Krishna is a 40 year old finance professional working with a private firm. His family consists of his home maker wife and two young children. A couple of years back, an article in a magazine made him aware of the importance of medically insuring himself and his family. This prompted him to buy a family floater policy with an annual sum insured of 4 lakhs on which he pays a premium of around 15,000/- per annum. He was pleased with his decision of having adequately provided for any unforeseen medical emergency.
The main purpose of life insurance is to provide financial stability to the breadwinner’s dependent family members in the event of his untimely death. Today it is more common to find women who are financially independent with careers; yet there are a significant number of them who choose to stay at home and take care of the house and their young children.
In such families, it is usually only the husband who takes a life cover for himself as the housewife is perceived to have no monetary value. Even the life insurance companies prefer insuring working people – many of them do not offer to insure housewives or have an upper limit on the maximum insurance cover which can be provided, that too subject to the husband’s income and existing cover! They do have a seemingly very valid argument for this – while the loss of a stay at home mom or wife is an irreparable loss for the family in emotional terms, since she doesn’t contribute to the family income in any way, it doesn’t have any monetary impact. And since the loss of income is what an insurance policy is supposed to protect against, it doesn’t make sense to insure her and is viewed as an unwanted expense.
If you have ever tried buying a life insurance policy online, it is likely that the insurance company’s website will prompt and ask if you would like to buy an additional health plan too. The health insurance market, which till some years back was exclusively the domain of general insurance companies, has now been invaded by the life insurance providers with each one of them having at least two or three medical insurance policies in their product suite, along with the term, ULIP and retirement plans. How do the mediclaim policies offered by Life insurers differ from those offered by mediclaim companies ?
The recent guidelines issued by IRDA would now enable you to hold your insurance policies in electronic form. The benefits of doing so need not be explained- transparency, lower transaction costs, ease of operation – transactions like switching and other changes can now happen at a click of a button. Most importantly, it will do away with the job of carefully and painstakingly maintain and preserve a physical folder with all the original insurance policy documents, for years together.
It is mid March, and just a fortnight left for the end of the financial year. Mr. A has not been able find time to invest the entire Rs 1 Lakh in section 80 C towards income tax rebate for the year. So, in a hurry to invest and save tax before the due date, he employs the services of Mr. B, an insurance agent who is readily available and more than willing to offer his services and sells him an insurance plan. After a couple of years, Mr. A realizes than the policy is not one of the best ones in the market, has high charges and has given returns below expectations. So he decides to wait till the minimum lock-in period gets over and then surrender it.
Five days from now, on 1st October 2013, new IRDA guidelines regarding issue of insurance policies would come into effect. Though most of the leading Insurance companies are still in the process of designing new products in accordance with these guidelines, here are some of the basic changes which are likely to get incorporated-
Now-a- days it is common to see advertisements by life Insurance and general Insurance companies offering a life or health cover up to a certain age, usually 40 years or 45 years without a medical test. This is because such policies without the inconvenience of going through a comprehensive check up attract more potential clients who would think twice or forever postpone taking those which requires medicals to be done. This could be due to a variety of reasons-