Frequently Asked Questions :: KNOW WHAT IS INSURANCE
What is the meaning of Insurance?
Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection and losses are paid out of the premiums collected from the insuring public.
Why do I need Insurance?
Insurance is a hedge against the occurrence of unforeseen incidents. Insurance products help you in not only mitigating risks but also helps you by providing a financial cushion against adverse financial burdens suffered.
Types of Insurance Business
- Life Insurance or Personal Insurance.
- Health Insurance.
- General Insurance
What is life insurance?
Life insurance ensures that your family will receive financial support in your absence. Put simply, life insurance provides your family with a sum of money should something happen to you. It protects your family from financial crises.
In addition to serving as a protective cover, life insurance acts as a flexible money-saving scheme, which empowers you to accumulate wealth-to buy a new car, get your children married and even retire comfortably. Life insurance also triples up as an ideal tax-saving scheme.
Why do I need life insurance
Who will take care of my family if tomorrow something unfortunate happens to me? If this question bothers you, then Life Insurance is the answer.
Of course, under any circumstances, the loss of a loved one is a traumatic experience. But, if your family is also left without sufficient money to meet basic living needs or prepare for future goals, they will have to cope with a financial crisis at the same time. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them.
Key Benefits of Life Insurance
Life insurance, especially tailored to meet your financial needs
From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation.
The core benefit of life insurance is that the financial interests of one's family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer.
Goal based savings
Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence.
Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage.
Life insurance is the only investment option that offers specific products tailormade for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met.
The table below gives a general guide to the plans that are appropriate for different life stages.
|Life Stage||Primary Need||Life Insurance Product|
|Young & Single||Asset creation||Wealth creation plans|
|Young & Just married||Asset creation & protection||Wealth creation and mortgage protection plans|
|Married with kids||Children's education, Asset creation and protection||Education insurance, mortgage protection & wealth creation plans|
|Middle aged with grown up kids||Planning for retirement & asset protection||Retirement solutions & mortgage protection|
|Across all life-stages||Health plans||Health Insurance|
How much insurance do I need?
Before buying an insurance policy, it is always important to find out the amount of life insurance cover you need. The following factors should be considered before buying a life insurance policy:
- Your age and number of dependents
- Your annual income and annual expenses
- Your outstanding liabilities like home loan, car loan, etc.
- Your investments / savings
- Your lifestyle expenses
- Monies you would require in future
As a thumb rule, it is suggested that you should have an insurance cover of around 5 to 10 times of your annual income. A good financial advisor in your neighborhood can help you ascertain your appropriate insurance cover.
Want to know the amount of insurance cover you need right now? Click here to access our Insurance / Human Life Value Calculator.
What is your Human Life Value?
Beyond all doubt, your life is invaluable. Yet, there is a certain worth that can be attributed to the financial support you offer your parents, spouse or children. This worth is referred to as Human Life Value (HLV). In the future, if your family does not have the protective blanket of your presence, they will no longer be able to enjoy the benefits of the income you earned. Put simply, Human Life Value is the present value of your future earnings.
Why should you calculate your Human Life Value?
You should calculate your Human Life Value so you can accordingly invest in insurance plans that provide your family with adequate finances and hence security even in your absence.
How do you determine your Human Life Value?
Your Human Life Value is determined by 3 factors:
- Your age
- Current and future expenses
- Current and future income
As a thumb rule, if you are 30 years of age, you should insure yourself for an amount approximately 8 times your annual income. At 35, your investment should be close to 6 times your income. Of course, the exact amount of your investment should be determined by the number of people who depend on you, your existing investments and your life stage. For example, if you are 30 years of age and have two children and parents to provide for, the amount you invest should be reflective of your requirements.
Life stage profiler
All through your life, several significant events the birth of your child, moving to a larger home, his or her education and wedding, buying a new car, retiring from work will occur at various stages and demand your financial commitment. If you plan in advance for these events, you will quite naturally be prepared when they occur.
Life insurance is an effective tool that assists you to plan for your future such that you are financially equipped to meet all your goals.
Our special tool, the Life Stage Profiler, assists you to plan for a secure financial future. Please use the tool, right away!
What are the tax benefits available?
All Life Insurance as a tax saving tool, offers savings under various sections of the income tax act. Some of the key tax benefits offered are as follows:
- Our life insurance plans are eligible for tax deduction under Sec. 80C.
- Our Pension plans are eligible for a tax deduction under Sec. 80CCC.
- Our health insurance plans/riders are eligible for tax deduction under Sec. 80D.
The proceeds or withdrawals of our life insurance policies are exempt under Sec 10(10D), subject to norms prescribed in that section.
Frequently Asked Questions :: HEALTH/MEDICAL INSURANCE INDIA
What is Health Insurance/Mediclaim?
Health Insurance/Mediclaim is protection against medical costs. A health insurance policy is a contract between an insurer and an individual /group in which the insurer agrees to provide specified health insurance cover at a particular premium. The health insurer usually provides either direct payment (cashless facility) or reimburses the expenses associated with illnesses and injuries.
Mediclaim Insurance is a cover, which takes care of the hospitalization expenses subject to maximum sum insured of the Insured in respect of the following situations:
- In case of a sudden illness.
- In case of an accident.
- In case of any surgery, which is required in respect of any disease which has arisen during the policy period.
Why do I need Health Insurance?
