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Why Insurance Claims Get Rejected
[Posted by: InsuringIndia News on Thursday, January 28, 2016 12:44 PM]
An insurance policy is a form of financial security in case of any untoward incident in future. Most of us take it for granted that once we have purchased the policy, the insurance company would settle our claim easily and quickly when we need it. That’s why most of us don’t even read the proposal form properly and simply ask the insurance agent to fill the form on our behalf.  But what if the insurance company rejects your claim?
 
There can be several reasons for the rejection of an insurance claim such as:
 
Non- payment of premium- If you fail to pay your premium on time, then the claims thereafter will get automatically rejected.
 
On technical grounds like slight delays in intimation of claims.
 
Non disclosure of facts- One of the foundation principles of insurance is Uberima Fides, or Utmost Good Faith. This means that both the policy holder and the insurer are legally bound to disclose all facts pertaining to that insurance policy. Any failure to do so, will lead to a breach of contract and will render the insurance policy null and void. Therefore, in a case where the policy holder has not disclosed or suppressed important information regarding the policy, the insurance company will not be obligated to settle the claim. E.g. non disclosure of pre-existing ailments such as high blood pressure and diabetes which can be hidden during medicals through medications but are found out by the insurer later during investigations from your previous medical records can lead to the claim being rejected. Wrong disclosure of important facts such as age, income, nature of occupation etc. can all lead to the rejection of the claim. The information that you fill in the proposal form should also not have any ambiguity. 
 
Non disclosure of the nature of the profession- It is necessary to describe the scale and nature of your job and business accurately in the proposal form to avoid getting your claim rejected.
 
Lack of knowledge on the part of the policy holder- Most people have very little knowledge of insurance. Due to this ignorance, and because they don’t read the policy document carefully,   people are not aware of the exclusions under the policy which are actually written in the terms and conditions of the policy at the time of sale. The agent doesn’t inform the client of these limitations because he/she is too eager to sell the policy.
 
Superfluous expenditures- Many hospitals, just to generate revenue  perform medical procedures on  patients which are not really necessary and so the insurance company rejects the claim. Similarly in the case of motor repairs, some people get unnecessary repairs done and produce inflated bills which are rejected by the insurance company as the irregularities come to light during investigations by the insurance company.
 
Being careless- A number of  motor insurance claims get rejected because of negligence on the part of the client. For instance,  if the client leaves his car keys in the car and the car gets  stolen, his claim will most likely get rejected. The same will happen in cases where  the client was driving with an expired license at the time of an accident or was drinking and driving etc. Claims will also get rejected  in cases where  a personal car insurance policy has been taken for a vehicle in commercial use. 
 
Similarly home insurance claims can also get rejected on grounds of negligence. For example, if there is a theft in a house while the house was unlocked, the claim will be rejected.
 
Not updating  nominee information- You should regularly  update the nominee information in your policy. If initially as an unmarried person you had nominated your parents as nominees then as a married person now it would be wise to nominate your spouse as the nominee.
 
Avoiding  medical tests- For a higher assured sum by the insurance company it is mandatory to undergo some special medical tests specified by the insurance company. If you don’t undergo these specified tests then on a later date the chances of your claim getting rejected are higher.
 
Non disclosure of old insurance policies- It is absolutely necessary to disclose your existing insurance policies to the new company, failing which your claims can get rejected.
 
Hence for your own good you should be honest and transparent while filling up the proposal form for  your insurance policies. Hiding any material facts might put all your efforts and hard earned money to  waste. Also read all the terms and conditions of the policy carefully before signing  to avoid any surprises later on at the time of the claim. You should focus on the product features instead of the price and also buy the policy from a company which has a proven record of settling their client’s claims promptly. These days most  reputed companies on the direction of the IRDAI give you an option of a re-look at your policy for a period of approximately two months. During this period if you feel that you are not satisfied with the policy, you are eligible to return the policy with minor deduction (on account of processing cost of the policy) and refund of your premium.
 
 
 


IRDAI’s New Proposal To Promote Wellness in Health Insurance Policy Holders
[Posted by: InsuringIndia News on Wednesday, January 27, 2016 10:14 AM]
Health Insurance is a type of insurance that we all need to cover our medical and surgical expenses at the time of need. It is a policy which you buy from an insurance company and the company reimburses the medical expenses of the policy holder as per the agreement. The Insurance Regulatory and Development Authority of India (IRDAI) in a bid to promote good health amongst  citizens, has recently proposed some major changes to health insurance by stating in its draft norm that the various health insurers all over the country could provide their customers with discounts on their renewal premiums based on the customer’s fitness and wellness criteria. So the fitter the policy holder, the better discount he might get from his insurance company. This will indirectly motivate the customers to pay more attention to their health and will also benefit the insurance companies in the long run as the number of claims will reduce over time.
IRDAI would like to see health insurance companies become the active medium to promote wellness and fitness in the country. They should  encourage healthy behavior among  policy holders by offering them health specific services and incentives such as health check-ups, outpatient consultations, treatments, spa and gym membership discounts, pharmaceuticals,  and  discounts at specified network providers. All these services can be offered to the clients based on the cost of the policy where the costs of the services would  be adjusted in the pricing of the health insurance policy. The IRDAI has said that the premiums charged from senior citizens by the health insurance company should be absolutely transparent and fair and duly disclosed upfront. The client needs to be informed in writing and his/her consent taken for any underwriting loading charged as filed and cleared over and above the premium before issuing the policy to him/her. For the easy redressal of  senior citizens health related claims and grievances, the IRDAI has called for establishing a separate channel for them.
Combination products which are a combination of a life insurance policy and a health insurance policy have also been issued detailed norms by the IRDAI on their functioning. The IRDAI has asked them to make clear disclosures on the products being offered by the two of them and has told them that one of them would be the ‘lead’ insurer in these products.
The previous norms did not allow the pricing of the health insurance policy to be based on the fitness levels of the policy holder. But now with the latest norms issued by the IRDAI,  health insurance companies will be able to reward customers who maintain their health and have better fitness levels with better insurance rates. So all in all it is a very good move by the regulator which all  customers will welcome.
 


