Why do I need a personal accident Insurance Policy?

These days due to increasing number of vehicles in the country, the number of accidents are happening. Life is capricious or uncertain. Anything can happen to anyone at any point in time. People purchase insurance to protect themselves financially against such unfortunate events. A good insurance portfolio ensures that all eventualities cover you or your finances. Life insurance proceeds will ensure that your family achieves the financial goals in your absence. A health insurance plan will provide quality health care for you and your family. Many people of us are inclined to feel that if we have adequate life, health or critical insurance, your finances are protected.

What about an accident or an illness that causes total or partial disability, which in turn compromises your ability to earn income at the level before the accident. Life insurance will typically not cover such a scenario. Health insurance covers only hospitalization expenses. You can see there is a gap, which is not covered. It is in such cases that a Personal Accident Cover can come in handy. Personal Accident Insurance plans offer limited coverage but are still better than nothing.Under your term cover, you might get the accident benefit rider on extra payment but it will mostly pay off in the cases of permanent total disability, thereby leaving all other temporary and partial disabilities. 

accidentAccidents are categorized as one of fatal health hazards worldwide. When this health hazard is put into the frame of a country where one person dies by accident every four-minute, it does require our attention. According to World Health Organization (WHO) report, about 12.5 crore people die every year due to accidents and between 200-500 crore sustain injuries.

A personal accident policy covers death, permanent total disability, permanent partial disability and total temporary disability due to an accident. First of all, these events have to happen in an accident. If the insured person dies or gets totally or partially disabled through a natural illness, such disability (or death) will not be covered under a personal accident policy.

If one day on your way back home you meet with an accident which may leave you paralyzed for life? It is scary. But, this can happen and might leave a long-lasting impact on your life. With lives lost daily and injuries rising rapidly due to accidents, we come across many cases of permanent total or permanent partial disability. A personal accident cover helps in such a scenario by providing coverage for disability, which is not typically covered under either life or health insurance.

personalWhat if you fall victim to temporary total disablement, how would you meet the income/Job loss caused by it. In such a case, your personal accident cover comes handy with income coverage part. This means, if for some time you are completely bedridden due to injury, you will be paid a certain percentage of your sum assured weekly to compensate the income/Job loss scenario.

When you are young, your chances of meeting with an accident are higher. According to WHO report, people aged between 15 and 44 years account for 48% of global road-traffic deaths; If this is just the data for deaths, imagine the rate of disability prone youth. Hence, it is always advisable to opt for a personal accident cover when you first start earning. The plan provides a considerable protection for a very low premium. While you get 100% payout in case of permanent total disability, in partial disability you get paid depending on the extent of the loss. For example; for the loss of an eye, the policy will pay 50% of the total coverage, for the loss of a leg it will typically pay 50-70% of the total coverage.

Say a strict no to Guaranteed Life Insurance Plans

Regardless of the fact whether you got hit by a two-wheeler or a four-wheeler, your personal accident insurance will cover even minor things like falling off a bike, among others. Not only this, even small injuries like broken bones, fractures, cuts, burns, etc. which do not require hospitalization, get covered under a personal accident cover.

The rule of thumb says you should go for a cover that is eight to ten times your annual income. The personal, emotional or mental trauma triggered by accident often leaves a permanent scar on life. Therefore, having a personal accident insurance can decrease that stress and can make your life a little less stressful. It can brace you from the financial hardships.

plan

The premiums for an accident cover are abysmally low. For a sum assured of Rs 5 lakh, your premiums can be as small as Rs. 600/- p.a. for death, total and partial disability coverage. This is probably equivalent to what you may pay for a meal for two when buying a food delivery app. However, we suggest that you should always buy a cover, which is at least ten times your annual salary. This is because your accident cover acts as your income in the event of death or disability. The product currently is an evolving one, and most insurers provide a protection of up to Rs 30 lakh online. The higher sum assured can be brought offline only.

HOW CAN YOU SETTLE YOUR INSURANCE CLAIM IF REJECTED?

Personal accident cover is required only to take care of permanent disability (total or partial). Your life insurance, health insurance, and emergency corpus should take care of accidental death, accident-related hospitalization and temporary loss of income.

Permanent disability, total or partial, can compromise your earning ability. In fact, it can even add to your expenses. You may require domiciliary treatment (treatment at home), physiotherapy sessions or nurse support. No health insurance coverage will cover such costs beyond a point.

LIC CANCER COVER PLAN – REVIEW

LIC had launched its second health insurance related plan which is named as LIC Cancer Cover (Plan-905) on 14th November 2017. LIC’s Cancer Cover is a regular premium payment health insurance plan which provides financial protection in case the Life Assured is diagnosed with any of the stages of Cancer during the policy term. This plan covers both the early stage cancer and significant stage cancer.

It is an online health insurance plan which has low premiums, and it comes with some benefits and add-on features.

LIC CANCER PLANFeatures-

It comes with numerable benefits like lump sum benefit, premium waiver benefit, income benefit which would be paid till ten years every month, and many more.

  • This plan has one month grace period.
  • Loan facility is not available in this policy as the policy will not acquire any paid-up value or surrender value.
  • The term period of policy is 10-30 years.
  • Tax rebate available under Income Tax under section 80D for premium amount paid.
  • It comes with two sum assured plans, i.e., Level 1 and Level 2.
  • This policy is non-linked and regular premium paying health insurance plan.
  • Basic sum assured is between Rs 10 Lakhs to Rs 50 Lakhs.
  • Free look period of 15 days if the policyholder is not satisfied with terms and conditions of the policy.
  • The policy will lapse if premium not paid within the grace period, though it can be revived but within two years of first unpaid premium.
  • The policy can be bought through online on LIC website.
  • No third party agencies are involved in this policy.
  • Nominations are available in this plan.
  • Policy can be assigned under as per Sec 38 of Insurance Act 1983.

