Tips to Increase the Chances of Avoiding Health Insurance Claims Rejection

Tips to Increase the Chances of Avoiding Health Insurance Claims Rejection

by | Jul 8, 2023 | Best Buy, Insurance

Tips to Increase the Chances of Avoiding Health Insurance Claims Rejection

Health insurance proves invaluable during challenging situations such as medical emergencies. It not only provides financial relief by covering the substantial expenses associated with major diseases but also offers peace of mind. However, this assurance is only realized when you, as the insured, receive the complete claim amount from your health insurance company.

Nevertheless, there are instances when insurance companies deny claims, leaving you responsible for the entire treatment cost. In order to prevent claim rejection by the insurance company, it is crucial to avoid making these mistakes.

  Subas Tiwari

Here are 20 potential reasons why health insurance claims could be rejected

  1. Ineligible or expired coverage:Your policy may have lapsed or you may be attempting to claim for services not covered by your policy.
  2. Non-covered services:The treatment, procedure, or medication you’re claiming for may not be included in your policy coverage.
  3. Lack of pre-authorization:Some insurance plans require prior approval for certain procedures, tests, or surgeries, and failure to obtain it can lead to claim rejection.
  4. Incorrect or incomplete information:Providing inaccurate or incomplete details on the claim form, such as personal information, policy number, or medical codes, can result in rejection.
  5. Filing deadline missed:Insurance companies often have specific timeframes within which claims must be submitted, and missing the deadline can lead to rejection.
  6. Duplicate claims:Submitting multiple claims for the same service or treatment can result in rejection unless explicitly instructed by your insurance provider.
  7. Coordination of benefits:If you have multiple insurance policies, failure to coordinate them properly may result in claim denials.
  8. Out-of-network providers:Seeking medical care from providers outside your insurance plan’s network can lead to claim rejection or higher out-of-pocket costs.
  9. Experimental or investigational treatments:Coverage limitations may exist for experimental or investigational treatments that have not been approved by the insurance provider.
  10. Billing errors:Mistakes in billing, coding, or documentation by healthcare providers can lead to claim rejections.
  11. Medical necessity not met:If the insurance company determines that a treatment or procedure was not medically necessary, the claim may be rejected.
  12. Incorrect or mismatched diagnosis and procedure codes:If the diagnosis and procedure codes reported on the claim form do not align or are incorrect, it can result in claim denial.
  13. Lack of documentation:Insufficient or incomplete medical records or supporting documentation for the claimed services can lead to rejection.
  14. Coverage waiting periods:Some insurance policies have waiting periods for specific services or conditions. If you file a claim during a waiting period, it may be rejected.
  15. Policy exclusions:Certain conditions or treatments may be explicitly excluded from coverage under your policy, resulting in claim denials.
  16. Late premium payments:If you fail to pay your insurance premiums on time, your coverage may be suspended or terminated, leading to claim rejection.
  17. Intentional misrepresentation:Providing false or misleading information when applying for insurance or filing a claim can result in claim rejection.
  18. Non-compliance with treatment protocols:If you deviate from the prescribed treatment plan or fail to follow recommended protocols, the insurance company may reject your claim.
  19. Pre-existing conditions:Some policies have waiting periods or exclusions for pre-existing conditions, which can result in claim rejections related to those conditions.
  20. Policy limitations:Your policy may have specific limits on the number of visits, services, or amounts covered, and exceeding those limits can lead to claim denials.

Please note that these reasons may vary depending on your specific insurance policy and provider. It’s important to review your policy documents and contact your insurance provider for accurate information about claim rejection reasons.

To expedite the process of getting health insurance claims in India, consider the following tips:

  1. Understand the claim process:Familiarize yourself with the claim filing process outlined by your insurance provider. Understand the required documents, claim forms, and procedures to streamline the process.
  2. Keep documentation ready:Maintain an organized record of all necessary documents required for claim submission, such as medical bills, prescriptions, diagnostic reports, discharge summaries, and any other supporting documents.
  3. Submit claims promptly:File your insurance claims as soon as possible after receiving medical treatment. Delaying claim submission can prolong the processing time.
  4. Complete and accurate information:Ensure that all claim forms are filled out accurately and completely, providing the necessary information, policy details, diagnosis codes, and treatment details. Any errors or missing information can cause delays in processing.
  5. Submit electronic claims:If your insurance provider allows electronic claim submission, opt for this method. Electronic claims are generally processed faster than paper claims.
  6. Follow up promptly:Regularly follow up with your insurance provider to inquire about the status of your claim. Stay informed about any additional documentation or requirements that may be needed.
  7. Maintain open communication:Stay in touch with your insurance company’s customer service representatives and claims department. Promptly respond to any requests for information or clarification to expedite the process.
  8. Utilize online portals:Many insurance providers offer online portals or mobile apps for claim submission and tracking. Utilize these platforms for convenience and faster processing.
  9. Seek pre-authorization when required:For planned procedures or treatments that require pre-authorization, obtain the necessary approvals from your insurance provider before proceeding. This helps ensure smooth claim processing later.
  10. Opt for cashless claims:If your insurance policy offers cashless facility, choose network hospitals where you can avail cashless treatment. This eliminates the need for reimbursement claims and speeds up the process.
  11. Maintain regular premium payments:Ensure that your insurance premiums are paid regularly and on time. Non-payment can lead to claim rejection or delays.
  12. Utilize technology:Take advantage of digital tools and services offered by your insurance provider, such as online claim tracking, e-mail communications, or mobile apps, to expedite the claim process.
  13. Provide additional information if requested:If your insurance provider requests additional documents or information to process your claim, provide them promptly to avoid delays.
  14. Be persistent but polite:In case of delays or issues with claim processing, remain persistent in following up with your insurance provider. However, maintain a polite and cooperative demeanor to facilitate a smooth resolution.
  15. Seek professional assistance if needed:If you encounter significant delays or challenges in getting your claim processed, consider seeking help from a professional insurance advisor or broker who can provide guidance and escalate the matter if necessary.

Remember that claim processing times can vary depending on various factors, including the complexity of the claim, documentation provided, and the efficiency of the insurance provider’s processes. By following these tips and maintaining proactive communication, you can increase the chances of receiving your health insurance claims faster.

