QCan a policy holder have both paper and electronic policies?
Policy holders can choose the form in which they want their policies issued – paper or electronic. A policy can be bought or maintained in one form only – either in electronic form or paper but not in both. However, a policy holder can choose to keep some policies in electronic form and others in paper form – only the electronic policies will be reflected in his e IA account and he can use repository services only for the e policies (and not the paper policies)
QCan anyone become or set up an Insurance Repository?
No, only entities approved by Insurance Regulatory and Development Authority (IRDA) can become an Insurance Repository.
Insurance Companies cannot set up an Insurance Repository on their own nor can they hold more than 10% stake in any Insurance Repository.
QCan I take health insurance plan for my parents who are senior citizen? Is there any tax benefit available if I pay premium for them?
Yes, you can take health insurance plan for your parents who are senior citizen. Now a day’s so many insurance company has designed product especially for senior citizens. You are also eligible to claim tax deduction u/s 80D upto Rs 20000/- P.A. if you pay premium for them.
QCan policy holders have multiple e Insurance Accounts if they have multiple Insurance policies issued by various Insurance Companies?
No. IRDA stipulates that an individual can have only ONE e Insurance Account across Repositories, irrespective of the number of policies owned by a policy holder – thus, if a person has an e IA with say Repository A, with any other Insurance Repository. All Repositories will have systems in place to check this before opening an e IA – any application for a second or multiple e IA will be rejected by the Insurance Repository. All the electronic policies owned by a policy holder can be credited or held under this single e IA.
QCan the eIA be operated by the Policy holder only?
Yes, the e IA can be operated by the account holder only during his life time, unless, of course, he has been unfortunately rendered incapable to operate it (incapacity due to mentally unsound means or terminally ill as certified by a medical practitioner). In such circumstances, the e IA may be operated by the Authorized Representative (AR) appointed by the account holder (pl see below for details).
The account holder is strongly advised to keep the log In ID and password for online access of his e IA confidential and not share it with anyone else.
QFor how long should I insure?
You should take insurance cover as long as you are the crucial earning member of your family.
QHow can Insurance Repository provide free service to policy holders? Where is the catch?
The Insurance Repositories will be paid directly by the Insurance Companies whose policies are held in electronic form in the respective Insurance Repository so that no charges are levied on policy holders. Insurance Companies will be able to pay these fees out of the savings that will accrue to them by the migration to issuance and maintenance of policies in electronic form.
QHow do I collect the maturity amount from the insurance company?
Insurance companies send information in advance to the policyholder regarding the maturity of the policy. The policyholder will be required to fill-up the forms along with the documents attached as per requirement. If the paper work is done properly and verified then the payment is either sent by post or directly credited in your bank account.
QHow do I convert my existing paper policy into electronic form?
On opening an e IA, you just need to write out a request, addressed to the Insurer, for converting your existing paper policy to electronic mode. Request Forms for policy conversion are available in all offices of the respective Insurance Repositories. They can also be downloaded from respective websites. You need to fill out a separate request for each paper policy that you wish to convert to electronic form. These requests, duly signed, can be submitted at the respective Insurance Company or at any Insurance Repository office.
If you do not have an e IA, you can submit an e IA opening form with the necessary supporting documents along with the request for converting paper policy to electronic mode.
QHow do I open an e Insurance Account (eIA)?
To open an e IA, you need the fill out an account opening application form of the Insurance Repository along with the necessary supporting documents. Application Forms would be available in all offices of the Insurance Repository, once they are operational. They can also be downloaded from the respective website or you can fill out an application online at the website). You can also contact your Insurance Advisor (Agent) for an application form. You can submit the signed e IA application form at any Insurance Repository office. If you are applying to open an e IA at the time of buying a new Insurance Policy, it may be best to hand over the e IA form, along with the insurance proposal form, to the Insurance Company.
To open an e IA, you need to necessarily have either a PAN or Aadhar number. When submitting your e IA application, please ensure that you provide copies of your PAN or Aadhar, Address Proof and proof of date of birth, along with a passport size photograph. You also need to show the original of address proof for verification (the list of acceptable address proof documents is given elsewhere).
QHow do I reduce the cost of buying life insurance?