Say a strict no to Guaranteed Life Insurance Plans

Sum Assured Options-

  • Level Sum Insured

The basic sum insured will remain the same throughout the policy term period.

  • Increasing Sum Insured

The sum insured increases by 10% of basic sum insured each year for first five years starting from the first policy anniversary or until the diagnosis of  first event of cancer, whichever is earlier. On diagnosis of any specified cancer as mentioned above, all the claims will be based on the increased sum insured at the policy anniversary coinciding or prior to the diagnosis of the first claim and further increases to this sum insured will not be applicable.

Benefits-

  • Lump sum Benefit-
  1. Early stage cancer In this stage, the early stage cancer is diagnosed, 25% of sun insured would be paid immediately to be insured.
  2. Major stage cancer in this stage of cancer, 100% sum insured would be paid on being diagnosed.
  • Premium Waiver Benefit-
  1. Early stage cancer In this stage of cancer, first three years premium would be waived and later the premium payment to be continued.
  2. Major stage cancer In this stage, all future premium payments would be waived off.
  • Income Benefit-
  1. Early stage cancer benefit is not available.
  2. Major stage cancer In this stage, 1% of basic sum insured would be paid every policy month for ten years irrespective of the policy term, i.e., even if policy tenure is over, this benefit amount has been paid.

LIC Jeevan Shikhar Plan : Tax Saver or Loser

  • Tax Benefit-

Tax benefits are available under section 80D of medical insurance but not under 80C as this is health insurance plan and not life insurance plan.

  • No Maturity and Death Benefit is available in this plan.

Eligibility Criteria for this plan-

LIC TABLEPremiums Payable under this plan-

For 20 years of term period and sum insured of Rs. 10 lakhs would have premiums accordingly:

  • Male whose age is 30 years For level 1 premium is Rs. 1,404 and for level 2 premiums is Rs. 1,841.
  • Male whose age is 40 years For level 1 premium is Rs. 3,044 and for level 2 premium is Rs. 4,224.
  • Male whose age is 50 years For level 1 premium is Rs. 9,936 and for level 2 premium is Rs. 14,101.
  • Female whose age is 30 years For level 1 premium is Rs. 2,856 and for level 2 premium is 3,953.
  • Female whose age is 40 years For level 1 premium is Rs. 5,546 and for level 2 premium is 7,753.
  • Female whose age is 50 years For level 1 premium is Rs. 9,900 and for level 2 premium is Rs. 13,476.

Waiting periods in this plan-

A waiting period of 6 months will be applied from the date of issuance of policy or date of revival of risk cover whichever is later, to the first diagnosis of any stage of cancer.

What are the Reasons Behind Most Women not Having a Health Insurance Cover?

Exclusions-

  • Any Pre-Existing Condition.
  • If the diagnosis of a Cancer was made within 180 days from the Date of issuance of policy or date of revival of risk cover whichever is later.
  • For any medical conditions suffered by the life assured or any medical procedure undergone by the life assured if that medical condition or that medical procedure was caused directly or indirectly by Acquired Immunodeficiency Syndrome (AIDS), AIDS-related complex or infection by Human Immunodeficiency Virus (HIV).
  • For any medical condition or any medical procedure arising from the donation of any of the Life Assured organs.
  • For any medical conditions suffered by the Life Assured or any medical procedure undergone by the Life Assured, if that medical condition or that medical procedure was caused directly or indirectly by alcohol or drug (except under the direction of a registered medical practitioner).
  • For any medical condition or any medical procedure arising from nuclear contamination; the radioactive, explosive or hazardous nature of nuclear fuel materials or property contaminated by nuclear fuel materials or accident arising from such nature.

 

DISCLAIMER

All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here.

HOW CAN YOU SETTLE YOUR INSURANCE CLAIM IF REJECTED?

Reason behind the rejection of claim

  • Lack of information on the proposal forms

The life insurance customers always make a common mistake that they hire the agents to fill the form on their behalf just because they find the form filling process very time to consume and complicated.

These agents may sometimes fill incorrect or incomplete information which will cause the rejection of your form. So, always fill your form yourself and recheck it after completing.

  • Not revealing (hiding) personal information

The personal information like age, occupation, family history, smoking habits, pre-existing diseases, alcohol consumption, details of other policy you are holding, etc. is vital to fill in the form for the insurance claim, which is used by the insurers to fix the premium. And if there is any mistake or conceal in this information, your form may get rejected.

claim

  • Pre-existing Diseases

If you have any of the pre-existing diseases and you claim for the insurance but do not reveal the fact of your disease in the form. In this case, your claim would get rejected as because it is essential to disclose certain facts in the form.

  • Settle the claims before the policy gets expired

It is essential to pay the premium on time so that your policy would be active. And if you fail to pay the premium, your policy will get expired and your claim would get rejected. So, to avoid the policy lapse, do not miss paying premiums on time.

Ways to settle your claim

 Go to the insurance company to resolve the claim

You can go and meet the Grievance Redressal Officer (GRO) of the insurance company and give him/her the complaint in written along with the required documents. And do not forget to take a written acceptance of the complaint with the date. Your complaint should get settled by the insurance company within 15 days from the filing of the complaint. And if the insurance company or the insurer fails to settle the issue within the mentioned time, you can approach the IRDA (Insurance Regulatory & Development Authority of India) Within the period of 1 year from the complaint filing date.

  • Register your complaint to IRDA

You can register your complaint via email to the IRDA ([email protected]) or you can mail or post your complaints to IRDA head office in Hyderabad. To register the complaint to IRDA, you should clearly specify the insurance holder’s name and address along with the name of the branch or office of the insurer against whom you have to file the complaint. And you have to state all the facts which give rise to register you a complaint. Also, required documents must be attached to the complaint. The nature and extent of the loss caused to the complainant and the relief requested from the Insurance Ombudsman (an official appointed to investigate individuals).

