Three months before, a close relative passed away. The family, however, is still struggling to get the life insurance claim. Are there any guidelines mandated by the Insurance Regulatory and Development Authority pertaining to claim processing which the companies must follow?
It is binding upon an insurance company to pay claim on the happening of any event mentioned in the policy, provided the customer’s records, documents and other necessary forms required for claim settlement are found to be in order. According to Irda’s regulations, an insurer must decide on claims (settle or reject, as the case may be) within 30 days of receiving the last requirement from the claimant.
Also, the customer has to intimate a claim within 180 days of the event. However, if the claim requires further verification or investigation, the insurer should complete the procedures within six months from the receipt of the written intimation of the claim. If the insurer settles the claim after the six-month period, he must pay interest at the rate of eight per cent on the amount of the claim. However, the interest is payable only in cases where the claimant has fulfiled all the requirements. The rate and period of interest are decided according to Irda guidelines.
I want to invest in investment-linked insurance policies. Which is a better option, single-premium plans or regular premium ones? Why?
The decision between a single or regular premium plan depends on the policyholder’s convenience in paying the premium, as also the disposable income at hand. Both the modes have their pros and cons. A single-premium plan is suitable for someone with an irregular income or bulk money receipts such as bonuses or windfall gains, and who has no problem in putting away a lump sum amount for a long period of time.
Being a one-time payment, these plans take away the fear of forgetting to pay future renewal premiums and the resultant lapse of policy. On the other hand, if you cannot afford to block a huge sum at one go and have an assured regular income, you should choose a regular premium payment mode. Regular premiums need to be paid consistently to keep the policy in force and to enjoy all the benefits it has to offer.
In a single-premium product, you can access your money only through a policy loan or by surrendering the policy. Although the applicable loan interest and surrender fee/charges can be high, the amount of loan in a single-premium product can be higher than in a regular premium one. Also, it may be noted that while most companies do not offer riders on the single-premium mode, a range of riders like critical illness, accidental death, waiver of premium etc are available with regular premium products.
On the cost side, single-premium plans usually have a higher minimum premium limit than a regular premium mode for the same plan. However, in comparison to the premium paid over the full policy term, a single-premium plan would turn out to be cheaper. Even as both the plans are eligible for deduction under Section 80C and Section 10 (10D), making withdrawals tax-free, the deduction can be availed only once for single-premium plans. Thus, the choice for the premium payment frequency depends on your paying capacity and the kind of flexibility you want from your insurance plan.
The writer is CEO, Bajaj Allianz Life Insurance. Send your queries to yourmoney@bsmail.in
