3 Things Everybody Ought To Know About Health Insurance

Featured

Posted on February 1, 2013 by Runjhun

3 Things Everybody Ought To Know About Health Insurance

Health insurance or Mediclaim is one of the most fundamental types of insurance after life cover in terms of being an absolute necessity for everyone. Being as important as they are, it then becomes an added responsibility on us to be extra cautious and aware when opting for a mediclaim. While there is no dearth of options in the market, prospective policy holders often find themselves bewildered by the variety and miss out on the crucial points for consideration. We, hence, bring you a lowdown on some salient points that you must keep in mind when opting for a health insurance.

The Premium Conundrum—Premium for a Mediclaim forms the ground for maximum mistakes. Most policy holders tend to choose between policies based on their respective premiums—the cheaper, the better. It is a capital mistake to base such a crucial choice on the price tag alone. While choosing the policy, always make the final decision based on important considerations like the coverage being offered, your individual requirements and whether all your concerns are being covered and addressed by the policy. A comparative analysis of the price tags comes in picture only once the basics are settled and covered; not as the ultimate clinching factor.

Another crucial thing to remember is that premiums change as we age. Hence, while comparison of premiums is not the right way to decide the right policy, it is equally important to understand the changes in the premium with time and to ensure that the premiums remain affordable even after you retire. Premiums that rise exponentially and/or become unaffordable after a point of time are undesirable and should be meticulously avoided.

Simple and Substantial—Mediclaims often come with loads of ‘added features’. A basic thumb rule is to avoid frills as far as possible and always go for the basic. This is a price effective strategy and makes the selection of the mediclaim a much simpler process. However, opting for a basic cover doesn’t mean one should go for policies that offer a small coverage. Inflation in the health sector is incredibly high and what is an okay-ish cover today may become totally redundant by the time you actually need it. Always go for the highest coverage that you can afford, taking into account the increase in the premiums over a period of time.

Background Check of the Insurer—As we had stated earlier, there is no dearth of options when it comes to the availability of the health insurance in the market. However, the more the option, the more is the requirement of vigilance on part of the consumers. Apart from the bare basic of ensuring a trustworthy advisor, a prospective policy holder must himself be involved intricately in the process of choosing the health insurance. Always conduct a background check of the insurer you are about to opt for. Search on the internet for reviews and complaints. Reading enough reviews and complaints will give you a basic idea of how the insurer has fared in the experience of other consumers. This is neither objective nor a foolproof method. However, it is effective enough to raise an alarm if the insurer has a track record of bad services and unfair practices.

A lot of insurance troubles are pure bad luck. However, there are still a substantial number of troubles that can be easily avoided if enough diligence, caution and awareness are exercised. Mediclaim is one of the most basic covers and comes handy in times of dire emergencies. Needless to say, caution is the key and while the issues we have highlighted may not be exclusive, they are enough to get you started on your vigil once you decide to opt for a health cover.

Misselling No More! IRDA Comes Out With A Framework To Curb Insurance Frauds.

Featured

Posted on January 23, 2013 by Runjhun

IRDA To Curb The Insurance Frauds, Cheating Agents Menace, Comes Out With A Framework.(Picture Credit: topcontentcenter.com)

Just because you are not paranoid, doesn’t mean your insurance agent is not out there to cheat you!

For the longest period of time, we have been resonating with this sentiment, urging our readers to be on guard against the misselling tactics of the insurance agents. For a glimpse of our concerns and take on this issue, see 5 Shocking Misselling Tactics Of Insurance Agents.

Our paranoia hasn’t been without a reason and the statistics emerging from within the insurance industry with respect to the cheating insurance agents has done nothing to quell our fears. However, the regulator IRDA seems to have been bothered by these concerns as much as the ‘aam junta‘ and after a long long while, decided to do something concrete about it.

IRDA has come out with a framework for monitoring frauds in the insurance sector and asked insurers to carry out due diligence on their staff, including agents. The circular issued by IRDA to the insurers directs them to lay down procedures to carry out the due diligence on the personnel (management/staff)/ insurance agent/ corporate agent/ intermediary/ TPAs before appointment with them. It is required that insurers understand the nature of fraud and take steps to minimise the vulnerability of their operations to fraud.

The insurers are required to submit a compliance report with the regulator by June 30, 2013.

A rigorous due dilligence of the employees, especially agents, if done right, is one of the most effective methods to curb fraudulent practices and to that extent IRDA’s has taken a step in the right direction.