Say a strict no to Guaranteed Life Insurance Plans

The Ombudsman gives his advice or suggestion within one month if parties agree to conciliation; otherwise, an award is passed within three months from the date of receipt of all requirements from a complainant. Then the insurance company has only 30 days to observe the suggestions given by the Ombudsman. And if the complainant is not satisfied with the results, then he/she can go to the consumer forum.

  • IGMS (Integrated Grievance Management System)

Besides all the above solutions, the IRDA has a new system to resolve the issues of the policyholders and stated it as IGMS. The system can be used by the policyholders to register and track their complaint with both the insurer and the IRDA. You just have to follow these simple steps:

  • Go to the IGMS website (igms.irds.gov.in) and create a profile on the name of the policyholder for further registration of complaint.
  • Fill up the asked details about your issue with the insurer.

Then you will receive an email along with IRDA token number which will be used by the IRDA and the Insurance Company to track the complaint. After the confirmation of the process from you, the complaint would go to the insurer’s system as well as the IRDA repository.

After the insurer makes the resolution, if you are not satisfied with that, then your complaint would be sent to the IRDA for a review for a potential violation of Regulations through IGMS.

After this act, there may be a surety for the complete satisfaction from your side and may be all your grievances would get solved.

Why you should say a big NO to LIC’s new Plans

In 2016, the biggest Insurance Company of India, LIC came up with 4 new schemes for the public. From January to December 2016, the company launched three Endowment plans and one Money-back plan. Out of the three endowment plans, one is a Limited Premium Payment Endowment scheme. The 4 plans are namely; LIC Bima Diamond Plan, LIC Jeevan Pragati, LIC Jeevan Shikhar & LIC Jeevan Labh.

Before discussing more on these plans, let us understand what Endowment & Money-back plans are.

  • An Endowment Plan is a combination of insurance and investment. The insured will get a lump sum along with bonuses on policy maturity or in a case of death.
  • A money back plan provides life coverage during the term of the policy and the maturity benefits are paid in installments by way of Survival Benefits (money-back payments).

LIC ENDOWMENT

LIC’s Bima Diamond Plan

Launched in September 2016 LICs BIMA Diamond plan is a non-linked, traditional Money Back policy. The plan is open up to 31st August 2017. It is a Limited Premium Payment Plan with survival benefit payable at the end of every 4th year.

Survival Benefit: At the end of each of the specified durations during the policy term, provided all due premiums have been paid, a fixed percentage of Basic Sum Assured shall be payable which is as below:

For policy term of 16 & 20 years: 15% of Basic Sum Assured is payable at the end of every 4th policy year.

For policy term of 24 years: 12% of the Basic Sum Assured is payable at the end of every 4th policy year.

Sum Assured on Maturity: For a policy term of 16 years 55% of the Basic Sum Assured and for policy terms of 20 & 24 years 40% of Basic Sum Assured is payable.

However, Maximum Basic Sum Assured that is offered under this policy is Rs 5 Lakh only, which is not enough if you are looking for a high insurance cover.

There are no simple and annual bonuses under Bima Diamond Plan. The Loyalty Addition, if any, shall be payable, on death after completion of 5th policy year but within the policy term or on maturity, at such rate and on such terms as may be declared by the Corporation.

Returns of around 4% to 5% can be obtained from this scheme.

Avoid buying this plan as it neither offers you better returns or a high life cover. However, If you have already bought it, you may let it lapse.

LIC.

LIC’s Jeevan Pragati

Available for purchase from February 2016, LIC’s Jeevan Pragati Plan is a non-linked, with – profits plan which offers a combination of protection and savings.

This plan provides for the automatic increase in risk cover after every five years during the term of the policy. In addition, this plan also takes care of liquidity needs through loan facility.

Death Benefit:  In the event of death during the policy term, if all due premiums have been paid, Death benefit, is defined as the sum of Sum Assured on Death, vested Simple Reversionary Bonuses, and Final Additional bonus, if any, shall be payable.

Maturity Benefit: Sum Assured on Maturity + Simple Reversionary Bonuses + Final Additional bonus if any, shall be payable at the end of the maturity period.

The expected returns on this plan can be around 6%. However, these returns are highly dependent on the bonus rates that LIC declares every year.

If you are planning to buy this plan, you may ignore it.

LIC Jeevan Shikhar Plan : Tax Saver or Loser

LIC’s Jeevan Shikhar Plan

LIC’s Jeevan Shikhar is an endowment plan. It is a participating, non-linked, saving cum protection single premium plan wherein the risk cover is ten times of Tabular Single Premium.

This plan is no longer available as the availability period ended on 31st march, 2016.

The proposer can choose the Maturity Sum Assured. The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured.

Maturity Benefit: On policy maturity, the Maturity Sum Assured along with Loyalty Addition (if any) shall be payable.

The expected returns from this plan are around 6%.

For those who have already subscribed to this policy, it is advisable to surrender it. The policy can be surrendered at any time during the policy year.  The Guaranteed Surrender Value allowable shall be as under:

In First year (after 3 months): 70% of the Single premium paid, thereafter, 90% of the Single premium paid.

LIC’s Jeevan Labh Plan

LIC’s Jeevan Labh is a limited premium paying, non-linked, with-profits endowment plan which offers a combination of protection and savings.

Death Benefit:  The death benefit under this plan is:

Sum Assured + Bonus + Final Additional Bonus (if any)

Maturity Benefit: The maturity benefit under this plan is:

Sum Assured + Bonus + Final Additional Bonus (if any).

The expected returns can be in the range of 5 to 7% depending on the premium payment term.

This plan is an endowment plan with more limitations. A mix of insurance and investment, this plan neither gives you good returns nor adequate insurance. So, you should avoid buying it. However, If you have already invested in this plan, you may let it lapse.

LIC Jeevan Labh Plan : Reviews/Features/Return Sheet

Must read for prospective policyholders:

These plans are very expensive when it comes to assuring high sums. So if your aim is to get adequate life cover, availing these policies will not help.

