DLF Pramerica Life Launched U-protect term plan

DLF Pramerica Life Insurance has launched a pure term insurance plan that provides higher life protection cover at an affordable premium, especially for women. Premium rates are substantially lower for women, making the plan, U-protect, particularly attractive for women customers, the company said.

While the minimum sum assured in the plan is Rs 25, 00,000, the consumer can take additional riders for accidental death benefit or critical illness, it said.

“With a minimum annual premium of Rs 4,000, U-protect are affordable for customers across multiple income groups,” DLF Pramerica Life managing director and CEO Pavan Dhamija said.

The company is a joint venture between realty major DLF and Prudential International Insurance. It started operations in 2008 and operates 40 branch offices and 86 branch units across Delhi, Haryana, Punjab and Gujarat.

LIC opens 2nd divisional office in city

LIC’s in-charge chairman D K Mehrotra on Saturday inaugurated the insurance firm’s Patna divisional office II. With this, Bihar gets its fifth divisional office.

LIC had earlier four divisions in Bihar – Begusarai, Bhagalpur, Muzaffarpur and Patna. Muzaffarpur and Patna divisions have now been reorganized to form the fifth division. The new divisional office consists of 12 branches and 15 satellite offices spread over eight districts of the state.

Speaking on the occasion, Mehrotra said the changes in Bihar in affluence, awareness of insurance and demography are noticeable. “This is what prompted the opening of a second divisional office at Patna,” he said and added it was now up to the firm’s marketing and administrative teams to validate this decision by getting close to the customer both in terms of servicing and marketing.

He urged the agents, development officers and employees to walk that extra mile to maintain the LIC’s position as a market leader.

Zonal manager Vinay Sah, regional manager (marketing) Rakesh Kumar and senior divisional manager of the newly-opened Patna II office Anirban Sarkar were present on the occasion.

Faster, cheaper trade draws insurers to direct mkt access

The facility is currently available only to institutional investors in India.

 

Domestic insurance companies have started using the direct market access (DMA) facility for stock market transactions to keep trades confidential and benefit from extremely low broking rates.

DMA is an electronic facility that allows brokers to offer their clients a direct access to the exchange trading system through their infrastructure, but without manual intervention. The Securities and Exchange Board of India (Sebi) had allowed DMA in April 2008. This facility is currently available only to institutional investors in the country.

DMA EXPLAINED

WHAT’S DMA? DMA is an electronic facility that allows brokers to offer clients direct access to the exchange trading system through their infrastructure, but without manual intervention. Sebi had allowed DMA in April 2008 WHO ARE ITS MAJOR USERS? At present only institutional investors are allowed to use DMA in India. Over 30 per cent of FII trades are estimated to come through this route

Foreign institutional investors (FIIs) are the major users of DMA in India, with more than 30 per cent of their trades coming through this route, according to brokers.

“Since manual intervention is not there in DMA, you can have finer broking rates, which can be as low as 25 per cent of the normal rates,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance. “You can monitor your trade on a real-time basis. Also, sanctity of trades is maintained as they are not disclosed,” he added. About 25 per cent of IDBI Federal Life Insurance’s trades in stock markets now happen through DMA.

The Life Insurance Corporation (LIC), India’s biggest insurer, has also shown interest in using this facility for its stock market transactions, according to brokerages officials.

The brokerage rate for DMA in the cash market is 5-6 paisa for a turnover of every Rs 100. For trades placed over phone and manually entered by dealers, institutional investors pay an 10-15 paisa per Rs 100 turnover as brokerage.

“We are using DMA in a small way at present. It works well wherever the liquidity is low, as the identity is not revealed. Also, it gives the full control in terms of execution of the orders,” said Sampath Reddy, chief investment officer (equity) at Bajaj Allianz Life Insurance. “Sometimes on smaller orders or orders with a higher monitoring level, brokers may not pay much attention in those cases DMA will be more helpful,” he added.

Bajaj Allianz Life Insurance started using DMA six to seven months ago. Less than five per cent of the company’s trade in the stock market comes through this route. “The use of DMA will keep on increasing gradually. But you can’t replace traditional broking with DMA,” Reddy added.

