1. Features · It provides you financial protection against unexpected events · Basic plans offered by insurers can be classified under three broad categories: pure insurance products (term plans), pure investments products (pension plans) and investment cum insurance products (endowment, money back and unit linked insurance plans) · If premium not paid in due date, policy lapses · Bonuses are to policies what dividends are to shares; they are declared from out of the profit that insurer make each year, and may vary from year to year, even be skipped in a bad year. · Riders are options that allow you to enhance your life cover, qualitatively and quantitatively · Premium for riders are far lower than the premiums on the base policy · Critical illness-the critical illness insurance riders provides additional cover in the event of a critical illness · Medical expanses- Riders under this category cover risk towards ailments, other than critical illness, that may require medical treatment and hospitalisation · Accident death rider- this rider is activated in case of policy holder dies due to an accident during the term of the policy · An agent is the preferred point-person for buying life insurance in India · Insurance products are being sold by banks too · If you don’t want to deal with an agent, you can approach an insurer directly Term Plans Features · In the event of your death during the term of the policy, your nominee receive the cover amount (the sum insured), you get no benefit if survive the policy · Term plans are available between five and 30 years, with the maximum age of entry generally is 50 years. · The premium payable on a term policy depends on your age and sex, the sum assured, plan tenure and your medical condition · Endowment Plans-Features · Offer some returns in addition to the sum insured · If you die during the policy term, your nominee gets the sum assured plus some returns · If you survive the policy term, you still get back the sum assured and returns · You pay premium for a predefined tenure and sum assured · Without profit plans- These endowment don’t offer you a share in insurer's profit · With profit plans- Such endowment plans offer relatively higher returns than without profit plans, sharing with you the profit earned by your insurer from year to year · Endowment plans offer good value to novice investors and those with a low appetite for risk Money Back Plans-Features · Money back plans are variants of endowment plans, with one basic difference: unlike endowment plans, where survival benefits are disbursed at the end of policy terms, the pay-back in money back plans is staggered through the policy terms · In case of a death claim, the full sum assured will be paid, without deducting any survival benefits that may have already been paid as money back components Whole Life Plans-Features · Whole life plans provide you cover through your lifetime- the only class of insurance policies to do so Unit Linked Plans (ULIP)-Features · From the premium you pay, the premium allocation charges are deducted and the balance amount based on your risk profile and the financial objectives can be graded into different asset classes-equity, debt, a mix of both or a more liquid assets · When your policy matures, you receive, the value of your funds as per the market conditions · In case the individual dies during the term, the nominee receives the higher of the sum assured less any withdrawals or the value of fund or both · If you need of some funds, the partial withdrawals facility can be used · A ULIP has the potential to generate higher than average long term returns from the equity markets · The actual returns from a ULIP would largely depend on three factors- charge, management of fund and market conditions · You can chose from income plans (high on debt, low on equity), growth plans (high on equity, low on debt) and balanced plans (roughly equally distribution between debt and equity) · You can shift from one plan to another free of cost for a specific number of times in a year 2. Advantages/Disadvantages · Safety: Safety depends on the types of insurer. Policies of LIC are the safest bet as the LIC is owned by Govt of India. However, policies of other insurers also relatively safe as all insurers are regulated by Insurance Regulatory and Development Authority of India (IRDA) · Liquidity: Liquidity is not considered high in this category of investment, as you can not encash policies pre-maturely. However, loan can be obtained against the surrender value of policies. · Capital Appreciation: Life insurance products in the categories of investments and investment cum endowment have capital appreciation. The capital appreciation is dependent upon the nature of asset class in which investment have been made by the insurer (e.g. all equity, debt cum equity, etc) · Returns : Pure form of insurance such as term plans are suppose to cover