The traditional Life Insurance plans can offer returns in the range of 4 to 7% which is a lower Return on Investment considering the large investment period of more than 10 years. Therefore these kinds of plan may not suit you unless you are satisfied with such low returns.

In case you wish to avail tax saving benefit under Section 80C, go for a long term Small Savings Scheme like PPF (Public Provident Fund) rather than choosing a traditional Life Insurance Policy.

Life Insurance companies offer many plans with specific benefits which may not be suitable for everyone. Therefore be aware of all the features of any financial product that you are about to buy.

Say a strict no to Guaranteed Life Insurance Plans

Say a strict no to Guaranteed Life Insurance Plans

Guaranteed Life insurance plans are the basic product offered by almost all insurance companies. These plans attract a wide customer base especially during the last few months of the tax saving season. Also, in a state of falling interest rates, such guarantees attract those individuals who want life insurance for availing tax benefits.

In these plans, Insurers declare a ‘guaranteed addition’ (GA) or ‘guaranteed return’ instead of bonus which varies depending upon the profits made by the insurer. Apparently, such plans appear attractive with lots of guarantees thrown in at different stages of the policy. All in all, the maturity amount is guaranteed and so are the monthly payouts.

Such plans may come up with the offers of guaranteed addition of 7-9 per cent of premium per annum or guaranteed payouts of 126-138 percent of the annual premium each year.

INSURANCE PLAN

The gap between guaranteed and actual returns

The guaranteed addition is not equivalent to the actual annualized returns. These guaranteed benefits accrue only on maturity and hence the actual return will vary from the one which is guaranteed to the customer. Guarantee always comes at a cost, therefore, the returns, after adjusting for the costs because of the guarantee, are low in such plans.

Although actual returns would depend on one’s age, term and premium amount, the average IRR (internal rate of return) in most traditional plans, including money-back, endowments, lie between 2 to 6 per cent per annum. The plans with guarantees would carry even lower returns.

PLAN

An illustration

Let’s assume that there’s a guaranteed plan for a 10-year term, but with a premium paying eight-year term. The plan offers guaranteed payout of 150 percent of premium every year after maturity of 8 years.

It means that the premium is to be paid for 8 years, but life cover will run for 10 years. After maturity, payouts will happen for the next 8 years. Illustratively, if the premium is Rs 20,000, it has to be paid for the initial 8 years. Thereafter, from 10th till the 17th year, there will be an annual payout of Rs 30,000. The IRR in the above plan comes to 2.9 per cent per annum!

Types of guarantees

The structure of the guaranteed plans is not the same across insurers.

  • Insurers may offer a guaranteed return based either on the premium or on the sum assured.
  • The guarantee may also differ based on the term of the policy or even the premium paying term.
  • In some plans, the guaranteed returns get added to the policy from the second year onwards, while in some, it may start at a later date.
  • Some of these plans are similar to money-back plans wherein there is a regular flow of income at regular intervals, while in some, there could be a lump sum payment on maturity.
  • Further, in a few of them, payouts happen after maturity for a certain number of years.

LIC Jeevan Shikhar Plan : Tax Saver or Loser

Guaranteed traditional plans gets complex

The offering could be anything, but hidden beneath the complex workings of insurance plans is the payout structure. There has been a vast change in the traditional life insurance which earlier represented the endowment and money back kind of policies. The terms and conditions of the payout are so complicated that understanding it may not be an easy task for many.

The premium, for a specific age and sum assured (SA), is paid for a limited period (say, 5 years) while the term of the plan is 15 years. Based on these parameters, the insurer will calculate a guaranteed maturity value and depending on that, will start paying a certain percentage of it as guaranteed cash amount starting the non-premium payment period (from the 6th year) till the end of the term.

Similarly, there could be a guaranteed plan in which every 5th year, 125 per cent of the premium is paid out, while the GA is added to policy each year, to be had on maturity along with SA (less amount paid every fifth year). In few other guarantee plans, the payout could be entirely on maturity, including GA and SA.

Contrary to the past when these policies were simple and straightforward, the newer versions are very complicated to understand. With guarantees thrown in, such plans may appear attractive, but the actual return in them is around 4 per cent per annum, or even lower.

Tip for insurance buyers:

One must not buy a life insurance for the purpose of saving tax. Traditional plans are inflexible and lock in funds for 15-30 years with a return of 2 to 5 per cent. so people must avoid buying traditional insurance plans, with or without inbuilt guarantees. Rather they should get a pure term insurance plan and park their savings in Public Provident Fund (PPF) or Equity Linked Savings Scheme (ELSS) for meeting long-term goals, while keeping the tax the tax liability at bay.

The Best Health Insurance Plan for the Diabetic Patients

In India, diabetes is one of the major health issues. Every 1 person out of 5 is suffering from diabetes. And this number is increasing day-by-day. The number of diabetic patients in year 1980 was 108 million and this number goes up to 422 million in the year 2014. It is being predicted that diabetes will become the 7th leading cause of death on a global level till the year 2030.

So, in the case of any emergency related to diabetes, health insurance will take care of you and your family after you. There are various health insurance plans for diabetic patients, so you need to select best out of it.

Unknown facts about Diabetes in India

  • There were approx 69.1 million cases of diabetes in India in the year 2015.
  • It has been predicted that, every 5th diabetic patient in the world will be an Indian by year 2025.
  • Our India is popular as the diabetic capital of the world having a 2nd position in the number of diabetic patients worldwide.
  • The number of death from diabetes in the year 2012 was 1 million.
  • In India, 87 million cases of diabetes by the year 2030 are being predicted by World Health Organization.
  • According to research, 1 out of 5 corporate workers suffers from diabetes or hypertension.
  • In India, a number of male diabetic patients is 13% higher that of the female.
  • The risk of contracting diabetes is 50% more for the people between ages of 60-70 years.

Age-wise Claim for DiabetesAge wiseState-wise Claim for DiabetesState wiseAfter a look at all these charts, you can see how this issue of diabetes is capturing the whole India. Now, it becomes must buy a health insurance plan for diabetic patients.