If you have a complaint related to health insurance in India, you can follow the below process to escalate and seek resolution:

  1. Contact the Insurance Company:Start by contacting your health insurance company’s customer service department. Explain your complaint and provide details of the issue you are facing. You can reach out to them through their dedicated customer care helpline, email, or online complaint portals.
  2. Maintain Written Documentation:Keep a record of all communication with the insurance company. Maintain copies of emails, letters, or any other form of correspondence exchanged during the complaint resolution process. This documentation will be useful if you need to escalate the complaint further.
  3. Escalate to the Grievance Redressal Officer:If your complaint is not resolved satisfactorily by the customer service department, escalate it to the insurance company’s Grievance Redressal Officer (GRO). The contact details of the GRO are usually mentioned on the insurance company’s website or policy documents. Submit a written complaint to the GRO, clearly explaining the issue and attaching relevant supporting documents.
  4. Await Resolution:Once you have lodged the complaint with the GRO, the insurance company is expected to investigate and resolve the issue within a specific timeframe, usually within 15 days. During this period, the insurance company may request additional information or documents for their investigation. Maintain regular communication with the insurance company to track the progress of your complaint.
  5. Approach the Insurance Ombudsman:If your complaint remains unresolved or you are not satisfied with the resolution provided by the insurance company, you can approach the Insurance Ombudsman. The Insurance Ombudsman is an independent authority appointed by the Insurance Regulatory and Development Authority of India (IRDAI) to address grievances related to insurance. File a complaint with the Ombudsman providing all relevant details, including the complaint history, correspondence, and supporting documents. The Ombudsman will review the case and provide a resolution within the framework of the IRDAI guidelines.
  6. Seek Assistance from IRDAI:If you are not satisfied with the resolution provided by the Insurance Ombudsman, you can escalate the matter to the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI has a Grievance Redressal Cell to handle complaints against insurance companies. File a complaint with the IRDAI Grievance Redressal Cell, providing all necessary details and supporting documents. The IRDAI will investigate the matter and provide a resolution based on their findings.

It’s important to note that the specific process and contact details for filing complaints may vary depending on the insurance company. It is advisable to refer to the policy document or visit the insurance company’s website for the exact procedure to lodge a complaint.

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Personal Accident Insurance

by | Jun 10, 2023 | Insurance

Personal Accident Insurance

During these times when people have to adhere to strict timelines, work longer hours, attend tours and meetings, the working class is always on the go. To minimize the risks associated with mobility, it is essential for individuals to obtain Accident Insurance coverage for themselves and their families.

                                                                                                                                    Subas Tiwari

Is Personal Accident Cover so important?

Indeed, in the era of globalization and the continuous mobility of the workforce, which includes self-employed individuals, businessmen, and traders, it is crucial to prioritize securing sufficient insurance coverage for oneself and their family members, including dependent parents or in-laws. This ensures that in unforeseen situations, there is no reliance on bank loans or borrowing from friends or relatives to cover medical expenses. By having adequate insurance, individuals can swiftly access necessary treatments and return to work promptly.

So, before we embark upon the task of finding out a suitable accident policy for individuals, let us find out why it is a must to be covered for accident insurance & what are the benefits/riders & common exclusions?

What is Personal Accident Insurance?

Personal accident insurance covers injuries or death that has been caused due to an accident. This is one of the most affordable and limited form of life & health insurance policy that is mostly availed by people who are travelling frequently by road, water or airways.

Why is it called Personal Accident Insurance?

There are accident insurance policies for Group Cover taken by organizations for their employees’ benefit (Group Accident Insurance) & there are those where the Corporate-employer takes accident insurance cover for their employees called Corporate Accident Insurance. So the term’ personal” denotes ‘individual’ accident insurance policies (where family floater options are also available).

Why do you need to have one?

Personal accident insurances cover the policyholder against death or disability due to an accident. All general insurance companies offer these policies. Firstly, it will provide financial support to the policyholder if he is disabled after an accident. Secondly, the magnitude of the mishap doesn’t matter; even minor ones like falling off a bicycle and breaking an arm, or fracturing a leg while playing football are covered by the policy.

PSU insurers offer cheap personal accident covers while private insurance companies offer a wider range of benefits, but the premium rates are higher. You can take a cover of up to 8 times your annual salary. Apart from the basic death and permanent disability cover, you can buy additional protection against partial and temporary disability, even loss of livelihood.

It’s important to understand the terms and conditions clearly before you buy a policy. For example, hospitalization benefit can be availed of only if the policyholder is admitted within seven days of the accident and is hospitalized for at least 24 hours.

How does it work?

One has to pay a monthly, quarterly or yearly premium that remains the same till the entire policy coverage period. A cash benefit can be availed as reimbursement when the policy holder has got a major accidental injury. Compensation is provided if the insured person dies due to accident. The coverage is generally valid even when you are out of the country. No medical check-ups are required prior to availing the personal accident insurance policy. It is important to pay the premium in time so that you can enjoy the benefits of this policy. You can also add your family members under this policy.

What is covered?

Accidental death– On the event of death due to 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 lump sum on education expenses of 2 kids under the Education Fund.

Accidental permanent disability– It means the policy holder has lost one or more limbs due to an accident or one or more parts of his/her body has been dismembered. The insured person is liable to get a certain amount as reimbursement of treatment cost (usually 100% to 125% of Sum Insured).

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

Accidental temporary disability– It means the policy holder has got severe injuries which 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 has arisen from the accident– Many personal accident policies also provide reimbursement for medical complications that has  arisen due to an accident, like treatment of mental trauma (cost of medicines or cost of psychiatric counselling sessions), and so on.

What are not covered? (EXCLUSIONS)

The following could be the most common exclusions (not covered) in the Personal Accident Insurance Policy Cover. Take adequate care to read them, understand the implications & take an informed decision to buy.

  • Suicide
  • Self-inflicted injuries
  • Influenced by liquor and drugs
  • Any pre-existing conditions or infirmity
  • Hazardous sports or careers (such as deep sea diving, working in mines, circus; in Army, Air Force or Navy, Airplane Pilots, etc)
  • Use of alternate systems of medical treatments (such as AYUSH)
  • War situations, mental disorders and pregnancy/childbirth

(These are only illustrative & not exhaustive)

Comparison of Accident Insurance Vis-à-vis Health Insurance and Term Plan Insurance 

Personal Accident Insurance Health Insurance Term Plan Insurance
Sum assured is payable against injuries/disabilities/death/other related expenses caused by accident, subject to exclusions & individual limits  Sum is available for hospitalization expenses only during the life of the insured Sum assured is payable on death of the insured only
Chances of meeting with an accident is higher in today’s times Chances of getting hospitalized for diseases are comparatively slimmer Chances of death of the assured are much slimmer if either/both policies are taken
Premium amount is cheaper compared to other policies Premium is higher of these two policies Sum assured is huge & taking this into account, premium is reasonable
Premium is fixed on the basis of nature of job and/or working conditions (not based on age of the insured ) Premium is fixed on the basis of age, health history, lifestyle, etc

Premium is fixed on the age &

nature of job and/or working conditions, health history, lifestyle, etc

Additional Benefits (Covers) Built into the Policy (FREE –NO COST TO PREMIUM)

There is no standardized format in the policies to look for. The offering in the product of Accident Insurance Policy of an Insurance Company varies from that of another. However, we shall look into some of the additional benefits of which some of them could be offered to the policy-seeker, and which could be built-into the policy.

  • Education grant to children (limited to 2 children)
  • Transportation expenses of mortal remains subject to cap
  • Travel expenses of 1 relative subject to cap
  • Purchase of blood
  • Transportation of imported medicines
  • Repatriation Benefit & Funeral Expenses
  • Burn injuries
  • Mobility cover (prosthetic/artificial devices and/or orthopedic braces to enable the mobility of the insured
  • Fracture expenses 
  • Domestic road ambulance
  • Reconstructive surgery
  • Home/Vehicle modification expenses

Rider Benefits (OPTED BY THE INSURED WITH COST TO PREMIUM)

The following could be offered to specific needs as the insured may perceive, but additional premium will be loaded.

