription or diagnosis – that could prove that the insured was getting treatment (even if irregular) for diabetes prior to his admission at the hospital. They could not counter the fact that kidney failure could be due to many reasons and that it was not possible to diagnose the time when kidney deterioration might have started.

All allegations by the insurance company were later proved wrong when the attorney cross-examined the doctor who had signed the medical attendant’s certificate. He accepted that he had not treated the patient and it was recorded that he was diabetic on the basis of symptoms of the patient. He also admitted that kidney failure could be due to many causes other than diabetes – there was no test available to determine the duration of diabetes. In fact, the old health records of Sumanagala that were obtained from a government medical college did not mention anything about him being a diabetes or hypertensive patient.

Announcing the final verdict, the commission reprimanded the insurance company and asked it to settle the claim.

Reiterating the above judgement in another case wherein Life Insurance Corporation had been sued by Dr PS Aggarwal, the Supreme Court had stated: “The onus to prove that there was material concealment of any disease, which directly proved fatal, was on the insurance company. In addition to above, the petitioner was supposed to prove that at the time of taking policy the person who gave the information knew about such a disease and he withheld it with an intention to defraud the insurance company.”

Likewise, in the case of Life Insurance Corporation versus Asha Goel, the National Commission had stated that “the burden of proving that the insured had made false representations or had suppressed material facts is on the Corporation.”

Stating the position of law, the National Commission explained that ‘exclusion clause’ could be applied by the court if insurer could prove the case of ‘pre-existing disease’. For that, the insurer must justify three elements:

(a) the policyholder suppressed facts which were material to disclose;

(b) the suppression must be fraudulently made by the policyholder; and

(c) the policyholder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.

One must note here that Pollock and Mulla’s Indian Contract and Specific Relief Acts states that “any fact the knowledge or ignorance of which would materially influence an insurer in making the contract or in estimating the degree and character of risks in fixing the rate of premium is a material fact.”

Consumers, Be Aware

Although the above judgements and interventions are encouraging and have favoured distressed consumers, one should always be conscious when buying insurance and avoid any possibility of dismissal of insurance claim, by filling in correct details about health, history of illnesses in the family, and occupation and income.

Details of health: Insurance proposers tend to avoid filling in details regarding health conditions fearing that information on any ailment may result in the insurer rejecting the contract or asking for a higher premium. It must be understood that insurance companies do not deny any scope for insurance to those afflicted with specific diseases or health troubles.

History of illnesses in the family: Details of correct age along with health details of family members are important owing to the hereditary nature of certain diseases. Two or more people in the family succumbing to some specific illness that may be genetic in nature or exhibiting suicidal tendencies indicates a higher risk of death of those insured, and hence attract higher premiums.

Occupation and income: The maximum life cover allowed by any insurance company depends on the level of income, thus requiring the insured to provide right details of his/her income. Authenticity of income details may be determined by submission of last pay slip along with the income tax return (ITR) filed. For those employed in risky occupations including aviation, army, police, defence services or mining jobs, giving information about the nature of job is especially important as the underwriting criteria decided by the insurer require an added load to the premium paid.

Taking a life-insurance policy is a way to show your loved ones that you care. Since the process involves underwriting a legal contract, it is necessary that extreme caution is taken while filling out the form. This will ensure timely and complete payment of the claim to the nominee.

 

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