IRDA has classified frauds in the insurance sector under three heads — claim fraud or policyholder fraud, intermediary fraud and internal fraud. It has also asked the insurance companies to frame anti-fraud policy and said that the company’s board would review the policy on an annual basis.

Insurer have been directed to inform both potential and existing clients about their anti-fraud policies and highlight the consequences of submitting false statement for the benefit of policyholder in the insurance contract.

We really hope that the move doesn’t turn out be another damp squid and does succeed in actually curbing this menace at least to some extent.

IRDA comes out with framework for monitoring insurance frauds (Business Standard)

Beware! The Cheque For Your Premium Payment May Buy You A New Insurance Policy–Without Your Consent!

Featured

Posted on December 27, 2012 by Runjhun

complaint against insurance agents misselling insurance policy IRDA mulls new norms

Picture this. Your duly sign a cheque for the payment of the premium of your existing policy, handing it over to your agent well within time. A couple of months later you come to know that your premium was never paid. And not just that, you are also the ‘proud’ holder of a brand new policy–one you had never really bought!

Unbelievable as it may sound, this is a scenario which routinely presents itself in the insurance sector as a biting reality. There has been a disturbing rise in the number of cases where unscrupulous representatives or agents collect renewal payments but use the cheques to sell fresh policies to unsuspecting customers.

Mis-selling is a concern we have been regularly raising and warning our readers against (See 5 Shocking Misselling Tactics Of Insurance Agents That Everybody Ought To Know About!). This is just another facet that has raised its ugly head and need to be guarded against.

The issue has become grave enough for IRDA to actually plan an intervention and ensure such instances are not repeated. IRDA is reported to be considering a suggestion that renewal cheques should be made in favour of specific policy numbers to avoid such cheques being used for any other purpose except the payment of the premium.

At present, the regulations are unclear and unspecific. Insurers accept cheques made out to a specific policy number but don’t refuse those that are simply in favour of the company. Some advise policyholders to specify the policy number on the cheque while others don’t. The result is a slew of such malpractices which not only leave a bunch of troubled consumers with unwanted policies but also insurance companies plagued by dissatisfied consumers.

Both the regulator and the industry are trying to rectify the situation by introducing fresh measures. While IRDA contemplates new regulation, several insurers are also planning to make mentioning policy number on the cheque mandatory. There are also proposals to have a welcome call whenever a new policy is purchased and let the consumer know if there is an unpaid premium of any previous policy.

While the regulations are contemplated and implemented, the chunk of responsibility to save themselves from the fraud lies with the consumers themselves. Awareness and education is the key.

The consumers should make sure that they always make the cheque stating their policy number. When buying a new policy, customers should mention their name, telephone number, email id and the name of the policy opted for on the back of the cheque.

Irrespective of what measures do or do not come into place, this is one sure shot way of saving yourself from this fraud.

IRDA mulls new rule to chequemate fraudsters (Economic Times)

3 Things Young Investors Must Know About Equity Investment

Featured

Posted on November 8, 2012 by Runjhun

3 Things Young Investors Must Know About Equity Investment

Equities are the proverbial ‘double edged sword’ in the field of investment. Technically, they are dubbed as ‘high risk, high return’ assets. And the fact that they are ‘high risk’ automatically pushes them into the forbidden category for the ones who are planning to start off in the field of investment.

While it is true that one should not invest in anything, least of all equities, without understanding their dynamics, it is equally foolhardy to steer clear of an excellent investment avenue just because it seems too daunting or scary.

Equities are an essential component of any effective investment portfolio and young investors must not make a complete exclusion of this category if they want to create an efficient investment scheme for themselves. While it is not possible for us to delve into the dynamics of equity investment as a whole in a single article, we have culled out the three most important and basic things that a young investor must know and keep in mind when dealing with equities.

The Best Time To Start Is ‘Now’- Of course the markets are volatile and the returns hardly look like what they did in the pre-recession era. But if you are waiting for the markets to improve and equity assets to prove their worth, it is probably the most disastrous investment error that you can make. Equities fluctuate directly with the markets and hence, a downward curve is never a bad time to invest in equities if you plan to remain invested for a long period of time. This way, you are assured of reaping the benefits of the inevitable upward swing in the market which succeeds the lean phase.