  • Life support benefit
  • Hospital cash allowance
  • Adaptation allowance
  • Accident hospitalization
  • Winter sports cover
  • Home convalescence
  • Loss of employment benefit

Procedure for Pre-Claim Filing (Important pre-filing procedures)

  • Hospitalization benefit can be availed of only if the policyholder is admitted within 7 days of the accident and is hospitalized for at least 24 hours. 
  • After the accident, one also has to submit  the following; 
  • Doctor’s certificate for the disability that prevents one from attending work
  • F.I.R
  • Policy copy
  • Claim form duly filled & signed by the insured/claimant/nominee
  • Post-mortem report (in case of accidental death)
  • Death Certificate
  • Spot Panchnama (certified copies)
  • Medical/Hospital report
  • Discharge Card
  • Doctor’s prescription
  • Medical/Pharmacy Bill
  • Any other document required by the relevant insurance company to process the claim

The following important points needs to be looked into

  • Contrary to public perception, premium paid on the Personal Accident Insurance Policy is NOT ELIGIBLE for any Income Tax benefits.
  • This kind of policy is not much canvassed by Insurance Agents as commission paid on such policies to them by the insurance company is too low.
  • For buying this policy, no medical checkup is required to be undertaken by the insured.

These policies can be purchased ONLINE & portability option is also available.

Do you Know Your ATM Card (Debit Card/Credit Card) Comes with Accident Insurance Cover?

In today’s time, most people use ATM cards. Due to ATM, we do not need to carry a lot of money with us. Money can be withdrawn anytime and anywhere with the help of this facility. But the ATM card does not work only for withdrawing money. Many other facilities are also available with the ATM card, whose information is not given to us. One of these facilities is your Accidental Insurance.

Yes, whether the ATM card is of a private bank or a government bank, complimentary insurance cover is also available with each card. This accidental cover can be from 25 thousand to 20 lakh rupees. The amount of insurance is decided according to the category of ATM card. In case of death or accident of the ATM card holder, this insurance can also prove to be the support of the dependents. Let’s know about it.

How do I make a claim?

The only condition for availing of the accidental hospitalization or death insurance cover is that the card should have been in use within 90 days prior to the accident. For the insurance cover to be applicable, the debit or credit card could have been used either at ATM, point of sale (PoS) or on e-commerce platforms, within the mentioned 90-day period.

The claim can be made bank branch where the cardholder has an account. It is not be noted that the claim has to be made no later than 90 days of the accident. Any claim made after 90 days might be rejected. The beneficiary of the claim could be the nominee on the account of the cardholder or legal heir.

It is also to be noted that this claim made with the bank of the cardholder will not affect claim process of any other external insurance provider. The claim can be made by submitting some documents to corroborate accidental death or permanent disability.

For example, for availing SBI’s RuPay card insurance, the following documents are needed:

  • Claim Form duly completed and signed.
  • Original copy of Death Certificate.
  • Original or Certified copy of FIR / Police report giving description of the accident.
  • Original or Certified copy of Post Mortem Report along with Chemical Analysis/FSL reports wherever applicable.
  • Aadhar copies of Cardholder and Nominee.
  • Declaration from Card Issuing Banks duly signed by authorized signatory and bank stamp specifying that: 
  • Cardholder is holding a RuPay card on RuPay issued IIN and mention the 16 digit card number.
  • Compliance of 90 days transaction criteria (to be supported with transaction log/account statement from the bank’s system).
  • Nominee Name and his banking details (including Passbook copy).
  • Brief description of Accident as per FIR translated in English or Hindi. 
  • Bank official’s Name and contact details with email ID.

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Tips to Increase the Chances of Avoiding Health Insurance Claims Rejection

Portability of Health Insurance

by | Jun 10, 2023 | article, Banking & Finance, Insurance, resources

Portability of Health Insurance

If you find yourself dissatisfied with the services provided by your current mobile phone service provider and wish to switch to a different company, you can easily port your mobile number. Similarly, you also have the option to port your health insurance policy, allowing you to transfer your policy from one insurance provider to another.

                                                                                                                                                                  Subas Tiwari

Portability of Health Insurance

When you change your health insurance policy from one insurance company to another, you don’t have to lose the benefits you have accumulated.

In the past in health insurance policies, such a move resulted in your losing benefits like the waiting period for covering “Pre-existing Diseases”.

Now IRDA protects you by giving you the right to port your policy to any other insurer of your choice. It has laid down that your new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”.

This applies not only when you move from one insurer to another but also from one plan to another with the same insurer.

Rights

  • You can port your policy from and to any general insurance company or specialised health insurance company
  • You can port any individual/ family policies
  • Your new insurer has to give you the credit relating to waiting period for pre-existing conditions that you have gained with the old insurer
  • Your new insurer has to insure you at least up to the sum insured under the old policy
  • The two insurers should complete the porting as per the timelines prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines

Conditions

  • You can port the policy only at the juncture of renewal. That is, the new insurance period will be with the new insurance company
  • Apart from the waiting period credit, all other terms of the new policy including the premium are at the discretion of the new insurance company
  • At least 45 days before your renewal is due you have to
  • Write to your old insurance company requesting a shift
  • Specify company to which you want to shift the policy
  • Renew your policy without a break (there is a 30 day grace period if porting is under process)

IRDA Facilitation

IRDA has created a web-based facility to get and maintain data about all health insurance policies issued by insurance companies to individuals so that it can be accessed by the new company to which a policyholder wishes to port his policy.

This enables the new insurer to obtain data on history of health insurance of the policyholder wishing to port his policy.

Process for Health Insurance Portability Policy

If you think that health insurance portability is an excellent choice for yourself and now you are wondering how to port your health insurance policy, here are the details of how to complete the process:

Stage 1

First of all, you may have to fill the IRDA portability form to initiate the process. Note that a policyholder can initiate a portability request when the policy is due for renewal. You will have to approach the insurance company where you wish to port your existing health insurance policy. The new insurer will send you a couple of documents that include a portability form and a proposal form. They may also send details about various health insurance products that the company offers.

Stage 2

Once you fill all the necessary forms and submit it to your new insurance company, they will get in touch with your previous insurer for obtaining your medical records and other related information. They might also ask for your claim history. Your old insurance company is bound to share this information via IRDA i.e. the insurance regulator when they receive such requests.

Stage 3

When the new insurance company receives all the required details, they will decide whether or not they wish to provide you a health insurance policy. This is called underwriting of a policy. An underwriter will analyse the data related to you and consider your risk profile to decide about providing health insurance to you. Your new insurance company is supposed to underwrite your policy within 15 days if they decide to insure you. In case of a delay in this time period, it is considered that you are insured under the new insurance company.

Documents Required For Porting a Health Insurance Policy

The process of porting a health insurance policy can differ slightly based on the terms and conditions of the insurance company. You need to get in touch with your current and previous insurer to understand the exact set of documents required for the purpose of porting the policy. You may be asked to submit the following documents to initiate the process:

  • Identity Proof
  • Address Proof
  • IRDA portability form
  • Proposal Form
  • Insurance Policy
  • Claim History if applicable
  • Declaration of no claims, if applicable
  • Documents related to medical history

Advantages & Disadvantages of Health Insurance Portability

Switching to a new health insurance company has its own set of advantages and disadvantages. We will discuss both in this section. You can read through them and then decide whether you want to make a switch to a new insurer or renew the existing health insurance policy at your current insurance company.

