Though life insurance is primarily intended to meet the unexpected loss of income owing to the death of the life assured; with the changing times, it has also been looked upon as an instrument to cover many other events such as scheduled expenses, risk of living long, critical illnesses and disabilities, etc.
Claims pay-out is perceived to be the ‘end of spectrum’ and most important milestone in the life cycle of a policy. This is where, as they say, the rubber hits the road. While the policyholder completes his part of the commitment by paying due premiums; fulfilment of the promise from the insurer’s side is completed by payment of the rightful claims.
Credibility or trustworthiness of an insurance company enhances with higher claim settlement ratio. All insurance companies work towards this. To achieve this, internally every insurance company has its own process for claim settlement which works within the framework designed by IRDAI. While safeguarding policy holders’ interests through sections like section 45, regulators also protect the insurers from fraudulent claims by allowing the insurer to investigate and repudiate when there is intentional misrepresentation of facts. Insurers, however, do offer claim concessions, ex gratia claim payments as relaxations in rules to favour claimants and protect their interests.
Claimants intimate the insurer of the event where claim becomes due, with relevant basic documents that are usually handy with the claimants. Insurers assess the legality of the claim and genuineness of the documents submitted. If all is found in order, the insurers are expected to process the claim payment immediately (30 days is the outer limit for this). However, if the insurers find something suspicious; IRDA allows the insurers to investigate the claim and then take a decision.
In any case, the insurer must complete the investigation and decide on the admissibility of the claim within 120 days. Insurers can take help from third-party investigators for this purpose. These investigators also help the claimants in getting documents otherwise difficult to procure and relieve their stress in difficult times. Most importantly, if the policy is in force for 3 year or above, the insurers cannot repudiate the claims on grounds of non-disclosure or misstatement of material facts concerning health, occupation, income, etc.
In this process, insurers regularly update claimants through website, phone helplines, company apps, branches, and field support. These gateways are also used for exchange of documents and other necessary interactions to ensure speedy claim settlement.
Repudiation of a claim is a sensitive matter and is a lose-lose situation for both the customer and the insurance company. Repudiations result in monetary losses to the claimants in times of need. Higher repudiation ratio creates a negative impact on the insurer’s credibility.
No company would like to repudiate a genuine claim. To ensure that there are no issues in the unfortunate event of a claim, it is imperative that at the time of taking the policy the customer exhibits the highest standard of good faith and discloses all material facts. Both the customer and the distributor should follow this good practice so that insurance serves its purpose in case of any unfortunate event. As long as the customer has shared all the information honestly, you can rest assured that the claim will be paid/settled.
IRDAI has mandated every insurer to set up a grievance redressal mechanism and the process is governed by the grievance redressal Cell of the consumer affairs department of IRDAI under Protection of Policyholders’ Interests (PPHI) regulations with detailed guidelines and turnaround times. Aggrieved claimants do have an option to approach the Insurance Ombudsman, if they are not convinced with the insurer’s decision on the grievance raised.
The concept of any insurance is making an arrangement of collectively covering a risk, where the participants pay a premium to contribute to an insurance pool, from which money is paid to those contributors who suffered due to the unfortunate happening of the insurable event.
If there are higher outflows from an insurance pool, the participants need to contribute more by paying a higher premium and vice versa.
So, to make insurance affordable, it’s very important to have low-risk participants among the contributors. While young people are more healthy compared to the older people and have lower risks of getting ill, among other benefits of taking a health insurance policy at a younger age, their participation also helps in reducing the health insurance premium and make it more affordable for everyone.
A health insurance plan is necessary for everyone to cover exorbitant medical costs. You could have heard folks/companies urging you to purchase health insurance when you were younger frequently.
What is the Right Age?
The ideal time to purchase health insurance is between 20 to 30. You’ll be in good health at this age and won’t have any financial obligations to your family.
Between 20 to 30 Years
If you purchase health insurance coverage in your mid-20s, you will have no trouble paying the cost because you won’t be under any financial strain. Because your premiums will be reasonable, you can choose the greatest coverage for your insurance needs. If you want to start a family shortly, you can afford additional coverage, such as maternity insurance, and get through its waiting period. Additionally, you can easily obtain a lifetime renewal option and a cumulative incentive.
When the Responsibilities Come Knocking
If you decide to purchase health insurance in your thirties, you can probably choose a family health plan if you haven’t already. Furthermore, if you consider starting a family at this age, you might need coverage for your spouse and kids as well. Additionally, you might want to purchase extra coverage for illnesses like heart conditions, whose symptoms are known to manifest around this age. As a result, the risk of your health insurance premium rising and a claim being filed is higher as you age.
