I am planning to buy a term insurance from a private company. But I am concerned about the following — How safe are private insurance companies as compared to public sector ones? In case of claim processing, where should I go if the insurer is reluctant to process my claim? Are premiums subject to price escalation?
All insurance companies — private and public — are governed by the Insurance Regulatory and Development Authority (Irda). The regulations laid down are uniform for all insurers. This ensures that all companies licensed to do business are safe and sound. Moreover, Irda lays down that all insurers maintain a solvency margin, dependent on the new and existing business to be set aside for meeting policyholder obligations such as claims. This amount is kept aside by every insurer towards potential claim liability, in case the insurer goes bust. This solvency margin has to be declared every year to Irda. While comparing insurers, you should consider the claim-paying ability of the company, which can be gauged by their solvency margin.
In case the insurer is reluctant to pay your claim, you can escalate the issue to the company’s internal grievance redressal machinery. If you are not satisfied, you can refer it to the insurance Ombudsman. The Ombudsman is appointed by the regulator for each state and all decisions are binding on insurers. If you are still not satisfied, you can approach Irda through its grievance redressal centre or even a consumer court.
In case of a life insurance policy, premiums quoted at the time of purchase remains the same throughout the entire policy term. It would only change if you opt for additional riders in the middle of the policy term.
I had bought a plan three years back, wherein I paid my premiums quarterly. Recently I approached my insurer requesting them to allow me to pay the premiums annually, but they were reluctant. What would your advice be? Does it make sense to convert the premium payment term?
Usually, an insurer would not deny changing the premium payment mode, but it may not be feasible in some products. Changing from quarterly to annually will be a problem if there are minimum premiums specified for a certain mode. But changing from annually to quarterly may be an issue in traditional plans as the annualised premiums would increase.
You should decide the mode of premium payment, depending on your convenience and disposable income. However, it is advisable to opt for an annual mode in a traditional plan, as your total outgo in premium would be lower than total premiums paid every quarter.
My 40-year-old cousin has been living in Florida for 20 years. He has recently got posted in India for three years. Can he take a life insurance policy here? Will he have to pay a higher cost?
A policy can be issued to a person of Indian origin (PIO) or a non-resident Indian if he provides a proof. A PIO is considered on par with Indian citizenship and normal underwriting rules are applicable.
The writer is CEO, Bajaj Allianz Life Insurance. Views expressed are his own. Send your queries to yourmoney@bsmail.in