There are many companies in India which cover diabetes as a pre-existing disease in their health insurance policy which also includes specific health issues arising due to diabetes. But, maximum people are not aware of these policies.

Critical Illness treatments now in Installment/EMI form will be a mode of relief

Types of Diabetes and their policies

 1st Type– It is the type of diabetes in which the body stops producing insulin, which is very much needed to convert glucose into energy, and is known as insulin-dependent diabetes. In this type, the patient needs regular shots of insulin.

There is no policy which covers this type of diabetes.

  • 2nd Type In this type of diabetes the level of sugar (glucose) in the body goes higher than the normal and the cells of our body becomes insulin resistance and the amount of insulin produced is not sufficient.

Policies covering this type– Star Health Diabetes Safe, National Insurance Varishta Mediclaim, Energy Plan by Apollo Munich Health Insurance Plan.

  • 3rd Type– it is the type of diabetes in which opposition of insulin occurs in the brain and it is the type of Alzheimer disease.

Gestational diabetes

This occurs in a female at the time of pregnancy and if not cured, it gets converted to the type 2 diabetes.

Policies covering this type– Maternity benefit of health insurance policy cover this type of diabetes.

Premium amount for Diabetes health insurance plans

The premium amount for a diabetic patient is mostly higher than the normal premium amount because the risk is also high. The diabetic patient gets a higher chance of claim due to the frequent medical attention. So, always go for that policy which gives you maximum benefit at minimum cost.

Minimum premium amount of different policies (A person of 45 years of age and cover of 3 lakhs)Name of the policy newWaiting Period of the Plans

Each and every health insurance policy has its waiting period for which you can claim for your pre-existing disease. Waiting period varies from company to company, but mostly it is of 4 years. You should go for the policy with a minimum waiting period.

Protect a Lady by Gifting Health protection

Sum assured

Your conclusion to the sum assured should be based on your diabetes condition age, city, hospitalization requirement and the inflation rate of health care. Choose the best which offers you a wide range of sum assured.

Age & Cover for the disease arising due to Diabetes

Always inspect before your buy. Check the age limit of your health insurance policy. It should be flexible because flexibility in the age limit will allow you to get insured at advanced age also. It will also cover problems arising in other body parts due to diabetes.

Points to be remembered

Always try to buy health insurance as early as possible, especially when you have the medical history of diabetes.

  • Always get a specialized and specific plan which covers you from the inception of the policy.
  • Terms and conditions related to the policy are very important to understand.
  • In India, the number of insurance companies covering diabetes is very less but there are sufficient plans to choose the best one. Think, understand, insure, and then buy.

Recent Claim Settlement Ratio issued by IRDA : Top Leading Insurance Companies In 2017

According to the data of claim settlement ratio, we’ll be able to finalize the best insurance companies for the coming year 2017.

  1. Claim Settlement Ratio
  2. Average Claim Settlement Amount
  3. Average Claim Rejection Amount of Life Insurers in 2015-16
  4. Claim Pending Status of Life Insurance Companies in 2015-16
  5. Top Life Insurance Companies in 2017
  6. Few points to be considered before selecting Life Insurance Companies.

1. Claim Settlement Ratio

It works as an indicator for the life insurance companies which tell them how much death claims have been settled in the particular financial year.

You can calculate it by dividing total number of claims received by total number of claims settled.

However, this claim settlement ratio is the raw data. But we can assume that how many death claim deals are made by the life insurance companies.

IRDA Claim Settlement Ratio 2015-16

The given chart shows the Claim Settlement Ratio of 2015-16 i.e. up to March 31, 2016.

In the chart, life insurance companies are differentiated by the colour code.

90%-100% are indicated by blue colour.

80%-89% are indicated by red colour.

70%-79% are indicated by green colour.

And lastly, 60%-69% are indicated by purple colour.

CLAIM SETTELEMENTAs per the given chart, there are 24 life insurance companies and 12 companies are above 90% in claim settlement ratio. And LIC comes first in the rank by providing 98% in the list.

Let us see the claim amount settled by each company to serve their best:

Reliance life comes with the great increase in the claim settle ratio as compared to that of previous one. The previous data shows it as 84% but this year it goes up to 94%.

Birla Sunlife had a drop this year. The previous data shows that its settlement ratio was 95%. But this year it decreased to 85%.

Star Union is also facing loss this year. As per previous data its settlement ratio was 94% but this year it falls to 81%.

PNB Met Life dropped down from 93% to 85% this year.

Edelweiss Tokio has done a massive increase in their settlement ratio this year. Previously it was 60% and it came up to 85%.

IDBI Federal Life had a change of 9%. It rises up from 76% to 85%.

DHFL Pramerica had a huge increase of claim settlement ratio this year from 57% to 84%.

Aegon Religare Life has a slight increase in settlement ratio. It rose from 90% to 95%.   

As we can see above, most of the new companies are moving their position towards the highest peak. Very few of them dropped from higher position. So, how could to decide which life insurance will give highest claim settlement ratio in the coming future. It might be very difficult for you.

2. Average Claim Settlement Amount

As the claim settlement ratio doesn’t give us the transparency of the type of products the insurance companies settle. So, this average claim ratio will clear our doubts.

IRDA CLAIM SETTELMENT

Here we can see that LIC which was leading in claim settlement ratio is standing in the lowest position in average claim amount settled by insurance companies along with Exide, Sahara, Reliance Life, and Future Genereli (mentioned in the graph by green colour).

The graph shows that even though LIC had settled highest number of claims but maximum the claims are below Rs 200,000 which unveils that the LIC claim settlement is mostly in the group of Endowment Plans but not Term Insurance.

3. Average Claim Rejection Amount of Life Insurers in 2015-16

If we study about the Claim Settlement Ratio 2015-16 in depth, we can analyze how many claims the insurance companies had rejected.

