Insurance can be classified as two categories, Life Insurance and Non-Life Insurance.
Life insurance: It is a contract between policy owner and the insurer. Here Insurer agrees to pay the beneficiary a sum of money upon the insured person’s death or maturity benefits (as per the contract). Different types of life insurance policies are as below:
- Term Insurance: Here the sum assured will be paid only on the death of Insured person during the policy term. No maturity benefits under this plan.
- Endowment assurance: Here the sum assured will be paid at the time of maturity or on the death of insured person during the policy term. There might be bonus associated with these policies. Money back policies are also there, where there will be assured money periodically and balance of sum assured at the time of maturity.
- Whole life policy: Here the insured person will be covered till his/her whole life. The sum assured will be paid when the insured person die. There is no policy term. The premium can be paid throughout the insured person life or for a specific period of time.
- ULIP (Unit Linked Insurance Plan): Here the premiums are invested into capital markets and the returns are linked to the market where it is invested. The sum assured or the current market value (whichever is high) will be paid on death of the Insured person during the policy term or on maturity.
- Accident Insurance Policy: Here apart from the sum assured paid on insured person death, there are many other instruments included. Instruments are Permanent Total Disablement, Permanent Partial Disablement, Temporary Total Disablement, Accident Medical Expenses, etc.
- There are few more such as Children policies, Joint life policies, universal life policies or variable insurance policies.
Non-Life Insurance: Non-life insurance policy provides payment depending on the loss from a particular event. Different types of non-life insurance policies are as below:
- Health Insurance: These policies cover medical expenses towards illness and/or injury. Insurer settles the medical expenses through Cashless, Reimbursement or Fixed amount of benefit. Medical expenses cover – Room rent/boarding expenses, Nursing expenses, surgeon fees, anaesthetist, physician, consultants, specialist, blood, anaesthesia, oxygen, operation theatre charges, surgical appliances, medicines, drugs, diagnostics materials, X-ray, dialysis, chemotherapy, radio therapy, cost of pace maker, artificial limbs, cost of organs, ambulance expenses etc. These policies are not issues for less than one year period.
Insurance company can provide Cumulative Bonus for every claim free year. Companies also provide Health check-up to policy holders. Related to disease, pre & post hospitalization expenses for a specific period from the date of discharge is also eligible for a claim. Please read the policy document to get more information.
To be eligible for a claim, minimum stay at hospital is 24 hrs. This might not be applicable for accidental injuries and for some certain treatments. Please read the policy document to get the more information.
Critical Illness Policy, which pay sum assured on detection of the illness which is covered in the policy.
Hospital cash, Surgical Expense benefits, Top Up, Super Top Up. These policies can also be taken separately.
- Property Insurance: Property insurance products are Householder insurance, Loss or damage of property and assets, Machinery of industries, Goods in transit, Motor insurance. These insurance provides security to someone who can maintain the same lifestyle even after loss/damage of the property.
- Travel Insurance: These policies insure the person and his family for domestic or international travel related unexpected events. Unexpected events are Medical expenses, Personal accidents, Loss of baggage, Delay in baggage arrival, Travel delay, Loss of passport etc.
Term Insurance: Comes under 80C. For policies starting 1 April 2012 and later, the premium has to be less than 10 per cent sum insured if the person wants to claim tax deduction.
ULIP (Unit Linked Insurance Plan): Same as Term Insurance. We can also seek exemption from gross income under Section 10 (10) D for any sum received from insurance policy as maturity proceeds, death benefits are exempted from tax. For insurance policies issued after 01 April 2012, where the premium payable for any of the years during the term of the policy exceeds 10% of the sum assured, the insured will not be eligible for Sec 10(10) D benefit.
Endowment assurance: Same as ULIP.
Health Insurance: Purchasers of health insurance who have purchased the policy by any payment mode other than cash can avail of an annual deduction of Rs. 15,000 from their taxable income for payment of Health Insurance premium for self, spouse and dependent children. For senior citizens, this deduction is higher, and is Rs. 20,000. Further, since the financial year 2008-09, an additional Rs 15,000 is available as deduction for health insurance premium paid on behalf of parents, which again is Rs 20,000 if the parents are senior citizens.
Note: Please consult your financial adviser to get the updated Tax related information.
Insurance Regularity and Development Authority of India (IRDA)
To protect interest of the policy holders. To regulate, promote and ensure orderly growth of insurance business and re-insurance business. It issues certificate of registration to insurance companies and licenses to all the intermediaries who are engaged in insurance related activities.
As per the IRDA Consumer Education Website (http://www.policyholder.gov.in) policy holder can follow below steps to take the grievance with an insurance company.
- Approach the Grievance Redressal Officer of its branch or any other office that you deal with. Click here for contact details of Grievance Redressal Officers, GRO, of all insurance companies
- Give your complaint in writing along with the necessary support documents
- Take a written acknowledgement of your complaint with the date.
The insurance company should deal with your complaint within 15 days.
If that does not happen or if you are unhappy with their solution you can:
- Approach the Grievance Redressal Cell of the Consumer Affairs Department of IRDA:
- Call Toll Free Number 155255 (or) 1800 4254 732 or
- Send an e-mail to [email protected]
- Make use of the Integrated Grievance Management System:
- Register and monitor your complaint at igms.irda.gov.in
- Send a letter or fax to IRDA with your complaint:
- Click here to download Complaint Registration Form
- Fill and send by post or courier to:
Consumer Affairs Department
Insurance Regulatory and Development Authority
3-5-817/818, United India Towers, 9th Floor
Hyderabad – 500 029 or Fax to 040-66789768
In case insurer does not readdress policy holder’s grievance, the institution of insurance ombudsman will address the policy holder grievance. Types of complains can be taken to insurance ombudsman are denial of partial or complete of claim, delay in claim settlement, non-issuance of policy, issue related to premium etc. If not satisfied with the order of insurance ombudsman, policy holder can go to court or consumer forum.
As per Max New York – NCAER survey (NCAE, 2008) in urban India and amongst the salaried class, insurance is largely used as a tax saving tool, rather than for protection against risk. There is need to reorient the consumer about the benefits of life insurance for both financial protection as well as for long-term wealth creation. The results of the Max New York Life–NCAER Survey on India Financial Protection (NCAER, 2008) indicates that awareness of life insurance stands at a high of 78 per cent on an all-India level with more urban households (90%) aware of it than rural households (73%). The level of awareness has increased with education, age and income levels. However, ownership of insurance products was low at only 24 per cent. Further, it was the salaried class that tended to buy insurance the most, followed by businessmen. Also, as compared to others married people are more likely to buy insurance.
As per Max Life- Nielsen survey on Digital Natives, the key findings from a sample of 1009 respondents have indicated that Life Insurance is one of the most searched financial product online, but does not translate into proportionate purchases. Complete details on the survey can be found at http://timesofindia.indiatimes.com/business/india-business/Max-Life-Nielsen-survey-on-Digital-Natives-says-online-search-for-life-insurance-high-but-purchases-low/articleshow/36615899.cms
As per the Global Consumer Insurance survey 2012:
- Miss-selling is a concern
- Customers are willing to pay for advice
- Products need to be easier to understand
- Quality and transparency of information must improve
- Customers want to buy more products, but agent role is fundamental
- Brand and service more important than price