Benefits of Porting Health Insurance Policy

Benefits of porting to a new health insurance company are as follows:

  • Customize the Policy- You have an option to customise the policy to an extent. This way you can make changes in the policy to suit your existing needs from a medical insurance policy.
  • No Claim Bonus- In case you have an accumulated No Claim Bonus on your existing policy, your new insurer will calculate this discount and incorporate it with the amount of premium you are supposed to pay. Thus, you can continue to avail the benefit of No Claim Bonus by leading a healthy lifestyle.
  • Health Insurance Benefits- Apart from the accumulated No Claim Bonus, all the other benefits of your policy remain intact even after you make a switch. Porting allows you to keep the existing benefits and avail new ones with a new insurer.
  • Premium- The current health insurance market in India is brimming with competition. Insurers want policyholders to join them and buy a health insurance policy. Thus, porting the existing policy may lower your premium while the benefits may increase

Disadvantages of Porting Health Insurance Policy

Disadvantages of porting to a new health insurance company are as follows:

  • Porting on Renewal- As mentioned earlier, porting a health insurance policy is only possible near the date of renewal. A policyholder may not be allowed to port the policy when the renewal date is far away.
  • Changes in Plans- Changing the existing health insurance policy drastically is not allowed. You can make certain changes in the extent of coverage, however, changing the whole plan is not possible.
  • Extra Coverage- The policyholder needs to pay a higher amount of premium for buying any kind of additional coverage at the new insurance company.

What to Do If They Reject Portability Requests?

There could be a few reasons why one’s health insurance portability gets rejected. Let’s take a look at these reasons and understand what a policyholder can do in such cases.

  • Providing incomplete information-This can lead to rejection because the new insurance company is not provided with true and complete information about the policyholder. Getting in touch with the insurance company to provide all the required details might be done to get an approval.
  • Not submitting the documents in time- As mentioned earlier, there is a timeframe in which the policyholder needs to get in touch with the new insurance company and apply for a switch. If there is a delay, the request for porting the policy may get rejected. The policyholder must now wait for the next renewal date and make sure that necessary timelines are followed.
  • Claim history- There are high chances that your request for porting the policy may get rejected if the claim history is not proper. The company has a right to reject the request in case of frauds or misrepresentation of information.

Things to Remember While Porting For Health Insurance

A medical emergency can affect a person in both financial and emotional ways. It can easily deplete your savings if you do not have proper health insurance coverage. Buying a policy without considering your needs, lifestyle, and coverage can have a huge impact on the claim amount. Thus, it is important to consider the following things while porting your health insurance policy from one insurer to another.

  • Limits and Sub-limits- Each type of coverage of a health insurance policy has a certain cap on the claimable amount. For example, the daily room rent could be capped to Rs. 2500. You need to check such limits when you port health insurance policy and make sure that you are okay with the limits and sub-limits of the new policy.
  • Benefits- Each health insurance policy is designed to provide certain features that are helpful for the policyholder. You need to understand that these features or benefits are limited to the policy and cannot be ported. For example, if your old policy offers pre-hospitalization coverage for 30 days and the new insurance company offers this coverage for 15 days, you cannot change this feature. You have to make do with the new coverage.
  • Premium- The new insurance company may offer a lower premium for a similar insurance policy. However, you need to make sure that the coverage offered for a lower premium is sufficient for your needs. Lower premiums for a lower coverage will increase your out of pocket expenses at the time of a medical emergency. ‘Out of pocket expenditure’ refers to the money you pay directly to the hospital or a medical facility without the involvement of the insurance company.

Frequently Asked Questions (FAQs)

Here are some answers to the most asked questions related to Health Insurance Portability.

From the article, I understood that making a switch between two insurance companies is possible. However, is it possible to switch between plans in the same insurance company?

Yes, it is possible to switch to a new health insurance policy offered by the existing insurance company. This process will not take as much time as switching to a new insurance company, because your current insurer already has all the details required to make a switch.

I have already served half of the waiting period. Will it reset upon porting the policy to a new health insurance company?

Probably not. If the applicable waiting period for a specific condition is similar to that of the old policy, then you may only have to serve the remaining waiting period under the new plan. However, this solely depends upon the terms and conditions of the new health insurance company.

Why should I port my health insurance policy?

You should port your health insurance policy if you are not happy with the services provided, coverage, or premium with respect to the current insurance company and your health insurance policy.

Does the age of a policyholder matter while porting health insurance?

Yes, the age of a policyholder is a vital factor while porting the policy. The older the person the more will be the health insurance premium. An insurance company may also reject a proposal based on the risk factor associated with the age of a policyholder.

Is it a good idea to buy health insurance coverage from two different insurance companies?

Buying health insurance from two different insurers depends upon the coverage being purchased. There is no point in buying similar coverage from multiple insurers. Instead, consider buying different coverages to create a comprehensive health insurance portfolio. This can provide all-round coverage in the time of a medical emergency.

Info sourced from: https://policyholder.gov.in & https://www.acko.com

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IRCTC Travel Insurance for E-Ticket Travellers

IRCTC Travel Insurance for E-Ticket Travellers

by | Oct 15, 2022 | Insurance

IRCTC Travel Insurance for E-Ticket Travellers

IRCTC Travel Insurance for E-Ticket Travellers

Who cares about buying travel insurance for rail travel? That too when one can get insurance coverage of up to ₹10 lakh at a premium of 35 paise for financial protection against rail accidents and other untoward incidents including robbery.

You might have overlooked it, but Indian Railway Catering and Tourism Corporation (IRCTC) has been providing you insurance every time you book a ticket through its website or mobile app. While booking tickets for your train journey on IRCTC site, you will get an option on “Travel Insurance” where you can choose whether you want travel insurance or not. Since the cost is only 35 paise, it is advisable to choose this one.

                                                                                                                             Subas Tiwari

Rail Travel Insurance Covered

Rail travel insurance provides coverage of Rs 10 lakh for death and permanent total disability arising out of any train accident or other untoward incident. 7.5 lakh is available for permanent partial disability. 2 lakhs coverage is available for hospitalization expenses for injury. Accidents, robbery, and other violent acts during train travel are covered by the policy. Insure for yourself & family when you book your tickets by train. It is simple & easy. No hassles of medical test, filling up of forms, etc.

Indian Railway Catering and Tourism Corporation (IRCTC), a Subsidiary of the Ministry of Railways, Government of India has floated this unique concept in rail travel in India, which is inviting raves amongst the travelling public for offering additional rail safety for train travellers.

As a pilot exercise, this scheme is open only to those who book travel tickets on online platforms (through e-tickets). Now, let us get down to understand what the scheme is & how does it extend rail insurance cover.

Who are covered?

  • All resident Indians and NRIs who booked online through NGet (New Generation E-Ticketing) website application of IRCTC only
  • All Indians above 5 years of age
  • All who have booked train tickets on online platforms (e-ticket)
  • All those who require Tatkal & Premium Tatkal train tickets through online booking
  • All those travelers who have confirmed/RAC tickets of any class (II, AC 2 tier, AC 3 tier, etc.) & who actually board the train to travel on the fateful day

What is the premium payable?

