Friday, February 22, 2013

3 Things you need to know about Life Insurance !

1. Insurance is mainly for financial protection
Life Insurance is an essential financial commodity. It is not meant to be bought only as a product for tax saving. Life Insurance is bought for financial protection of the dependents of the insured and should be treated as such.

2. Pay a premium you can afford !
Many folks take on life insurance policies without realizing the feasibility of these products. Premium needs to be paid on a regular basis. And missed payments can lead to a lapsed policy. Thus a proper personal financial inventory should be performed before buying a life insurance policy

3. Read the fine print like your life depended on it !
That is the only way us Indians will ever read the terms and conditions of a policy. With so much legalese and that too written in such a small font, it is a challenge to read it all. But kindly remember that that tiny sub point that you missed in the T&C may lead to some serious problems in the future.

Tuesday, February 12, 2013

IRDA may soon put an end to high NAV products

Distracted over the misleading nature and selling of high NAV (Net Asset Value) -guaranteed life insurance products, the Insurance Regulatory and Development Authority (IRDA) has decided to put an end to such products.

These products give an impression that returns offered are linked to market performance. At present, such products account for about 20% of life insurance sector's new premium income.

Speaking on the sidelines of a programme organised by the Institute of Insurance and Risk Management (IIRM) and ICICI Lombard in Hyderabad, J Hari Narayan, chairman, Insurance Regulatory and Development Authority, said, “The high NAV guaranteed products are discouraged in several markets since they result in an easy miscommunication... What is deemed to be highest NAV should not be confused with what is the highest index or how the market is performing. Highest NAV products tend to become debt products in order to maintain the guarantee whereas while marketing such products, the consumer is left with the feeling that it grows along with the value of the market itself.

According to the IRDA chairman, total assets under management for the insurance sector, which has posted a healthy growth, is expected to touch 20 lac crore by March 2013 against 18 lac crore a year ago. “When I took charge, the total asset under management was at 8 lac crore. Last year, it was 18 lac crore... and by March it may touch 20 lac crore," he added.

Further he said the new product regime, as and when they come into force with different dates to stagger the implementation, gives time to insurance companies to readjust their processes.

“In the new product regime, we don't envisage clearing highest NAV products. But existing products of that nature can continue to be serviced to give whatever benefits the scheme had promised till the end of the policy tenure,“ said Hari Narayan.

Though a formal order withdrawing the products is yet to come, the regulator is believed to have been discouraging the companies from filing such products for approval. “The new product guidelines were considered by the advisory committee in its last meeting and the authority is set to meet on February 8 after which they will be gazetted," he said.

( Source: )

Monday, February 4, 2013

10 Things to look for in YOUR INSURANCE POLICY

VERIFY: your personal details and data provided to the insurance company, for it forms a very important part of the settlement claims. Mention all details correctly and honestly. In cases where it is not declared or is erroneous on policy documents, the insurer in all fairness may refuse to honor the claim.

ANALYSE: your benefits, must correspond with your long term plans. Go through the features of the product and check if they match with promises made during the purchase. Check for evolved features such as dynamic fund allocation or increasing premium to beat inflation which needs to be understood in detail.

CHECK: for add-on covers known as riders for other types of contingencies. Ensure that rider you bought are included in it, to avoid disappointments at critical moments.

CONSIDER: knowing the exact payment tenure. Check for how long you need to pay premiums and also what mode of payment you may have chosen, for example half yearly, quarterly etc. Life insurance is a long term savings and protection tool and its benefits can be seen only if one buys it for the long-term, which is the primary reason you bought the policy.

AUTHENTICATE: Study carefully what is guaranteed and what is not. Once you get the policy documents, check out the benefit illustrations of returns.

GLANCE: through terms and conditions of the service contract. In case you find any difficulty in understanding any aspect, you may want to check with the insurer the impact of those terms.

CONFIRM: the exact surrender charges mentioned in the documents for the times you face a cash crunch and need to surrender your policy or make partial withdrawals.

EXAMINE: exclusions in the policy, which define aspects or situations that will not be included in the coverage. It is common for many life insurance policies to refuse to cover certain types of deaths within a specific period of the policy being issued.

CLAIM: nominee's details are captured properly. Your life insurance policies should include everything that is supposed to be in your coverage, and it will spell out exactly what your responsibilities are, what the life insurance company is responsible for, what you are covered for and how much, and every other aspect of your life insurance coverage.

Mis-Sold: The life insurers give a free look period of 15 days to the consumer during which a consumer can review the policy from his needs perspective. If product features aren’t in sync with consumer needs, then he is free to return the policy and claim a refund of the money paid.