risk to life and not meant for returns purpose. However, there can be some returns in the form of bonus, subject to various claims made under the cover. In case of other categories of policies, the returns are generally better than that from bank FDs and less than that from top rated mutual funds. · Tax benefits: Deduction available on life insurance plan (Section 80C). if you claim deduction on an investment in an insurance plan but withdraw from it within three years, the deduction claimed by you will be deemed as tax payable. Insurance paybacks- income, maturity benefits and death claims from most plans are tax free. In single premium plan, if the annual premium paid on any life insurance policy exceeds 20% of the amount payable on maturity (not death), the returns from the plan (maturity value minus the total premium paid) will be taxed in the hands of policy holder at time of receipt. Insurers don’t give cover to individuals in professions that, by their nature, carry an apparent risk of death. Death while taking part in high adventure sports like mountaineering and motor racing or dangerous activities like hunting is also not covered. Most insurers don’t cover death by suicide in the 1st year of policy · 3. Live Examples There are vast numbers of insurance products (Life and Non-Life) provided by various insurance companies. One should carefully chose the products based on his/her needs and capacity to pay premium on time. Details of various products can be found from the websites of these companies. | Companies | Websites | | Aviva Life Insurance | | | Bajaj Allianz Life Insurance | | | Bharti Axa Life Insurance | | | Birla Sun Life Insurance | | | HDFC Standard Life Insurance | | | ICICI Prudential Life Insurance | | | ING Vysya Life Insurance | | | Kotak Mahindra Life Insurance | | | Life Insurance Corporation | | | Max New York Life Insurance | | | MetLife India Insurance | | | Reliance Life Insurance | | | Sahara Life Insurance | | | Shriram Life Insurance | | | SBI Life Insurance | | | Tata AIG Life Insurance | | 4. Documents · Proof of identity (Passport, PAN card, Driving License, Letters from public authority, Identity card, etc) · Proof of address (Passport, Bank Account Statement, Ration Card, Letters from public authority, House lease agreement, Credit Card statement, etc) · Source of income proof ( Form 16, IT assessment order, Salary slips, Audited company accounts, Audited partnership deed, Employers certificate, etc) · Application form · Declaration of health, wherever necessary 5. Problems and Solutions · Lapsed insurance- A lapsed policy has to be revived by payment of the accumulated premiums with interest as well as giving a health certificate as required. In case the premium under a policy is not paid not within days of grace, the policy lapses. Revival is a fresh contract where the insurer can impose fresh terms and conditions
Complaints One of the major areas of concern of the Government has been the efficient customer services in the insurance sector. With a view to ensure expeditious redressal of public grievances relating to the settlement of the claims, the Government has introduced a system of Ombudsman in the Insurance Sector with effect from 11th November 1998. Insurance Ombudsmen are currently located in 12 cities. Each Ombudsman is empowered to redress customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs.20 lakh. Particulars of the Insurance Ombudsmen are given below | Addresses of the Insurance Ombudsmen | Telephone Numbers & e-mail addresses | | AHMEDABAD
2nd Floor, Ambica House, Near C.U. Shah College,
5, Navyug Colony, Ashram Road, Ahmedabad–380 014 | 079 - 27546150 – Off.
079 –27546142 – FAX | | BHOPAL
1ST Floor, 117, Zone-II
(Above D.M. Motors Pvt. Ltd.)
Maharana Pratap Nagar, Bhopal – 462 011. | | | BHUBANESWAR
62, Forest Park,
Bhubaneswar – 751 009. | | | CHANDIGARH
S.C.O. No.101, 102 & 103, 2nd Floor,
Batra Building , Sector 17-D, Chandigarh – 160 017. | 0172 – 2706468 – Off.
0172 – 2708274 – FAX | | CHENNAI
Fatima Akhtar Court, 4th Floor, 453 (old312),
Anna Salai, Teynampet, Chennai – 600 018 | | | DELHI
2/2 A, Universal Insurance Bldg.,
Asaf Ali Road , New Delhi – 110 002. | 011 – 23239611 – Off.
011 – 23230858 – FAX | | GUWAHATI
Aquarius, Bhaskar Nagar,
R.G. Baruah Road, Guwahati – 781 021. | 0361 – 24145430 – Off.
0361 – 2414051 – FAX | | HYDERABAD
6-2-47, Yetura Towers, Lane Opp. Saleem Function
Palace, A.C. Guards, Lakdi-ka-Pool,
HYDERABAD – 500 004. | | | KOCHI
2nd Floor, CC 27/2603, Pulinat Bldg.,
Opp. Cochin Shipyard, M.G. Road ,
Earnakulam – 682 015 | | | KOLKATA
North British Bldg., 29, N.S. Road , 3rd Floor, Kolkata – 700 001. | 033 – 22212666 – Off.
033 – 22212668 – FAX | | LUCKNOW
Chintel’s House, 1st Floor, 16, Station Road, Lucknow – 226 001. | | | MUMBAI
3rd Floor, Jeevan Seva Annexe (Above MTNL),
S.V. Road, Santa Cruz (W), Mumbai – 400 054. | 022 – 26106889
022 – 26106052
| |