The premium amount is Rs.0.35 paise per passenger (inclusive of all taxes). However, there are conditions attached to this premium. That is, if you opted for this travel insurance, then it will be compulsory for all passengers booked under the single PNR. Also, in the case of ticket cancellations, the premium charged would have to be forfeited & would not be refunded.

Amount of coverage

  • The scheme offers travellers or their family’s compensation of up to Rs 10 lakhs in the event of death or permanent total disability (and Rs 10,000 for transportation of mortal remains in the event of death in a train accident). 
  • Rs 7.50 lakhs for permanent partial disability (and Rs 10,000 for transportation of injured person(s) in a train accident. 
  • Upto Rs 2.00 lakhs for hospitalization expenses (the coverage for Hospitalization Expenses for Injury is over and above the death/permanent total disability/partial disability).

The above is applicable on a train accident or other ‘untoward incident’ including terrorist attacks, dacoity, rioting, shoot-out or arson, as well as for short termination, diverted route and Vikalp trains. Further claims under train accident and untoward incident cases will be as per definition under Sections 123 read with Sections 124 and 124A of the Railways Act, 1989.

Which Insurance Companies are covering this Risk?

IRCTC offers Rail Insurance cover in partnership with the following General Insurance Companies (under Personal Accident Cover)

  • SBI General Insurance
  • Bharti Axa General Insurance
  • Bajaj Allianz General Insurance
  • Shriram General Insurance
  • ICICI Lombard Insurance
  • Royal Sundaram General Insurance
  • Liberty General Insurance, etc.

Rail customers shall receive the policy information through SMS and on their registered email IDs directly from insurance companies along with the link for filling nomination details. However, policy number can be viewed from ticket booked history at IRCTC page. 

After the booking of ticket, the nomination details are to be filled at the respective insurance company site. If nomination details are not filled, then the settlement has to be made with legal heirs, if the claim arises. 

However, the following are the terms & conditions governing the insurance cover-

  • Insurance policies are contractual obligations between the insurance company & the passenger. In case of the passenger opting for insurance, the claim/liability shall be between passenger and the insurance company.
  • The insurance company is responsible for policy issuance and claims settlement.
  • All the correspondence by policy holder should be made directly with the insurance company on their toll free number, official E Mail IDs or offices as mentioned in the policy document. No correspondence is to be made with IRCTC in this regard.
  • IRCTC only provides linkage to transact with insurance company through its website to take insurance cover and as such assume no responsibility or liability in respect of said policy, under any circumstances.

The Policy document would be issued as a soft copy to your registered email ID. 

What are the Exclusions?

  • Intentional self-injury, suicide or attempted suicide, whilst under the influence of intoxicating liquor or drugs.
  •  Arising or resulting from the Insured, committing any breach of law with criminal intent while crossing the railway tracks.
  •  Due to mental disorders or disturbance of conscious, strokes, fits or convulsions which affects the entire body. 
  • Radiations, infection, poisoning except where arise from accident, whilst engaging in any sort or form of adventurous sport or directly or indirectly caused or contributed by congenital anomaly, venereal disease, sexually transmitted disease, AIDS or insanity.
  • Any congenital internal or external diseases, defects or anomalies.
  • Any costs relating to the Insured’s pregnancy, childbirth or the consequences of either.
  • Any costs in any way related to psychiatric or mental disorders.
  • Dental treatment or surgery of any kind, unless to sound natural teeth and necessitated by an accident or untoward incident.
  • Plastic or cosmetic surgery, unless this is certified by the attending medical practitioner. 
  • Claim in instances wherein ticket was booked by the Insured; however, the ticket was not confirmed but still the passenger boarded the train.
  • Claim in instances wherein ticket was booked by the Insured; however, the train was not boarded.  This is irrespective of whether the train ticket was cancelled or not.

The above-listed exclusions are not exhaustive.

Who are not Covered?

  • Children below 5 years of age 
  • Citizens of foreign countries
  • Those who have not opted for rail insurance cover
  • Those who do not have confirmed train travel tickets
  • Those who are on wait-list & unreserved rail tickets

Settlement of Claims

  • The Insured or his nominee or legal heir shall deliver to the nearest office of the respective insurance company, not later than 4 months from the date of occurrence of the insured event, a detailed statement in writing as per the claim form and any other material particular, relevant to the making of such claim.
  • The Insured or his nominee or legal heir shall tender to the insurance company all reasonable information, assistance and proofs in connection with any claim hereunder.
  • The claim documents should be sent to the claims department of the nearest office of the insurance company through which this insurance is affected. List of the address of the office of the insurance company can be obtained from the website of the insurance company.
  • Benefits payable under this policy will be paid within 15 days of the receipt of the last necessary document. 
  • No claim is admissible beyond 365 days from date of expiry of the policy in respect of hospitalization commencing within the period of insurance. 

Advantages

  • It assures the rail passenger of maximum safety of life while in travel.
  • The premium is affordable by the common rail passenger.
  • The insurance cover will help financially compensate at least in part, the physical loss of the deceased or of grievous injuries.
  • The identity of the rail passenger can be quickly confirmed in case of a train accident, as the IRCTC has already captured all the personal information of the passenger in their website.
  • Financial compensation in case of death/injury is quite reasonable.
  • Left to the rail passenger to arrange for accident insurance for the period of travel, no insurance company would come forward to effect insurance cover.

Limitations

  • IRCTC rail insurance is not available for travel in Suburban/Metro trains.
  • As a pilot scheme, IRCTC has not included offline passengers, who form the majority of rail passengers requiring travel safety.
  • All classes of passengers ( Second Class Chair Car, Sleeper Class, AC I Class , AC 2 Tier, AC 3 Tier, non/AC Chair Car, etc.) are treated equally without giving weightage for class of travel.
  • The insured amount is not flexible in that those rail passengers who seek higher insurance cover are deprived of this facility.
  • Those rail passengers who could afford to pay a higher premium are not offered the option. 
  • Rail passengers do not enjoy choosing their preferred insurance company amongst the 3 companies under IRCTC tie-up. Whichever company is insuring your passage, you will have to stick with it.
  • Presently, in online ticket booking, the particulars of “NOMINEE” are not captured at the time of issuance of tickets, but subsequently get updated by calling for such particulars after a lapse of time. If the e-ticketing passenger does not respond to the particulars sought, then such updation of nominee does not get registered with IRCTC.

What could be in store?

According to unconfirmed sources, it is understood that the scheme could be liberalized to include all rail travellers based on customer feedback on success of the existing scheme, thus paving the way for secured & safe rail travel in India.

FORMAT OF IRCTC RAIL INSURANCE POLICY CERTIFICATE

Related

14 Investment Options for Your Child’s Better Future

14 Investment Options for Your Child’s Better Future

by | Aug 14, 2022 | Banking & Finance, Insurance

14 Investment Options for Your Child’s Better Future

ESOP
Parents want their children to be happy. They want them to be healthy. They want them to be successful in their life and have everything they desire. These desires are directly or indirectly connected to one thing- money. Today, we will tell you about that financial planning, by which you can achieve many goals for your children. To be honest, planning for your children’s financial future is not much different from long-term goals like buying a house or planning for retirement. Here we will tell you about this process.