Healthcare is expensive. Technological advances, new procedures and more effective medicines have driven up the cost of healthcare. This increase has to be borne by the consumer, making treatment unaffordable for too many. Health Insurance overcomes these obstacles so that you remain free of anxiety regarding your health. Think for a moment about the enormous medical costs you would incur if you suffered a major accident tomorrow or were suddenly stricken by an illness. Uninsured people live with such risks everyday. Health insurance seeks to shield you from that risk. It provides the much needed financial relief.
You also get tax benefit under section 80D of the Income Tax Act.
What are the salient features of this policy?
Though the features may vary from insurer to insurer, some basic features are:
- Reimbursement for Hospitalization due to illness/disease/ surgery.
- Reimbursement for Domiciliary Hospitalization expenses in lieu of Hospitalization.
- Pre-hospitalization expenses
- Post-hospitalization expenses
- Ambulance Charges
- Cashless Access
- Income Tax Benefit etc
What is the procedure for change of address for medical insurance?
You can change the address by giving a request letter to the insurance company on plain paper and the insurance company will pass the endorsement and give a copy of same to you.
Kindly remember to send same to your TPA also so that they can incorporate same in their records.
What are the things to look for while choosing a health insurance plan?
Health insurance is a long term plan as you may need it in the long run and should be taken after considering many factors like:
- Max renewal age of the plan : The insurance company will provide you cover only upto this age ,thereafter you have to switch plan or take a new plan which is very difficult to get after 60 years especially if you have any preexisting conditions.
- First and second year exclusions.
- Daycare treatment/procedures covered.
- Pre existing coverage.
- Sublimits, if any.
- Per illness limit, if any.
- Diabetes and hypertension loading.
- 30 days exclusion.
- Your next renewal premium as you choose plan with low premium for the age you are entering but your next premium may be higher and it is a very important factor to be taken into consideration.
- Cashless facility in the nearby hospitals .
- Portability ,if you are already insured and looking for switch from one insurer to another i.e benefits your previous policy is carrying must be transferred to new in partial or full.
- Add on covers like additional sum insured for critical illness,personal accident,opd coverage.
- Top up covers have come in market and you can take policy with low sum insured and then top it up and it will be cheaper as compared to choosing higher sum insured straight away.
Is maternity covered in health insurance policies?
Most of the companies do not cover maternity and related conditions but some companies like Apollo Munich, Max Bupa have specific plans which cover maternity after specified waiting periods generally 2-4 years. For details please visit our health page.
Can I cancel my policy and if yes will I get my premium back?
Yes, the insured can cancel the policy at any time. In such a case, the company shall allow a refund of premium at company’s short period rate(given below provided no claim has occurred during the policy period up to cancellation.
|Period of cover up to||Rate of premium to be charged|
|1 month||¼ of the annual rate|
|3 months||½ of the annual rate|
|6 months||¾ of the annual rate|
Can a person have more than one Health policy?
Yes. But each company will pay its rateable proportion of the loss, liability, compensation, costs or expenses. E.g. If a person has Health Insurance from company X for Rs. 1 Lac and Health Insurance from company Y for RS. 1 Lac, then in case of a claim, each policy will pay in the ratio of 50:50 up to the SI.
What is General Insurance?
General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determined to be life insurance.
Types of General Insurance
- Travel Insurance.
- Motor Insurance.
- Home Insurance.
- Marine Insurance.
- Commercial Insurance.
What does General Insurance do for me ?
Accidents... illness... fire... financial securities are the things you'd like to worry about any time. General Insurance provides you the much-needed protection against such unforeseen events. Unlike Life Insurance, General Insurance is not meant to offer returns but is a protection against contingencies. Under certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability Insurance have been made compulsory.
Why should one cover oneself immediately?
Accidents and mishaps can occur anytime and anywhere. It is important to identify the risks faced and insure oneself against these at the earliest.
What is a Premium ?
Premium is the fixed amount of sum paid over the period by the insured to the insurance company to take insurance policy and to complete the contract of insurance.
What is deductible ?
The amount, which the insured has to bear in all cases and this amount is first, deducted from the total assessed payable claims amount before determining insurance company's liability.
What is the period of General Insurance policies?
Typically General Insurance contracts are for one year period only.
Do I have to renew policy every year?
How can I renew the policy ?
Approach the insurance company well in advance before your expiry date of your policy.
- Seek an approval from the company on the intention of renewing your policy if you have not received a renewal letter / intimation
- Seek premium & other relevant details
- Pay the premium and take premium receipt and cover note/risk held note Wait for documents
- Check for its correctness on receipt and store it carefully
- In case of denial for renewal
- Seek an explanation from the company
- Clarify doubts if any
- Find any other company if the existing insurer doesn't renew
What is the top appellate authority ?
Can I contact any authority if I am not being treated properly by the insurance company?
Yes you can contact following:
- Customer Services cell of Insurance company
- Insurance ombudsman
Can I contact any authority if I my insurance is not renewed by the insurance company?
Yes same as above
Where can I get the Insurance ?
IRDA the chief regulatory body allows various Insurance companies to operate in the country and offer general insurance products.
How much Insurance do I need ?
It is very important to have adequate amount of coverage for each insurance policy. For any asset or property insurance, the value of the asset based on market value or reinstatement value should be taken into consideration before deciding Sum Insured. If the Sum Insured is not adequate, the percentage representing the uncovered portion of the asset is to be borne by the insured.