Term Insurance- Your Gift to Your Family
[Posted by: InsuringIndia News on Monday, January 18, 2016 12:12 PM]
We all need a financial plan in life to make our life secure and tension free. So the first step in this direction would be to buy a term insurance. A term insurance is your gift to your family for their safe future and your own mental peace. It is a way of ensuring that your family does not have to face any hardships and continue to maintain the same lifestyle in case of any eventuality.
 
It is a type of a life insurance policy which provides coverage for a specific number of years and incase the insured person dies during the time period specified in the policy, then the death benefit is paid to the family in the form of an assured sum. The benefits in a term insurance policy can be availed only in the event of the death of the insured within the specified coverage period.
 
Most of us build a financial plan purely on the basis of our savings for our needs. What we actually need to do is to build a financial plan on the basis of our savings for needs as well as our protection against life’s contingencies.
 An example of savings for our needs would be- You need Rs. 10 lakhs for your daughter’s marriage after 10 years. If you assume that your investments will earn 8% per year, you will have to set aside Rs.64, 000 (approx) each year, for the next 10 years. So this need can be achieved through regular savings from your income.
 
Now for the example of financial plan for protection- Imagine that you are the only earning member of your family. In case of any eventuality your family would need Rs.1crore to maintain the existing lifestyle but you were unable to save that much money through your savings while you were alive with your sole income. So in this situation where will your family get this kind of money from? This can be achieved easily and in no time with the collective effort of say 1000 people contributing Rs. 10,000 each. This kind of safety net, technically called the term insurance is created by a group for the financial security of that unfortunate person who dies before being able to save enough for the sustenance of his family. 
 
What’s the need to buy term insurance?
 
It is essential to buy a term insurance so as to enable your family to lead a life of dignity in your absence. It could come to their rescue in several situations such as
 
Home loan- In case you have taken a home loan to purchase a property and something happens to you before you can repay it. In that case the entire burden of repaying the outstanding loan will fall on the family. If you have a term insurance, then the company pays a fixed amount to your family which the family can use to repay the home loan and live in the house without any fear.
 
An assured income for your family when you are no longer there to look after them- Your family will get a fixed assured amount in case of any eventuality and they can invest that amount in various savings schemes, which will give them a regular source of income even in your absence, making life easier for them. Up to the age of 40years one needs insurance that is 20-30 times the individual’s annual income. In 40s the insurance can be 10-20 times and in 50s it can be 5-10 times the annual income.
 
The money from the term insurance policy can take care of the post death liabilities of the individual, which in his absence will have to be taken care of by the family members.
 
Points to remember while buying term insurance
 
Who should buy it? - Anybody and everybody who loves and cares for his family should buy a term insurance policy.
 
How to decide the amount of the life cover- You need to cover yourself till your retirement to repay your loans and to ensure a secure future for your family in case of any loss of future income.
 
So for buying a term plan you need to keep in mind two points i.e. your income and your outstanding loans. For example if you are 30 years old with a monthly income of Rs.25000 and an outstanding loan of Rs.800000, then you need a life cover for the next 30 years. The total amount then for your life cover would be: (Rs.25000 x 12months x 30years) + Rs800000 = Rs 98,00,000.
 
Where to buy the term insurance from? -  There are a lot of companies in the market offering term insurance therefore you should carefully select a company which has had a long standing reputation for timely and consistent high claims settlement records.
 
Is it wise to switch to a new policy if it is cheaper than the existing one? – No, you should continue with the existing policy, as the insurance becomes more expensive as age progresses.
 
Your responsibilities while buying term insurance-
 
1. Provide correct information in the application form, failing which the company can decline your claim on a later date in case of any eventuality.
 
2. Ensure that the contact details are updated for the company to send reminders and settle benefits in a timely manner.
 
Medical Checkup - To ensure your health condition before issuing you your term insurance policy, the company will want you to undergo certain compulsory medical tests. Your term insurance premium will be based on your medical condition. If the medical tests show up any prognosis, then you need the cover even more in the light of a greater risk to life, even at the cost of paying an additional premium.
 
The term insurance policy does not give any interim benefits to the policy holder, is the simplest and the most cost effective insurance policy. This policy has set time duration and on its expiration the policy holder can decide whether he wants to renew the policy or let the coverage end.
 


 

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*This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for an individual health policy with the sum insured of Rs. 5 lakhs.
**This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for a term plan, with the sum insured of Rs. 30 lakhs, and the premium paying term of 30 years.
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