                                                                                                                                  Subas Tiwari

Public Provident Fund (PPF)

The PPF account or Public Provident Fund scheme is one of the most popular long-term saving-cum-investment products, mainly due to its combination of safety, returns and tax savings. The PPF was first offered to the public in the year 1968 by the Finance Ministry’s National Savings Institute.  Since then it has emerged as a powerful tool to create long-term wealth for investors. Investors use the PPF as a tool to build a corpus for their retirement by putting aside sums of money regularly, over long periods of time (PPF has a 15-year maturity, and the facility to extend the tenure). With its attractive interest rates and tax benefits, the PPF is a big favorite with a small saver.

Why is the PPF so popular?

The PPF is popular because it is one of the safest investment products. i.e., the government of India guarantees your investments in the fund. The interest rate is set by the government every quarter. PPF scores over many other investment options mainly because your investment is tax exempt under section 80C of the Income Tax Act (ITA) and the returns from PPF are also not taxable.

Features of PPF accounts

  • You can invest a minimum of Rs. 500 and a maximum of Rs. 1, 50,000 in a financial year.
  • A PPF has a minimum tenure of 15 years. You can extend it in blocks of 5 years if you wish.
  • Any Indian citizen can open a PPF account.
  • You can take a loan on your PPF account between the 3rd and 5th year and make partial withdrawals after the 7th year for emergencies only.
  • You can open a PPF account with just Rs. 100 with any recognized You can make deposits every month or in a lump sum through cash, cheque, DD or online transfer.
  • The PPF accounts cannot be held jointly, though you can make a nomination.
  • You must compulsorily make a minimum deposit of Rs. 500 every year.
  • The government of India’s guarantee and unmatched tax benefits make a PPF account one of the safest, attractive and popular long-term investments available.

 Sukanya Samriddhi Yojana (SSY)

The SSY plan is specially designed to encourage you to save for your daughter. An SSY account can be opened any time after the birth of your daughter till she turns 10. Some features of the Sukanya Samriddhi Yojana are:
  • The account is opened in the name of the girl by her parents/legal guardians.
  • Multiple accounts for the same girl are prohibited.
  • The interest rate for SSY is 6.9% p.a. but is subject to change.
  • A family can have only two SSY accounts, which means one for each daughter. If the firstborns are twins/triplets, no additional account can be opened if the second birth results in a girl child. If the first birth results in triplets (girls) or second birth results in twin girls, then three accounts can be opened by the family.
  • The minimum investment amount is Rs. 1000; the maximum amount is Rs. 1, 50,000 annually.
  • The SSY account matures when the girl turns 21.
  • SSY scheme has the EEE (exempt, exempt, exempt) tax feature under Section 80C and offers risk-free fixed returns. EEE feature means that the initial investment is eligible for a tax deduction, returns are not taxed, and the maturity amount is also not taxed.

Post Office Term Deposit (POTD)

Another valuable option for your girl’s future planning is the Post Office Term Deposit. This post office saving scheme allows you to open an account in post offices across the country. The features are:
  • The lock-in period for the scheme is 5 years.
  • POTD can be transferred anywhere within the country.
  • Depending on the tenure you choose, a POTD offers interest between 5.5% and 6.7%. The rates are subject to change.
  • POTD can be opened for your child who is above 10 years.
  • The minimum deposit amount is Rs 1,000; there is no maximum limit.
  • Interest earned on this scheme is added to your total annual income in the year of receipt and is taxed as per the tax rate applicable to your slab. However, POTD with a 5-yr tenure is eligible for tax benefits under Section 80C of the Income Tax Act.

Post Office Recurring Deposit (PORD)

One of the post office savings schemes that allow saving small amounts every month is the PORD. You can save as little as Rs. 100 per month. Some features of the scheme are:
  • The interest rate is subject to change from time to time. Currently, a 5-yr PORD offers interest at 5.8% p.a. compounded quarterly.
  • The post office recurring deposit scheme has a medium-term length of 5 years and can be extended after that.
  • It can be opened for your daughter/s above the age of ten with you as the guardian.
  • The PORD scheme is a good option if you are looking at a disciplined way of investment. It is a risk-free investment backed by the government.

National Savings Certificate (NSC)

NSC is another popular post office savings scheme. Some of its features are:
  • Tenure is 5 years.
  • The minimum deposit is Rs. 1,000 with no maximum limit.
  • Currently, interest is paid at 5.9% p.a., which is subject to change with time.
  • Tax benefits under Section 80C, risk-free returns, and transferability are the chief advantages of NSCs.

Children Gift Mutual Fund

Designed for accumulating a sizable corpus for milestones in your daughter’s life, children’s mutual funds offer many advantages. The features are listed below:
  • Children’s Gift Funds are hybrid or balanced funds that invest in a combination of equity and debt instruments.
  • The funds are locked in till your child turns 18.
  • Children funds create long-term appreciations and allow you to invest in a combination of debt instruments and equity stocks as per your choice.

Equity Mutual Funds

Everybody often goes gung-ho with equity mutual funds to generate wealth for children. However, this has some risks. The problem is one is not sure at the time of redemption or when your child needs the money, how the markets would be. For example, if you want to redeem all your units in 2030 to meet a child’s need, you are not sure if the markets would be buoyant at that time. However, many equity mutual funds have beaten returns from even bank deposits and have given sizeable returns. So, if you are a long term investor, these tend to give you returns like no other. If you are planning to save money for your children’s education or other such plans, look no further then equity mutual funds. The income distributed by equity mutual funds would now be subject to tax, so your overall returns could reduce.  So, one as to be really careful before choosing equity mutual funds.  Be warned that these are risky and there is no certainty that at the time you want to redeem the markets would be high.

Debt Mutual Funds

Some debt mutual funds offer better returns than bank deposits. They are also more tax efficient than bank deposits, which makes them a better choice. However, you need to opt for the safe child plans more than anything else. Go for them if you are planning a very long term investment, given the fact that they give better returns in the more long term. Again, you may need some professional advice here, given the fact that some of these schemes could be a little risky. Go for debt mutual funds that are heavily tilted towards AAA securities. This would provide you some respite in case markets fall. Gilt edged funds, which invest most of the money in government security may also be good a bet.  Returns from debt mutual funds would largely be in line with interest rates in the economy, which are now offering between 7.5 to 8 per cent.

Systematic Investment Plan (SIP)

A systematic investment plan offers you an option to invest the desired amount every month in a mutual fund of your choice to save for your child’s future. The features of a SIP are:
  • Each month a predefined amount is deducted from your account towards the investment.
  • You can invest in different SIPs simultaneously.
  • Can start with as lows as Rs 500 per month.
  • Depending on your goals, you could invest in equity, debt, or mixed funds.
  • SIPs offer advantages like the power of compounding, and rupee cost averaging and better returns in the long run when compared to a recurring deposit.

Gold ETFs

Gold has been traditionally a preferred choice for investing for girls. In current times, instead of investing in physical gold, you can invest in gold ETFs.
  • Gold ETF, just like a mutual fund, can be bought online.
  • One gold ETF unit is equal to one gram of gold.
  • Gold ETFs are open-ended; you can enter and exit as per your choice.
  • Unlike investing in physical gold, investing in Gold ETF does not come with safety and storage hassles. You can invest small amounts too in Gold ETFs. They help in diversifying your portfolio.