AVG CLAIM

The graph shows that LIC is in the second position in claim rejection amount just after Sahara. LIC’s claim rejection is less because the quantum of claims it handles is high but value is less.

4. Claim Pending Status of Life Insurance Companies in 2015-16

The fast growing settlement of claims in the life insurance companies is the topic of consternation for all of us.

CLAIMAs in the graph we can see that, Kotak Life, Reliance Life, SBI Life, Shriram and LIC are leading in pending cases which are more than a year. We don’t know the reason but it may be fault of insured or the insurer.

5. Top Life Insurance Companies in 2017

According to the Claim Settlement Ratio 2015-16 issued by IRDA I got these selected life insurance companies. But your idea may differ that of mine. My choices are:

ICICI, HDFC, Aviva etc..

6. Few points to be considered before selecting Life Insurance Companies

  • Claim Settlement Ratio is a Primary/Raw data.

It means that it will not provide you with the transparency of data i.e. data will not be clear or up to the mark.

So, never depend on only this much data while choosing your life insurance company.

  • Focus on product, not on company

Go for the product will is as per your requirement and premium cost which you can afford. Do not conceal any fact and material.

  • Section 45 of Insurance Act will help you

According to Section 45 of Insurance Act “No policy of life insurance shall be called in question on any ground after the expiry of 3 years from the date of the policy, i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later”.

  • Reveal all facts perfectly

When you decide to buy certain life insurance products, you have to fill a proposal form on your own. Do not ask or allow anybody else to fill it. And open up all the facts properly which will help you anyway. And will not give any chance for the insurers to reject your claim.

ICICI Pru Life Insurance IPO Review

ICICI Prudential Life Insurance Co. Ltd. (IPLICL) is the largest private sector life insurer in India by total premium in fiscal 2016 and assets under management at March 31, 2016. It is a joint venture between ICICI Bank Limited, India’s largest private sector bank in terms of total assets with an asset base of 7.2 trillion at March 31, 2016, and Prudential Corporation Holdings Limited, a part of the Prudential Group, an international financial services group with GBP 509 billion of assets under management at December 31, 2015. ICICI Prudential Life Insurance Co. Ltd. Is one of the first private sector life insurance companies in India and commenced operations in fiscal 2001. It offers a range of life insurance, health insurance and pension products and services. Every fiscal year since fiscal 2002,It has consistently generated the most new business premiums on a retail weighted received premium basis among all private sector life insurers in India.

The Indian life insurance sector was the 10th largest life insurance market in the world and the 5th largest in Asia in terms of total premiums in 2016, according to Swiss Re, sigma No 3/2016. The Indian economy is one of the fastest growing large economies in the world, with a GDP growth rate of 7.3% (in real terms) in fiscal 2016 and a household savings rate of 19.1% of GDP in fiscal 2015, according to CRISIL Research, Life insurance industry report, July 2016 . ICICI Prudential Life Insurance Co. Ltd.  expect these macroeconomic factors, coupled with India’s large and young population, rapid urbanisation and rising affluence to propel the growth of the Indian life insurance sector.

Comparison of Life Insurance penetration

Comparison of Life Insurance penetrationIn fiscal 2016, its market share, on a retail weighted received premium basis, among all insurance companies in India (public and private sector) was 11.3%, as compared with a market share of 9.7% for our nearest private sector competitor. Among the 23 private sector life insurance companies in India, IPLICL had a market share, on a retail weighted received premium basis, of 21.9% in fiscal 2016

Issue Particulars

Issue opens on 19 Sept 2016

Issue closes on 21 Sept.2016

Issue Size: 181,341,058 Equity Shares of Rs 10 aggregating up to Rs 6,056.79 Cr
Offer for Sale of 181,341,058 Equity Shares of Rs 10 aggregating up to Rs [.] Cr

Face Value: Rs 10 Per Equity Share

Issue size : Rs. 6000/- Cr.

Price Band Rs. 300-334

Market Lot : 44 shares

Proposed listing on :  BSE,NSE

Lead Managers : BoA Merrill Lynch,Deutsche Equities India Private Limited,Edelweiss Capital Limited,HSBC Securities & Capital Markets Pvt Ltd,ICICI Securities Limited,IIFL Holdings Limited,JM Financial Consultants Private Limited,SBI Capital Markets Limited,UBS Securities India Private Limited.

Market premium Updates ( Grey Market )

On 20th Sept 2016, at 03.00 pm,  MP is Rs. 14-15 sellers, kostak Rs. 600/650.

On 19th Sept 2016, at 12.00 noon MP is Rs. 23-24, kostak Rs. 1100.

On  16th Sept  at  02.00 pm : MP is  Rs. 21-22 .Kostak is of  Rs.900/950.
On 15.09.2016 at  02.00 pm : MP is  Rs. 21-22 .Kostak is of  Rs. 900
On 14.09.2016 at  11.00 am : MP is  Rs. 17-18 .Kostak is of  Rs. 850.
On 13.09.2016 at  11.00 am : MP is  Rs. 21.50-23 .Kostak is of  Rs. 950.
On 12-09-2016 at 05.00 pm MP Rs. 18-19  ,Kostak rates Rs.600-650
On 12-09-2016 at 12.00 noon MP Rs. 17-18  ,Kostak rates Rs.750
On 10-09-2016 at 08.00 pm MP Rs. 15  ,Kostak rates Rs. 900
On 10-09-2016 at 03.00 pm MP Rs. 18  ,Kostak rates Rs. 925
On 09-09-2016 at 05.00 pm MP Rs. 22-23 ,Kostak rates Rs. 950
On 09-09-2016 at 11.00 am MP Rs. 21-22 ,Kostak rates Rs. 900
On 08-09-2016 at 11.00 am MP Rs. 27-28 ,Kostak rates Rs. 1200
On 07-09-2016 at 11.00 am MP Rs. 36-37 ,Kostak rates Rs. 1350 ( Strong buying seen), & at some centres, trades were at Rs. 28-29 and kostak Rs. 1200-1300
On 06-09-2016 at 11.00 am MP Rs. 35 and Kostak rates Rs. 1350-1400 ( Strong buying seen)

 

ICICI Pru life Comparison with others

ICICI PRU LIFE COMPARISON 1ICICI Pru Life Comparison 2In the 2015-16 fiscal, ICICI Pru Life total premium stood at Rs 19,164 crore. Its persistency ratio was 82.4 percent, the highest in the sector, while AUM was at Rs 1.09 trillion (Rs 1.09 lakh crore). The total expenses of the entity are one of the lowest at 14.6 percent.