Terms and conditions that an insurance contract does not cover

Your insurance policy is expected to deliver when things go wrong. The insurance company promises to pay the sum assured when an insured event occurs, provided the policyholder has paid the premium in advance. But to bring down the possibility of anti-selection and also limit losses, insurers introduce the concept of exclusions to the cover offered. Exclusions simply connote conditions that an insurance contract does not cover.

An example will make it easier to understand. An individual, with the intention to defraud an insurance company, may buy a life insurance and then commit suicide. A life insurance policy promises to pay the sum assured to the nominee upon the death of the life assured.

But a suicide in the first year of the policy is not covered at all. This ensures that the insurer does not incur undue losses as individuals are highly unlikely to plan a fraud by committing suicide. The same applies for group life insurance policies other than the policies issued in lieu of employees’ deposit-linked insurance where the sum assured is limited.

Similar exclusions are applicable for accident disability rider. If a life assured dies in an accident while driving in a drunken state or participating in a car racing event or due to drug abuse, then his survivors won’t be paid the benefit payable under the accident cover rider.

Then there are other exclusions such as deaths occurring in war, terrorism, droughts or accidents incited by the actions of the life assured. In case of surgical assistance, surgeries carried out for cosmetic purposes are also excluded.

An insurer may choose to exclude certain benefits for a specific period of time. This is termed as the waiting period and is seen mainly in non-life insurance policies. For example, a critical illness cover will insist on a waiting period of 180 days from the date of issuance of the policy.

The waiting period protects the life insurance company from a fraudulent claim. Some insurance companies cover pre-existing diseases after a waiting period of four years, whereas a set of daycare surgeries is also covered after a waiting period of two years.

While buying a policy, a buyer should read the exclusions in detail. If you need further clarification, you may check the policy wordings and contact the insurance company. If you are moving from one insurer to another for health insurance, please double-check the exclusions in the new policy. Under benefits due to portability, you are entitled to some exclusion waivers.

 

Get the right health insurance cover under portability

Until portability was allowed for health insurance, customers were wary of shifting to a new insurer, even if they were unsatisfied with the existing one. The fear was the loss of accumulated loyalty benefits or having to begin the waiting period for existing diseases afresh. But now, with the option of health portability in place, they can right their wrongs. However, it would be wise to keep a few factors in mind before shifting to another insurer.

“Customers can only take the policy in totality. So it’s important to understand the benefits offered under the existing health policy and to match those with the plan one wishes to port to,” says Apollo Munich Health Insurance CEO Antony Jacob.

Those planning to port their services should look for an insurer with a good track record in claim settlements and a large network of hospitals. Besides these, there also are other conditions that should be looked up to avoid being in a spot when making a claim.

WHAT TO LOOK FOR IN A NEW INSURER

Claim-settlement record and network of hospitals for cashless facility Lifelong renewals. Insurers cannot refuse renewals to aged customers Additional premiums, co-pay and sub-limits Incentives for prudent usage of policy Flexibility to increase cover with age Wellness support facilities

Additional loading: Typically, if you have a hospital cash cover, you can opt only for a similar cover with another insurer. Going by the apples to apples logic, there may not be a wider scope for added premiums or loads on renewals.

But insurers say every portability request is considered as a new application. So, if a customer is considered a high-risk person under an insurers’ underwriting norms, he may be asked to pay a higher premium or extra loading. In such cases, unless the insurer is offering a better cover, you should not port your services in haste.

Co-pay and sub-limits: Companies often ask customers to share the risk burden, and levy conditions like co-pay or sub-limits on treatments. Under co-pay, a customer pays a percentage of the total cost, while under sub-limits, he pays anything above the pre-decided cost limit for treatment. For instance, Bajaj Allianz General Insurance levies the co-pay structure, if the customer goes to a non-network hospital.

Customers could look at insurers that reward customers for prudent usage of the cover. So, for instance, Apollo Munich encourages shared accommodation or hospitalisation under its ‘Easy Health’ policy. As an incentive, depending on the slab applicable, it offers Rs 300-500 per day hospital cash to policy holders.