The cost of a policy could be lowered if one starts buying insurance at an early age (while the risk is lower). A longer duration policy along with large sum assured would also reduce the cost. Also you will avail discounts if you offer to pay premium annually. Select a low cost policy such as a Term product. Do not buy riders or additional benefits that may not be of additional benefit to you.
QHow do I understand a life insurance Policy?
It is necessary to know the following terms in order to understand a life insurance policy:
Premium - the amount of money you have to pay to continue your insurance coverage.
The premium amount depends upon
• Your age
• Policy selected
• Mode of premium payment
• Term of premium payment
• Term of the policy
You could choose to pay premium monthly (as a deduction from your salary), quarterly, half yearly or annually. However, there are Single premium policies where you pay premium once only (hence you do not have the facility to make the effort of paying premium regularly).
Term - the number of years you choose to insure yourself.
The longer the term the lower the premium. Policy terms vary from a single year to a maximum of 55 years. Not all policies offer you a range of terms.
Premium paying term - the number of years you pay premium on your policy.
The longer the premium paying term, the lower the premium. Usually the premium paying term is the same as the policy term. However, some policies offer you the option of selecting a premium paying term that is lower than the policy term.
Sum Assured / Face amount - the amount of insurance cover you have or the minimum amount your family receives in the event of your demise.
Your family could get more than this amount based on the type of policy or riders that you select.
Bonus / Participating profit - is declared by the insurance company each year as a proportion of the sum assured. This amount could vary; it could be different for different policies and terms.
Although declared each year, the bonus is a lump sum payment made to the insured person upon maturity or to his family upon death, in addition to the sum assured.
Bonus is based on an insurance company’s assumptions about the future performance. Like any other assumption, actual results will be more or less favourable. The longer the time being projected, the greater the likelihood of variance from the predicted values. Not all companies guarantee the amount of bonus on each policy.
Guaranteed Addition - is a declaration made by the insurance company; it states that irrespective of the financial results of the company, the company will pay the guaranteed amount of money, to the insured or his nominee.
Like the bonus amount, this is a lump sum payment made to the insured upon maturity or to his family upon death, in addition to the sum assured.
Survival Benefit - is the amount of money received at pre-fixed, regular intervals by the insured person, upon survival of the term of the policy.
Often, money received upon maturity or at the end of the term of the policy is also referred to as Survival benefit.
Maturity Benefit - is the amount of money received by the insured, upon survival of the term of the policy.
In case of policies that offer a bonus, the sum assured plus the bonus for the term of the policy is paid to the insured upon maturity. In addition, some policies offer a loyalty addition, which is paid as a proportion of the sum assured and is based on the term of the policy.
In case of policies that offer no bonus, upon maturity, the sum assured or a refund of the premium or no money is receivable by the insured (depending on the type of policy selected).
Cover or Death Benefit - is the amount of money the nominee receives from the insurance company upon the insured’s death. In addition to the sum assured, this would include the bonus, if any.
If additional riders such as Accident Death Benefit or Additional Sum Assured have been selected, the amount of money receivable by the nominee could be higher.
Returns or Pre-tax yields - Interest earned on the premium, on a compounded basis, is the pre-tax yield.
Post-tax yields - If the premium paid for a life insurance policy is used as a tax deduction under section 80C, then the effective premium paid by the insured is lower. Interest earned on the effective premium, on a compounded basis, is known as the post-tax yield.
Source: SBI Life Insurance
QHow long will it take for the Insurance Repository to open AN e Insurance Account?
The Insurance Repository will open an e Insurance Account within 7 business days from the date of receiving the eIA application form. On opening the e IA, the Insurance Repository will inform the applicant the particulars of the e Insurance Account and usage instructions through email and by post.
QHow much does life insurance cost?
The cost of buying an insurance policy depends on the following factors:
The insured person’s age, health and his nature of work
Type of policy selected
Term for paying premium and payment frequency
Riders (if any) attached to the policy
QHow much health insurance I should opt?
Looking to the present medical cost we should take min sum assured of 3 lacks. We should also keep in mind that once we will be suffered from and disease then sum assured will not increase so, we should consider higher sum assured to cover inflationary medical cost for future.
QHow much sum assured I should take?
There are two methods of deciding the sum assured which is human life value and need based analysis. One should use need based analysis method for deciding sum assured. In need based analysis method we should add survivors living expenses, future value of outstanding life goals, outstanding debt, cost of dying (funeral, estate lawyer's fees, etc.) and subtracts saleable investments, and insurance already available. The difference is the sum assured required.