Unit Linked Insurance Plans (ULIP)

ULIPs combine life insurance with investment. A part of the premium paid goes towards insurance; the remaining is invested in equity. Child ULIPs offer triple benefits
  • If the parent dies, the family receives a regular monthly payout for paying the child’s fee. For all you parents who have ambitious young children with stars in their eyes, here are a few options that can help you save for their bright future.
  • They also receive death benefits for meeting daily expenses.
  • The insurer pays future premiums.
  • Continuity in investment when the parent is not there is the main advantage of this option.

Money Back Policy

As the name suggests, a money back policy is a policy which gives money back at regular intervals. This money back is paid during the plan tenure and is a percentage of the Sum Assured. Money back payouts are called Survival Benefits. These benefits are paid during the plan tenure and on maturity, the remaining Sum Assured is paid along with vested bonuses. However, if the insured dies during the plan tenure, the full Sum Assured is paid irrespective of the Survival Benefits already paid. This is what makes the plan unique. Some of the salient features of the Money Back Policy are:
  • The Survival Benefits are calculated as a percentage of the sum assured.
  • Survival Benefits are paid at regular intervals during the plan tenure. There is a fixed interval when the benefits would be paid. Every plan has a different payout structure. Similarly, the percentage of Sum Assured paid as Survival Benefits is also not fixed and varies between different plans.
  • If the plan matures, the remaining portion of the Sum Assured (actual Sum Assured less the Survival Benefits already paid) is paid as maturity benefit. However, in case of death, the entire Sum Assured is paid irrespective of the money-back benefits already paid.
  • Money back plans usually come as participating plans where bonuses are added. The accrued bonus is then paid on maturity or on death.
  • Riders are also available under many money back plans. Rider benefits are paid as a lump sum only when the contingency covered by the rider occurs during the plan tenure.

Fixed Deposit

Fixed deposits are the vanilla ice cream of the investment world. You can open an FD for your child in any bank or NBFC. The features of FDs are:
  • FD investment can be started with just Rs 1,000.
  • Generally, the term varies from a few months to 10 years.
  • Flexibility to get interest payout at maturity, monthly, quarterly, and annually.
  • Benefits of investing in FDs include flexibility, safety, and liquidity.

Kisan Vikas Patra

Kisan Vikas Patra, popularly known as KVP, is a small savings scheme that is offered in the form of certificates in Indian Post Offices. This savings plan is a fixed-rate savings plan that aims to increase your money once a set length of time has passed that is during 124 months (10 years and 4 months). The account can be opened by any adult or on behalf of a minor. Moreover, a minor who is above the age of 10 can have an account in his own name. Three individuals together can open a joint account too.

Interest rate

Interest rate for the quarter ending June 30, 2022 is 6.9 % which is compounded annually.

How much investment can be made?

There is no upper limit and the minimum is Rs. 1000 in multiples of Rs. 100. One can open any number of accounts.

KVP can be pledged and transferred

KVP can be pledged or transferred as security by submitting a regulated application form, along with a pledgee’s acceptance letter.

Transfer/pledging can be made to the following authorities.

  • The President of India/Governor of the State.
  • RBI/Scheduled Bank/Co-operative Society/Co-operative Bank.
  • Corporation (public/private)/Govt. Company/Local Authority.
  • Housing finance company.

KVP premature closure

KVP may be closed before maturity at any time if the following requirements are met: –
  • When a single account, or any or all of the account holders in a joint account, passes away.
  • On forfeiture by a pledgee being a Gazette officer.
  • When ordered by court.
  • After 2 years and 6 months from the date of deposit.
  • Transfer of account from one person to another person

Tax benefits

The scheme is not eligible for tax deductions under Section 80C of the Internal Revenue Code, and the returns are fully taxable. Nonetheless, withdrawals after the maturity period are exempt from TDS (Tax Deducted at Source). To transfer from one person to another person, the following are the criteria according to Post Office:
  1. On the death of account holder to nominee/legal heirs.
  2. On the death of account holder to joint holder(s).
  • On order by the court.
On pledging of account to the specified authority.

Tips you must consider while making an investment for your children

  1. The early you start with savings and investments, the more time you will have to build a corpus for them. Your savings will also get sufficient time to grow. The emergency corpus is important for any medical and non-medical emergency. It should have funds equal to nine to one-year household expenses. This fund will be very useful in case of job loss, medical emergencies. You can rely on this fund without disturbing your other investments.
  2. During this whole process, discipline is very important. You need to have patience while investing for long-term goals. A sustained approach and meticulous planning are very important while building a corpus. In order to attain consistency with your investment, you can opt for a systematic investment plan (SIP).
  3. Open savings account for your kids, to teach them the basics of banking and money. Once he or she turns 10 or above, your child can operate his or her account, explain to them the basics of bank deposits and withdrawals.
  4. Besides taking care of your child’s material comfort, invest in their health and wellbeing. It may be noted that the immunity of children is lower as compared to adults and they are more susceptible to diseases. There are some health insurance especially designed for kids which offers a host of benefits such as lower premiums, tax benefits, discounts, add-on covers, etc. They also offer a number of plans for kids, covering every stage of their growth, with tailor-made plans for a particular stage.
  5. Always review your investment portfolio from time to time. And if some fund is not performing well, do not hesitate to replace it with a good performing fund. Ideally, rebalance your portfolio every six to nine months. Time to time, our needs and requirements change and keeping that in mind rejig your portfolio. 

Related

Term Insurance: All You Need to Know

Term Insurance: All You Need to Know

by | Jun 18, 2022 | Insurance

Term Insurance: All You Need to Know

Term Insurance is not just an expense, it is a protection cover. Only 3.7 percent of the people in India have insurance, which means a large part of the population is without insurance cover. Not buying insurance is an injustice to loved ones. Particularly in times like Corona, term insurance will be able to help your family financially. So don’t miss out on the right term insurance, not just for yourself but for your family. Now, the central question is how to choose term insurance and why is it so important?

                                                                                                                                    Subas Tiwari

Term insurance is a basic life insurance policy, which gives you a cover of protection. Many times people postpone term plans because they consider it an expense, but its premium is not expensive. It starts with just Rs. 400 and you get a good life cover. In case of sudden death of the insured, the family gets the entire sum assured.

How to Decide on Term Insurance Cover?

Understand your income base and decide on the insurance cover based on that. Experts believe that there should be life insurance of 15-20 times the income. The cover can also be decided according to age. If you are below 30 years of age, then take a cover of 25-30 times of the income. If you are between 30-45 years, then take an insurance of 15-20 times of the income and if above 45 years, then 10 times the amount of income should be insured. It is also important to estimate how many people are dependent on your income.

It is wise to buy term insurance early. At an early age, you will be able to lock in the insurance at a cheaper premium. Younger people have lower premiums. The premium once paid, will always be fixed. Therefore, the sooner you buy term insurance, the more benefits you will be in.