“The cash perks attached to them mean lower price on the product in the long run,” adds Jacob.

Renewals: While insurers have been following 70 years as the average age after which they refuse covers to individuals, customers should now insist on lifelong policy renewals.

“There is no official regulation from the Insurance Regulatory Development Authority (Irda) on the age limit and insurers have been told that they cannot refuse health policy renewals. This, in effect, makes lifelong renewals a must,” says Suresh Sugathan, head (health administration team), Bajaj Allianz General Insurance.

Increase in cover with age: Given the rise in medical inflation, your current cover may be insufficient at a higher age. While you may plan to bridge the gap by buying a new policy, companies are sceptical about covering those in the higher age bracket, as medical risks rise significantly with age.

“Customers should, instead, approach their existing insurers, as they are much more open to upgrades from own customers, subject to the necessary medical tests,” adds Sugathan.

Doing this will also help a customer skip the waiting periods applicable on new policies.

Wellness support: A number of companies now offer wellness support to their customers through helpline set-ups for health tips, medical camps and newsletters. These are value additions and part of awareness campaigns insurers undertake.

But, experts warn, one should take into account the kind of support offered, since the costs involved are met by insurers in premiums. “How many people would really follow the advice dispensed by a doctor on the other side of the phone helpline,” asks an official.

It would be better to see if the new insurer has tied up with hospitals and offers discounted rates for out-patient procedures not covered in the basic policy.

HDFC Ergo to provide $15m cover to Formula 1

Private general insurance company HDFC Ergo, in collaboration with the Delhi-based Ace Insurance Brokers, will provide an insurance cover of USD 15 million (Rs 67.5 crore) to the Formula 1 Race, which is being organized in the Capital from the month end, the company said today.

“The insurance cover would protect the Formula 1 Grand Prix event against adverse weather, non-appearance of several teams, riots, strikes and civil commotion leading to cancellation of the event, its postponement or relocation,” it said in a statement.

HDFC Ergo, which is a 74:26 joint venture between the mortgage leader HDFC and Ergo International AG, is the lead insurer for the event, it added.

Commenting on the deal, Anuj Tyagi, Head, Corporate and Rural & Agri Business of HDFC Ergo said, “insuring such a high- profile event in a country like ours is a great learning experience.”

As per the company, the organisers would write off the costs including deposits, advertising, printing costs, and booking fees among others in case of cancellation of the event.

“A policy like event cancellation insurance policy is a savior for the organisers because it pays any irrecoverable cost or expense, which have been or will be incurred in connection with the event, following a cancellation, interruption, postponement or relocation due to any of the insured perils,” Director of Ace Insurance Brokers, Anil Arora said.

 

Health data bank for city folks

The Active Network Group of Emergency Life Savers (ANGELS) crew will prepare a detailed health data bank of individuals who are willing to be part of its health forum. A detailed health check-up will be organised for selected members from all panchayat and municipal areas in the district.

To boost the morale of the members of the forum, the organization has joined hands with United India Insurance Company to provide free insurance converge of Rs 1 lakh to all members. The scheme will also help the members to avail free medical care in case of life threatening emergencies like accidents, heart attacks and strokes.

According to P P Venugopal, executive director of the organization, preparation of health data bank of the residents of Mavoor panchayat has already started with the help nursing students. The data collected will also be provided to blood donation drives with the consent of the members, said Venugopal.Health data bank of people is being prepared to form ‘Angels Emerald Health Forum’ programme. It aims to strengthen emergency rescue operations with the support of ambulances. All those who are interested in extending voluntary service for offering pre-hospital care and emergency medical service to accident victims, will be enrolled in the forum.

The forum members, according to Venugopal, will be trained on emergency care, medical support, resuscitation and rehabilitation, accident prevention, lifestyle modification, and disaster management. All 40 candidates who have completed their training in emergency medical care technology will be included in the forum to help the new members.

ANGELS plans to form around 500 health groups and to affiliate them to the Emerald Health forums, said the office bearers of the organization. The scheme will make the people aware of the significance of pre-hospital care in saving life.