During Your Middle AgeIn your forties and fifties, you should consider purchasing health insurance with higher coverage. At this point in your life, you will have the most financial responsibility and you are highly prone to health issues like diabetes, high blood pressure, etc. You might therefore need to get broader coverage that includes critical sickness and sum insured enhancement features. Without a doubt, your premium will be on the higher end at this time. You can choose family floater coverage to partially lower your rate, but it will still be quite pricey.
At Retirement Age or Beyond
After turning 60, you will have to pay a hefty premium if you want to purchase a health insurance policy. At this age, you are more susceptible to serious health issues that can require hospitalisation and long-term therapy. You could need senior citizen health insurance coverage at this point in your life because a standard health policy won’t be adequate. They will include coverage for AYUSH therapy, in-home hospitalisation, organ donation costs, etc., and come with a bigger sum insured.For a stress-free and financially secure life, health insurance is a necessity. It doesn’t matter how old you are, good health insurance makes sure your following life is spent well. While you must buy insurance whenever you can, it is highly recommended that the earliest possible period is the ideal time to purchase a health insurance plan. As soon as you touch 20 years, you should get health insurance if it fits into your budget. Moreover, your wallet will benefit more if you buy early. It is as simple as that
Health insurers are increasingly offering customers wellness programmes such as sports club and gym membership, yoga classes and periodical health check-ups. The insurers reward policyholders who take part in these wellness programmes in the preceding policy period with discounts on health insurance premiums or by increasing the sum assured at the time of renewals. However, these discounts are not linked with the No Claim Bonus offered by insurers.
The wellness reward points can also be redeemed for certain medical tests at network hospitals and diagnostic centres and to avail discounts at various wellness centers like gym and yoga centres. Policyholders can avail value-added benefits such as outpatient consultations and health check-ups which will help them get diagnosed at an early stage, making preventive healthcare more prevalent. A few insurers also provide second medical opinions where the policyholder can consult doctors empanelled with the insurance company.
Insurers track the insured through smart wearable health monitoring devices and wellness providers and InsureTech startups are collaborating to provide app-based health and wellness solutions. These health tracking apps generate data on users’ health and habits which will help the latter keep better track of their health.
What to check
In September 2020 the insurance regulator had mandated companies to include wellness and preventive benefits in health plans. It underlined that the intent of wellness programmes should be to improve the insured’s health and insurers should provide the opportunity to the insured to enroll in these programmes without any discrimination.
While there is no pricing impact of inclusion of such benefits in the policy, policyholders must read the terms and conditions on the wellness perks of the policy carefully, especially the types of medical tests included in the free health check-up benefits. They should note if the cover has the provision to enhance the scope of health check-up by paying an extra amount on policy renewal and if the wellness perks are part of the cover or an add-on
The Insurance industry is at a crucial inflection point at this moment. The Insurance Amendment Bill 2022, which is likely to be tabled in the Budget Session of Parliament, is all set to transform the very nature of Indian industry. The two proposed amendments — composite licences for the insurers and permission for insurers to offer an Ecosystem of Services not necessarily linked to insurance — will impact the insuring public in many ways.
Composite licence allows the insurers to develop and sell life, non-life and health insurance products, provided they meet the necessary capital requirements. While this will give insurers economies of scale, customers also stand to benefit by getting all types of insurance cover from one insurer. Most life insurers, notably LIC, have a countrywide network of intermediaries and brick-and-mortar offices. Already more than 70% of the agents of non-life insurance companies are also agents of life insurance companies. So, life insurers are perfectly poised in distributing non-life products from almost all their operational units. Of course, if some non-life insurers have special product offerings, then the customers can take a call whether they should buy non-life products from the general insurers separately.
Ecosystem of services
Now, let’s see what Ecosystem of Services means for the insurance industry. In mature markets, insurers and insurance customers manage a wide range of risks together. After all, we live in a world of multi-dimensional risks. Customers look for both risk prevention and risk mitigation services which insurers can provide. Indian customers can similarly benefit once insurance firms are allowed to provide services related or incidental to insurance.
or example, life insurers can offer advice on pension and estate planning, finding and scheduling doctors, remote diagnosis and consultations. They can also help senior citizens (being customers of whole life and annuity products) in getting affordable housing, special medical care, and meal deliveries. Home insurers can arrange for emergency repair services, home security advice, remote monitoring and alerts, purchase of smart devices and automatic shutdown of appliances during floods and fires. Customers can be helped to save energy and can get discounts on household items.
Pandemics, natural catastrophes, cyber risks and terrorism risks are hard realities of life today. These can all lead to considerable financial losses. The individuals and small business entities can not always fathom the risks they are exposed to. Even when they can, they are just unable to manage such risks. The amendment can help Indians manage a lot of risks quite conveniently. Now, insurers are likely to assess a customer’s risks in totality and offer products which are more customised than ever before.