QHow pension plan works?
Pension plans are also known as retirement plans for your future financial stability during your old age. With ever increasing cost of living it has become important that you make arrangements for your retired life. When you continually invest in this plan it grows with the compounding effect.
QI am healthy. Why should I take health insurance?
Insurance cover is always available for uncertain event; once we suffer from any disease it is difficult to take coverage for such disease. Life is full of uncertainties we do not know when we will be suffer from diseases and accident so, it is better to take health insurance when we are healthy. When we are healthy we have number of choices available and we can choose the best and affordable plan for us.
QI do not believe in taking health insurance instead of that I prefer in creating my own fund.
It is good to create a fund but once we suffer from diseases then our fund will last. Whereas in health insurance if we availed total sum assured in one policy year then again in next policy year same sum assured is available to us even if we suffer from major diseases. If we see the yearly premium of health insurance it is ranging from 1% to 3% of sum assured which is negligible. We also get the tax benefit on premium paid for health insurance.
QI have not paid premium for some time. Can I revive my policy?
For a regular premium paying policy, premium has to be paid within 30 days of the due date (15 days if the mode selected is monthly). The insurance company provides a grace period during which you can pay the premium and keep the policy in force. If the premium has not been paid within the grace period, the policy is considered lapsed.
Insurance companies offer various schemes that facilitate the process of reviving lapsed policies. A few are mentioned below -
• Paying all the arrears of premium and the interest for the same period can revive the policy. In certain cases, the company may offer installment revival schemes, where you pay a part of the arrear along with the regular premium, and the balance of the revival amount is paid in instalments spread over a year of two years.
• Under another scheme, a money-back policy can be revived by using the survival benefit under the policy (the money receivable from the insurance company at regular intervals) to pay premium plus interest. (If the survival benefit amount is lower than the revival value, you have to pay the shortfall. If it is higher, you receive the excess amount.)
Source: SBI Life Insurance
QI have not paid premium for some time. I want to discontinue my policy. Do I get anything back from the insurance company?
The policy holder may get a proportion of the premium back based on two conditions. The insurance company gives an option of grace period during which you can pay the premium and keep the policy in force.
If the policy is been less than 3 years old since you purchased your policy and not paid premium, then you may not receive any money back from the insurance company.
If you have paid premium for more than 3 consecutive years, you will receive a proportion of the premium paid; depending upon the assured sum and the accrued bonus if any. However, the surrender value will vary by company and policy.
The surrender value depends on factors like type of policy, amount of premium, policy term, number of years for which the premium has been paid and accumulated bonus.
QIf I already have an e IA, how do I buy a new policy in electronic form?
Once you have opened an e Insurance Account, it is quite simple to buy a new policy in electronic form. You just need to quote your unique e IA Number in your new insurance proposal form, with a request to issue policy in electronic form. Since KYC documents had already been submitted and verified when you opened your e IA, the Insurer will not do KYC again, provided there has been no change to your KYC details, making the process simpler and convenient for you.
QIs it compulsory for all Insurance Companies to offer electronic policies?
Yes. It is the policy holder’s prerogative to opt for a policy in electronic form. If a policy holder wants his/her policy (either new purchase or existing) in electronic form, then the Insurer is bound to fulfill his / her requirement.
The choice of a Repository for opening an e IA is the prerogative of the policy holder and hence all Insurance Companies will need to work with all the Insurance Repositories.
Initially, repository service will be available for life insurance only; over time, health and general insurance (personal lines only) will also be brought within the ambit of repository services.
QIs it compulsory to issue policies in only electronic form? (i.e. is dematerialization of insurance policies compulsory, as in the case of shares?)?
No, it is not (yet) compulsory to issue insurance policies only in electronic form.
Policy holders can choose the form in which they want their policies issued – paper or electronic.
QShould I buy a life insurance policy even if my employer has insured me in a group insurance scheme?
It is always sensible to buy an individual life insurance policy because
a. The amount of insurance covered by your company may not be a very large cover
b. If your employer decides to cut cost then you may no longer be covered
c. If you quit the company then you may no longer be insured
d. Age also plays a role. The premium goes high as you start getting older.
02 Dec - 10:00 hrs
Founder & CEO, Right Horizons