Besides, members of the health insurance forum will assist rescue operations in accidents and disasters.

Keep your insurance policies in demat form

After shares, you can now keep your insurance policies in demat form. In order to reduce transaction costs and ensure swift modifications in insurance policies, the Insurance Regulatory and Development Authority (IRDA) issued guidelines for electronically issuing policies. IRDA has also laid down guidelines for repositories, which compile and store data about policyholders on behalf of insurance companies.

According to the IRDA, the objective of creating an insurance repository is to provide policyholders with a facility to keep insurance policies in electronic form. They can also undertake changes, modifications and revisions in the insurance policy with speed and accuracy.

This would enable the insurance companies to sell all the polices – life, pension and non-life , in electronic form. With the issuance of e-insurance policies, there will be efficiency, transparency and cost reduction in issuing and maintaining them. According to the guidelines, an insurer issuing e-insurance policies will have to take the services of a registered repository. All such insurance policies in electronic form will be treated as valid insurance contracts.

A certified insurance repository has to have a net worth of at least Rs 25 crores, without any foreign investment. No insurance company can hold over 10 percent or hold any managerial position . The repository has measures to safeguard the privacy of the data to prevent manipulation of records and transactions, before the commencement of operations. An insurer can enter into an agreement with one or more insurance repositories for maintaining the electronic insurance policies.

Hence, insurance buyers will now be able to open demat or e-insurance accounts for their contracts and hold the insurance policies in electronic form. Having an e-insurance account will reduce hassles for buyers. The need to provide age and address proof every time a policy is bought will not be necessary now. It will also save insurers substantial money in printing and dispatching policies.

 

Similar to demat account

 

E-insurance will be similar to the demat account for shares and mutual funds. Just like the securities market, the IRDA has proposed to create insurance repositories on the lines of securities depositories like the National Securities Depository or the Central Securities Depository. These repositories will be licenced by the regulator and connected to all insurance companies. This will result in efficiency and better customer service by the insurance companies. Since the repository will consolidate all policies under a single account, the family will immediately come to know of the policies purchased by an individual in an emergency.

IRDA will grant licences and regulate insurance repositories, which will act as service providers to life insurance companies. The repository will give a unique number to every individual and all his policies will come under that account. It will hold all types of policies – including life, health, motor and group covers. The data maintained by the repository will include history of the claims of the individual and names of the beneficiary, assignees and nominees.

Dematerialized policies will be more liquid than paper policies as these contracts can be easily assigned. Whenever the policies are assigned, the assignee will have the same rights as the policyholder.

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Any insurance policyholder or a prospective policyholder can open an e-insurance account. Opening an account will require identity proof and address proof. There would be no additional costs for a policyholder for opting for electronic policies. You will not be required to go through KYC (know-your client) procedure every time you buy a policy.

Pure term plans save money

Invest the rest in mutual funds or debt instruments to create corpus.

One of the basic principles of sound financial planning is to buy insurance only if and when needed – the policy of choice being term insurance. However, most investors have difficulty in accepting the fact that upon survival (or when the term ends) there is nothing the policy yields by way of maturity proceeds. Those who buy term insurance are often told that they are making a totally wasteful investment! This misconception is quite enduring and widely prevalent. But term insurance scores over any other kind of insurance plan that one can buy.

Basically a plan that seeks to combine insurance and investment more often than not tends to be sub-optimal. It is always better to keep insurance and investments separate. All endowment, whole life and ulips are examples of combination insurance plans. On the other hand, a term insurance plan has no cash payout at the end of the term. This means if the policy holder were to pass away during the term of the policy, his family will get the sum assured. However, were he to survive he will not get a single rupee. In other words, term cover is pure life insurance and has no cash or surrender value. If this is indeed the case, why favour term insurance as against a traditional endowment or whole life policy which, at least pays, at the end of the day, no matter what, either the sum assured or the maturity value?