As far as young investors are concerned, time is their biggest asset and irrespective of market conditions, our standard advice for any young investor is to start investing as soon as possible. The longer the investment time-frame, the greater are the benefits that are reaped. And of course, a longer time frame also increases the risk appetite of the young investors who have the security of income generation to cushion any unexpected loss, hence giving their investments time to recover through varying market cycles.

Invest Small, Invest Systematic- Bulk investing is almost never advisable, especially in the current market conditions. A systematic investment in small fractions ensures that your investment is evenly spread out, thus reaping the maximum benefits from the varying market conditions. SIPs or systematic investment plans offered by most funds are the best way to ensure that your money in simultaneously regulated and invested in a disciplined manner. Apart from the fact that this is an excellent way to discipline your savings, SIPs are also recommended to weather the changing market conditions efficiently.

Don’t Be Conservative. Do Diversify.- Being conservative is a cardinal sin for young investors when it come to investment. The risk appetite of the young investors is their biggest strength and it should be utilized to the hilt. However, this does not imply that the young investors should be careless with the way their investment is positioned in the market. It is crucial for them to understand the dynamics of various asset classes and then diversify the investment as per their long term financial goals. However, we reiterate, risk is an essential feature of a young portfolio and young investors should take the maximum advantage of high risk asset classes like equities. Even while investing in equities, there must be careful consideration of the nature of the equities (large cap, mid cap, small cap stocks/funds; diversified or sectoral funds etc.) and the investment must be distributed according to individual goals and capacity.

The young investors must understand that investment is not a sleep walking exercise or else, they would be confined to a portfolio that would be ‘safe’, but definitely not efficient. And once the young investors do get into the investment scene, they must be keen, aware and vigilant. The best way to ease oneself into equity investments is through mutual funds. (Read 3 Reasons Why Every Lay Investor Should Invest In Mutual Funds). They are relatively easier to understand and manage.

Irrespective of the mode of investment, young investors must understand the risks involved, always have an emergency corpus to deal with unexpected situations, in market or otherwise and be extremely aware and well researched on the asset classes they include in their portfolio. Investment in equity is hardly an avoidable proposition if one intends to get the maximum value for money and hence, young investors should delve into it with an aware gusto.

Insurance Troubles! LIC And Other Insurers Pay Heavy Compensation In Separate Cases.

Posted on November 5, 2012 by Runjhun

complaint-against-lic-new-india-assurance-hdfc-general-insurance-pay-heavy-compensation

Insurance! Insurance!

And that is never a hoax Wolf! cry.

The variety of issues that this industry manages to come up with is staggering. For a few moments/days we take our eyes off the consumer issues scene and the world seems to be flooded with insurance woes. (Not that it does not happen when we are looking, but at least we are not overwhelmed by the consolidated bulk!).

The first of these cases is by now, one of the regulars when it comes to the errant insurers list–The New India Assurance. The complainant had purchased a a burglary policy from the insurance Company in the year 2003, active from July 2003 to July 2004, during which a theft occurred in the complainant’s garment factory. An FIR was duly filed and a oss of around 2.5L was reported.

The insurer however refused to the claim on the ground that its surveyor’s listed a loss of only 35K. Aggrieved, the complainant approached a Maharashtra consumer forum in Mumbai which directed an insurance company to pay a complainant `2.34 lakh, along with nine per cent interest from the year 2008 onwards, after it denied to pay the claims made by its consumer.

Insurance Co. Asked To Pay 2.5L (Asian Age)

The next story originates with everybody’d trusted insurer LIC. Definitely. to its credit, LIC does have a way better track record that any of the other insurers in the industry. And yet, even the mighty fall at times–a tad bit frequently when it comes to brand-consumer dynamics.

In a clear case of mis-communication of essentials on part of the insurer and a complete absence of vigilance and awareness on part of the policy holder, a barren widow, LIC had been ordered by a district consumer forum to pay Rs5,000 for non standard service and Rs3,000 for case expenses. The forum said if the corporation had informed about the rules and reasons for denial of the benefits of the scheme to the complainant at the time of claim, she would not have been forced to appeal to the court. In this instance, the policy holder was a barren widow and upon her death, her niece’s claim had been denied by LIC on the grounds that they have sent the principle amount to the complainant and she did not deserve the interest amount and other benefits of the scheme as the policy holder had made false statement.

‘Non-standard services’ cost LIC Rs8,000 (Daily Pioneer)

Another private insurer courted trouble when HDFC Ergo General Insurance Company Limited was penalized and ordered to pay Rs. 50,000 as compensation for non grant of a claim for an insured car that had met with an accident. The grounds for denial were what we have often termed as insurer’s favorite stumbling block in such cases-the driver’s license. The company had claimed that the complainant had changed the name of the driver when driving license was required for processing the claim.