Buying Term Insurance Online is better

  • If you buy term insurance online, you do not have to pay commission to any intermediary.
  • Buying online reduces the cost of premium for you and makes insurance cheaper.
  • If you buy online, you fill all the details yourself, so there is less scope for mistake.
  • Online settlement can also be done at the time of claim. You can apply for this online only.
  • Online claim is also settled quickly.
  • You have to submit some documents such as death certificate, KYC and bank account details.
  • The claim money gets directly credited to your bank account.

Benefits of Term Insurance Plan

  • 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 customize 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% of whatever you have paid.  

Limitations of Term Insurance Plan

  • 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 & hence should know more of the product- so it is easy to ask him questions & 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.

Things to Keep in Mind while Buying a Term Insurance Plan

1) 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.

2) Don’t get mislead by “per day premium” marketing gimmick

A lot of insurance companies have started to advertise their term insurance plans by sharing the cost per day basis, like for example – “Buy 1 crore term plan just for Rs 25/day”. However, note that these numbers might be applicable only for a certain age group and tenure of the policy.

Like it might happen that the advertised premium per day is only for the clients around 25 years and for a policy of 40 years. Your case will be different and the premiums might differ for you, so don’t get trapped by the lure of cheaper premiums.

3) Don’t buy single premium policies

At times, you have to choose between single premiums vs. regular premium while purchasing a life insurance policy. A lot of people think that just because they can afford to pay a onetime premium, it makes sense, but it’s not true.

Other than some cases, it does not make much sense to pay a one-time premium (single premium) while buying a term plan. The best option which will work for most people is the yearly premium. So if your agent is trying to explain to you how a one-time payment will help you save the cost, don’t fall for it.

4) Don’t get over-excited by term insurance riders

“Riders” are great add on with a term insurance plan, but only if you really require them or if they are specific to your case. Don’t add them just because it’s available and gives you a sense of more security. I mean if you travel a lot, the risk of dying in an accident is higher for you, so in that case, you can add an accidental rider. Here are various types of term plan riders

  • Accidental Death Rider
  • Permanent & Partial Disability
  • Critical Illness
  • Waiver of Premium
  • Income Benefit Rider

In the same way, if you feel that you want to cover the risk of some critical illness in the future and don’t want to buy a separate policy, then you can add critical cover. But don’t add any term insurance riders for the sake of it.

5) Buy the basic version of the term insurance plan

A term plan comes into various flavours nowadays. The most basic one is the one which pays you a lump sum on death. However, there are other variations now which also gives you income for 10/20 years along with the main cover, or pays only the income for the next 10/20 years and a small lump sum at the time of claim.

I think one should just choose the base policy in most of the cases. Most of the other options are designed for very specific situations and they are not “better” or “bad” compared to the base policy. To check this, you can go to any term insurance premium calculator and find out the premium with rider and without a rider.

6) Tell them if you are a smoker/alcoholic

One of the worst things you can do while purchasing any life insurance plan is to hide the fact that you are a smoker or consume alcohol. Please don’t hide it. There is nothing like a best term insurance plan for smokers in India at the moment.

Your premium calculation happens based on this critical information and if you hide these facts, then you are actually breaching the contract with the company and almost always your claim will be rejected at the end. Also, don’t think that just because you smoke just once in a while does not make you a non-smoker.

If you smoke (even though fewer number of times), you are a smoker in the eyes of the life insurance company. Same is the case with those who take alcohol.

Make sure you fill your own form because there have been cases when an agent just mentions the policyholder as non-smoker or non-alcoholic to make sure the policy is easily issued.

7) Don’t hide your health information

Another grave mistake done by policy buyers is to hide any critical health information while purchasing the policy. If you have any health issues or have gone through any major operations/surgeries then you should clearly communicate that to the insurance company. One of the reasons for term insurance claim rejection is hiding important facts while purchasing the policy. Please don’t wait for the insurance form to ask you the exact details.

An insurance policy is actually a proposal from your end in the eyes of law where you have to disclose all the facts and the company will accept your case or reject it. So the onus of providing all the information is on you.

8) Don’t hide your family health history

Even your family health history matters. If your parents or siblings have some illness, then even that should be shared by you. Please don’t hide it because even that information impacts your premium. Many people think that just because their parents had diabetes, it does not matter at all. That’s not true.

9) Don’t take small insurance cover (like 10-20 lacs)

Do you know that the average sum assured per India is in the range of Rs. 90,000 to 1 lac only? Indians on average are highly uninsured, however, that’s mostly true for those who do not have term plans. But even those who have term plan try to cut the corners and eventually take less term insurance cover.

The most favourite number nowadays is Rs. 1 crore. I see most of the people just taking a 1 crore term insurance plan thinking that it’s the right number. No, it’s not the case.

With the rising costs and lots of aspirations, Rs. 1 crore might not be enough for most of the families all their life. I suggest you should take a good enough cover which gives you enough peace of mind. Make sure you add up all your liabilities, 300 times of your monthly expenses and some more amount which can help your family reach your other financial goals and take at least that much cover. If your life insurance requirement is Rs. 1.3 crore, better take a 1.5 crore plan and not 1 crore.

10) Don’t forget to add nominee’s name

While filling the insurance form, make sure you carefully put the nominee’s name. But who can be a nominee in insurance? Ideally, it should be wife, children or someone whom you want to pass the term plan money. But try to avoid very old people as the nominee (in general).

Also make sure you mention this fact in your WILL too, or if you are not going to create a WILL right now, you can take the life insurance policy under MWP Act, so that your nominee will be the final person (it can only be wife and kids if you add MWP) who gets the money.

If you have bought the term plan long back and now your preference has changed, it’s better to change the nominee’s name.

11) Don’t take more than 1-2 policy 

You should ideally have 1 term plan policy in your life insurance portfolio, the max can be 2 policies. But nothing more than that.

I have seen some people dividing their 2 crores of the cover into 4 policies of 50 lacs each with 4 different companies and it’s a little bit of stretch. In almost all cases, 1 single policy of a big amount is good enough.

However, if you still feel that you want to break it into two policies, that’s the maximum you should do. Also, some people who are going to buy another term plan after a couple of years should not note this point that they should eventually not have more than 2 policies.

12) Disclose the old insurance policy 

When you buy any life insurance policy, it’s mandatory as per their rules to disclose the old insurance policy you already have. In most of the cases, when people buy a term plan for the first time, they already have a couple of traditional insurance plans, but they fail to declare that.

I suggest you don’t do that because as per life insurance policies, a company should know how much coverage you already have and only based on that they will offer you additional cover.

If you have already bought a term plan without mentioning your old policies, you should reach the customer care of the company concerned and share with them about your old policies.

13) Check the policy papers once you get it 

One of the things which you should immediately do after receiving the policy is to check all the fine points and a copy of your medical examination. Kindly go through each point and make sure things like your age, name, blood group, address and other important things are mentioned correctly.

There have been cases, where the information has been wrong. If things are wrong, you can reach out to the company customer care to get it corrected.

14) Communicate to your family that you bought a term plan 

You should share about buying the term plan with your family immediately along with the policy papers and the contact number of the insurer.

You can also write down the claim process on paper and keep that at a safe location and share it with your family. I know it’s not easy to talk about even though it’s the logical thing to do. Nonetheless, at least communicate with your family about the important things they should be aware of.

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