The reason is because basically insurance is a cost. It is a contract (policy) in which you purchase financial protection or reimbursement against a loss or an unanticipated expense. The price paid to purchase such protection is also called premium in insurance parlance. Such premium is payable, year in year out, till you desire protection from the loss. Now, take for instance car insurance. You pay the insurance premium, year in year out, to protect yourself against the financial damage an accident can cause. If you are a safe driver and manage not to damage your car during the year, the premium paid is lost – you don’t get anything out of it. And you are perfectly happy to have done so, so long as you and your car are safe. Or take medical insurance. Again, premium is paid to defray any costs of medical emergencies or hospitalization. However, if you remain fit and healthy the premium paid on buying the medical insurance is lost. But then again, you do not mind this, do you? Then why should life insurance be any different? But it is. It always has been.

The reason for this is mainly because life insurance premiums come bundled with the pure premium part combined with the part that gets invested on your behalf. The policy is sold more as an investment where the insurance just comes along. However, know that insurance never comes along, it always has to be paid for. In the case of life insurance, the premium is known as mortality premium. Such mortality premium is applicable for all polices, year after year, without any exception, till such time that the life is insured. Even in the case of single premium plans or policies where the premium is payable only for part of the policy term, nonetheless, the mortality premium keeps getting deducted every year from the fund value. So, you buy insurance directly or indirectly each year.

Let us take an example to understand this concept in depth Take the case of a 30 year old person who desires to buy an insurance cover of Rs. 10 lakh. Were he to buy an endowment plan, the annual premium that he would pay is around Rs. 39,000. However, a term plan would just cost Rs. 3,800 per annum for the same amount of risk cover of Rs. 10 lakh. This difference of Rs. 35,200 between Rs. 39,000 and the pure risk cover cost of Rs. 3,800 is the called the investment premium. Putting it differently, for a premium of Rs. 39,000 per annum, one can either purchase an endowment plan where the sum assured is Rs. 10 lakh or one can buy a term plan where the sum assured is around Rs. 1 crore. Your choice.

Of course and understandably so brokers earn a far greater commission if they sell you polices other than the term cover. These commissions, that can go as high as almost 40 per cent are recovered from the investment premium (Rs. 35,200 in the above example) that you pay. And it is an easy sell too since the logical sounding argument given against buying a term cover is why opt for the same when you don’t get anything back in the end?

A better strategy would be – buy term and invest the difference.

Comprehensive Health Insurance from Apollo Munich

Everybody wants to have complete health protection. The problem arises when they choose a health policy for themselves. There are very few numbers of people who know how to make a right choice. Majority of people buy the plan that is recommended by their friends or relatives, thus ignoring their healthcare needs. A person should try and buy a comprehensive health insurance policy so that there are no issues before him/her at the time of medical emergency. These policies help a person to enjoy life under the complete coverage.

Apollo Munich, a joint venture between the Apollo Group of Hospitals and Munich Health, has taken all the above said parameters in mind and has designed products, looking into healthcare needs of people. It has brought a variety of products to help Indian citizens seek medical treatment with ease. An insured need not have to worry for the medical expenses while seeking quality healthcare. There are products for people of all income groups.

India’s first 360 degree product, called Maxima, is the most comprehensive health insurance plan designed by Apollo Munich. It offers wide coverage, which includes inpatient as well as outpatient treatment, maternity expenses, optional critical illness cover, outpatient treatment for pre-existing diseases etc. There is no doubt that the premium associated with this plan is quite high but it is far too less than the coverage offered with this plan. There is coverage for pharmacy costs, diagnostic tests, doctor’s consultations, up to a certain limit. It is, therefore said that Maxima makes medical treatment almost free for an insured.

Looking into other products brought by the company, Easy Health has gained much popularity. In the recent survey, in which various health insurance products in India were compared on basis of their price and features, Easy Health gained the topmost position for being the best medical insurance policy. It is one of the 5-star rated products. One good aspect of this product is that there are three variants and a person can buy the one, as per his/her health needs and budget. This plan also offers complete health coverage at cost-effective price.

Both these products, mentioned above, come with a lifelong renewal facility such that its customers can enjoy the coverage for the entire life. Regular renewal also helps them to enjoy continuity benefit. So, a person can enjoy life under the coverage of these plans.