L&T Technology Services IPO Review

ICICI Bank has diluted around 6 per cent before IPO and through IPO now it is diluting another 12.63 per cent stake. Post IPO ICICI Bank will hold around 55 per cent, Prudential group 26 per cent and the rest will be public holding. As it needs to dilute another 6 per cent in next three years, the existing stakeholders have planned to have ICICI Bank holding around 54 per cent and Prudential group at 20%, thus the next dilution will be by way of offerings from Prudential group.

Claim settlement ratio

Claim settlement ratioPositive Factors

A.Consistent leadership across cycles;
B. Ability to deliver superior customer value;
C. Diversified multi-channel distribution network for our products and services;
D. Leveraging technology;
E. Robust and sustainable business model.
F. Strong and established brand of our shareholders, “ICICI Bank” and “Prudential”; and
G. Experienced senior management team.

Negative

Its Company and its Directors and its Subsidiary, one of its Promoter and certain Group Companies are involved in certain legal and other proceedings.

Changes in market interest rates could have a material adverse effect on its business and profitability.

Higher expenses than expected could have a material adverse effect on its business, financial condition and results of operations.

It could be subject to claims by the customers and/or regulators for alleged mis -selling.

There are operational risks associated with the insurance industry which, when realised, may have a material adverse effect on its business, financial condition, results of operations and prospects.

Any termination of, or any adverse change to, its ability to attract or retain distributors, both institutional and retail,and key sales employees, could have a material adverse effect on its business, financial condition, results of operations and prospects.

Regulatory and statutory actions against IPLICL or its distributors could cause us reputational harm and have a material adverse effect on its business, financial condition, results of operations and prospects.

Shifts in demographic trends and consumer attitudes towards life insurance could have a material and adverse effect on its business, financial condition, results of operations and prospects.

Catastrophic events, including natural disasters, could materially increase its liabilities for claims by policyholders and have a material adverse effect on its business, financial condition and results of operations.

A WAY OF SUCCESS FULL FINANCIAL PLANNING

Differences between its actual benefits and claim payments and those assumptions and estimates used in the pricing of, and setting reserves for, our products could have a material adverse effect on its business, financial condition, results of operations and prospects.

The actuarial valuations of liabilities for our policies with outstanding liabilities are not required to be audited and if such valuation is incorrect, it could have an adverse effect on its financial condition.

Its rely on third -party contractors and service providers for a number of services, but ICICI PRU cannot guarantee that such contractors and service providers will comply with relevant regulatory requirements or their contractual obligations.

Insurance business is vulnerable to misconduct and fraudulent activities and such activities could have a material adverse effect on its business, financial condition, results of operations and reputation.

Any increase in or realisation of its contingent liabilities could have a material adverse effect on its business, financial condition, results of operations and prospects

The majority of our corporate bonds portfolio has a domestic credit rating of not lower than “AA”.

Investment portfolio is subject to liquidity risk,market risk,interest rate which could decrease its value.

Some of Group Companies have incurred losses in the past, based on their audited financial statements available. One of its Promoters may also have unsecured loans.

The insurance sector is subject to seasonal fluctuations in operating results and cash flows.

Adverse changes in the reinsurance markets could have a material adverse effect on its business, financial condition, results of operations and prospects, and ICICI PRU are exposed to the risk that our reinsurers may not perform their obligations.

Foreign investors are subject to foreign investment restrictions under Indian laws that may limit our ability to attract foreign investors, which may have a material adverse impact on the market price of the Equity Shares.

Market risk arises from unanticipated financial loss due to adverse fluctuations in key variables, including interest rates, foreign exchange rates and equity market prices

Employees

At March 31, 2016, we had 10,673 employees. Agents are not an employees.

On performance front, for last three fiscals it has posted an average EPS of Rs. 11.40 (on consolidated basis). First quarter of current fiscal is showing dismal performance, but insurance industry normally generates maximum business in the second half of the year. Hence the attribution on the basis of first quarter will be misguiding.

Valuation: The IPO values the company at Rs 47,880 crore, at the upper end of the price band. This implies a price to embedded value (EV) -an industry term which represents the present value of future profits from assets after adjusting for risks -multiple of 3.4 times the FY16 EV of Rs 13,939 crore. The valuation is 47% higher than the last stake sale of 6% to Premji Invest and Temasek in November 2015. However, compared to the multiple commanded by the share swap agreement between HDFC Life and Max life (4.2 times FY16 EV), the pricing appears attractive.

Recommendation

Current market premium is Rs. 22/- ( From Rs. 35/- )

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here

 

A WAY OF SUCCESS FULL FINANCIAL PLANNING

My years of practice as a financial planner, I met several successful from common person to  CEO’s MD’s  of the company’s business men ,respected intellectuals  in their fields earned millions of rupees but paid little attention to their financial planning. While analyzing their investment portfolio I observed some common mistakes people often commit. Some of the commonly committing mistakes I have narrated it below. If avoid these mistakes even a common person can make his financial planning successful to the large extent.