However, in the absence of evidence to support this claim, the forum held that refusal to indemnify the complainant for the loss caused to him amounts to deficiency in service by the company and hence, is liable to pay compensation for mental agony and harassment suffered by the consumer.

Consumer court penalises insurance firm for refusing to grant claim (Indian Express)

3 Reasons Why Young Investors Should Invest In Real Estate!

Featured

Posted on October 25, 2012 by Runjhun

3 Reasons Why Young Investors Should Invest In Real Estate

One of the most frequent advices that can be given to the youth when it comes to investment is starting young. And just because, the advice is so frequent, most of us tend to forget that it is actually the BEST advice anyone can be given.

Why is starting young so important? The answer is hardly rocket science. By the sheer luxury of time that youth has on hand in terms of the period of investment, the risk appetite is multiplied several times which in turn leads to investments that by design are high risk, high returns. At a simpler level, starting young means you have a lot scope for distributing your investments over a long period of time, ultimately leading to a substantial increase in the net amount invested. At a still simpler level, starting young means your money has that more time to grow and hence, higher returns.

While this common wisdom has had many young investors coming into the market, investing largely in equities and debt instruments , real estate continues to be an area out of the purview of the obvious choice of the investors. Going by the volatile nature of the economy these days however, real estate has rapidly emerged as a mode of investment that should ideally be on the top of the investment priority list, especially for the young investors. We give you a lowdown on the reasons why real estate should be preferred by the youth.

The Anti-Inflation Investment—Real estate investments are an almost guaranteed way to get around inflation. Real estate is growing market, more so because of the rapidly shrinking supply of land. You only have to go house hunting in a city like Mumbai to know the extent of land shortage in the country. A shortage supply logically means a growth in market and so long as this shortage persists, the market shall not slow down. The core point here is a careful market research before investing into the real estate. You can hardly expect your money to grow exponentially if you chose to invest your money in a landed property in remote UP. It shall still grow but not as much as it would in a more favorable location like Mumbai or Delhi-NCR. There are other considerations too, which need to be taken into account. For instance, in cities like Pune and Gurgaon, which thrive on floating population, investing in residential properties that can be leased out at a later stage is a good strategy.

These examples are illustrative. The moot point here is that investment in real estate can be an excellent strategy for the young investors to get past inflation. The essential corollary is proper market research and careful consideration before investment. Read up, ask around and ask plenty of questions. If you there is any doubt about importance of market research, read all that can go wrong with your real estate investment 6 Things Your Builder Can’t Do But Still Does.

Affordable Option—Yes, you read it right. Contrary to the popular perception, investing in real estate is actually one of the more affordable options with banks funding up to 80% of the cost. The young investors also get income tax benefits. A slightly more complex benefit is derived from the fact that young investors are expected to pay fixed installments over years which in effect amounts to purchasing an asset at a lower cost, whose value is bound to appreciate while the investor’s own income too keeps rising. For those young investors looking to discipline their investments, servicing regular EMIs is an excellent method. Of course, real estate is a volatile asset but from a reasonable perspective, it is still a safer bet than stock markets, especially when trade pundits across board have been reiterating the fact that the probability of appreciation in case of real estate investments is very high.

Tangible Asset—This is not exactly an objective benefit but may hold significant importance in several cases. Unlike old times when owning house marked a definite landmark in one’s life, young investors can now enjoy the benefits of a tangible asset pretty early on in their lives. If the property is a residential one meant for personal purposes, the obvious benefits are manifold. In several cases, the investors’ end up paying an EMI which is only slightly more or almost equal to the rent they would be paying otherwise, with an added benefit of actually residing in their ‘own’ place.

As we had stated earlier, real estate is a volatile option, even if relatively less so. And hence, the prudent way ahead is to make real estate one of the modes of investment in your portfolio and not the only one. An ideal portfolio has a balanced distribution between various options and irrespective of the benefits or the risk factors, concentration of wealth in any mode is problematic. The ideal way ahead is to start off with SIPs (systematic investment plans) and gradually proceed to real estate, as and when you reasonably acquire enough spare wealth to distribute between various investment options. The key is to be prudent with your money and invest as soon as you possibly can. And while investing in real estate, always remember, an aware investment is the only safe investment and a thorough market research is a must.