1. Setting financial targets

2. Importance of liquidity

3. Over exposure to either fixed income  or equities

4. Treating life insurance as an investment tool

5. Inadequate amount of health insurance coverage

6. Over weight to previous performers/ track record of the scheme

7. Exersing the option of selling

Setting financial targets :-

It is a first & most important step. It should be more realistic than dramatize. We need to consider many major & minute issues such as monthly income, monthly & annual fixed expenses, age, responsibilities, current life style & aspiration of post retirement life style, all such issues should co relate with present inflection & adoptive of future inflection also.

So for the better planning & implementation purpose target should divide in three phases that is short term, medium & long term goals. Periodical review & changes in goals after accomplishing the first is a better option & for these reasons policies have to be flexible & accommodative.

Importance of liquidity :-

Human life is full of surprises. How so ever people try to make full proof plan, destiny always has an upper hand & prepared to surprise us. To cope up with those surprises only available option with us is through contingencies plan by maintaining sufficient cash reserve or liquidity. I have seen people with good monthly income facing difficulties in just couple of months when they lose their jobs. Thanks to poor financial planning & thanks to credit cards as well which tempt people to reckless shopping.

Financial planning

Over exposure to either fixed income  or equities :-

It has been observed that people are either over cautious & skeptical or over aggressive in investment. Both things are not good. With over cautious approach people prefer fixed income options where return on investments are low. While second strategy of over aggressive in equity we carry excessive amount of risk which is just uncalled for. Instead of it there should be balanced approach. Decision about equity & fixed income investment depends upon many things i.e. age, income, financial targets, responsibility, risk appetite capacity etc.

Treating life insurance as an investment tool :-

Why people are so fond of insurance policies is a million dollar question now a days. Without accessing an amount of coverage required, without getting in to the schemes details people purchases those randomly purely as an instrument for the purpose of tax saving. But we forget the basis difference in two concepts i.e. purpose of investment is creation of wealth where as life insurance purpose is financial compensation from the life threats. Over exposure to any type of insurance policies are likely to the overspending on it than to receive from it.

Inadequate amount of Health insurance coverage:-

Similar to life insurance people in general are least informed about their health insurance policies. The way medical treatments cost is souring up in its proportionate amount of coverage should also needs to increase besides the age, medical history, hereditary, etc. but unfortunately neither at the time of investment nor at the time of its renewal we considers all these issues. As well as another blunder mistake in health insurance is family floater. If any one insured family member required expensive medical treatment then in that case other family members remains unprotected till the next policy renewal.  Option of Add on shopping is not supposed to apply in all areas & at least not in finance / insurance.  So better to have separate health insurance coverage for every family person.

Over weight to previous performers/ track record of the scheme: –

The concept is more related with market related investment instruments. Market dynamics because of industrial cycle, govt. Rules & policies, tax policies can affect or change the scheme/stocks future performance. So these things should also be considered while observing past performance. After all it does not give guaranty of future performance, so shall not over emphasis on past performance.

Exersing the option of selling :-

As the entry or purchase decision is important, selling of stock / units ( in case of mutual fund investment)  are equally important. Any market related investment be it equity or mutual fund, to book the profit / exit from the scheme or stock is equally important. In its absence that profit remains only on the paper. It is observed that people once invest in any stock or scheme remains invested, without keeping track record of their investment.

 

Critical Illness treatments now in Installment/EMI form will be a mode of relief

Over the last decade, the cost of medical treatment has grown at a rate of 10 percent.

Let us first understand the kind of critical illnesses that are covered by various insurance companies which are cancer, end stage renal failure, multiple sclerosis, benign brain tumour, motor neuron disorder, end stage lung disease, major organ transplant and heart valve replacement.

As per a WHO report published in 2014, heart disease was the biggest killer of people around the globe and in India too, where it killed more than 12 lakh people. It was followed by Lung Disease and Stroke which killed 1,061,863 and 881,702 people, respectively.

Cancer too is quickly emerging as a major cause of death among Indians with 548,015 cancer deaths reported in 2014. Among the different types of cancers, Oral Cancer is the biggest threat, followed by Breast Cancer. Diabetes, Liver diseases, and Kidney diseases also took more than 6 lakh lives in the India in 2014.

The below diagram states the estimated deaths per 1 lac people in the world according to World Health Organization :

Critical illness

This diseases are mainly caused due to the changing work patterns, long working hours, high-stressed jobs, junk food, smoking and alcohol, little or no exercise leading towards the so-called lifestyle diseases. The traditional health policies pay for hospitalization and domiciliary expenses and certain critical illness policies provide coverage to only a few critical illnesses. Therefore this leads to less adoption and ignorance towards opting for such health insurance policies.

The differences between a regular Health Insurance policy and Critical Illness policy offered by Insurance Companies are as below:

Differencr between Health insurance and critical illness

As per IRDA (Insurance Regulatory & Development Authority), India still continues to have the highest levels of under-penetration of health insurance and med claim in the world, with only 0.16% of the total population insured for health. Little wonder then that 70% of healthcare expenses are met from one’s pocket. This healthcare expenses cause greater financial burden on the family, more chances which lead deaths due to untimely treatments, high stress levels on the family members, etc.

The below diagram shows the approximate cost of medical treatments of the critical illness diseases :

Rising cost of medical Treatments

Therefore, such higher cost of treatments can be relaxed by designing products which can offer Installment/EMI option facility which are tied up with the hospital & insurance companies. The way the installment can be routed is through a credit card in which an empaneled list of hospitals is provided to the credit card holder. The patient has to inform the Center for the drug or medical service to be undergone and its confirmation for opting EMI facility thereby to finance the necessary formalities.

The advantages of such plans provided by hospitals & Banks will hence lead to deferred financial burden, more effective treatments with no waiting period leading to savior of deaths, assigned payment period from (3– 60) months period based on the financial profile and the debt paying capacity of the borrower, no lump sum cost to bear, inducting knowledge towards adopting health insurance policies at earlier age etc.

Thus in my opinion, a country where poor and low income groups still qualifies for more than 80% of the population in the vast majority of India’s 1.2billion citizens such medical plans will add to the convenience, savior to life and a mode of relief to such income groups.