Term Insurance
The cheapest and the most basic, this is a no-frills life cover that should be one of your first financial instruments. Being a pure insurance cover, it does not return your money if you survive the policy term.
If you don't, the sum assured is paid to your dependants. So, buy only if you have financial dependants, or you expect to have dependants in the future. If you expect to have dependants till a later stage of your life, look for a plan that has a high maturity age.
Most term plans provide cover till 60-65 years of age. Few even offer plans till age 75.
As there is no surrender or maturity value in these, you should settle for the one with the lowest premium and the longest term.
Since they are simple, term plans can be easily compared on the basis of price and the cover period. Search for a quote from at least four to five companies before buying one.
Recently, a few variants have been introduced in term insurance.
ING Vysya Life Insurance has launched limited premium paying term (PPT) plans. In these, you have to pay a higher premium in the initial years to cover the premiums for the entire term, after which you stop paying altogether. If you think, you can afford higher premiums only for a few years, this plan will make sense for you.
However, it has its drawbacks. In the event of death in the initial years, you would end up paying much more than what you would have paid till that time under a normal plan.
Also, if at any point you want to discontinue the plan in the absence of dependants, you would have paid for the entire term in any case. Switching to a lower cost plan would also be hindered.
DLF Pramerica's Family Income Plan has come up with another innovation. Unlike a conventional protection plan, where the dependants receive a lumpsum, the plan allows you to choose the monthly financial support system.
Under this, your dependants would be paid on a monthly basis till the end of the plan term.
Important
Keep the highest possible term
Keep the maturity age as long as possible
Talk to 4-5 insurers or visit their websites to get premium rates
Choose the plan that has the lowest premium at your parameters
Undergo medical tests, if required
Keep the nominees informed
Pay premiums every year
Friday, January 2, 2009
How to make an insurance claim
How to make an insurance claim
It is important for both the insured and the nominee to know the process of insurance claim settlement. A false step can lead to denial of the benefit for which life cover is bought.
What is a claim?
A life insurance policy is a contract between the insurance company and the insured in which the insurer agrees to pay a pre-defined sum upon the death of the insured. This sum is claimed by the nominee of the policy -- the person designated to make a claim in the event of the death of the insured.
Making a claim
In order to make a claim, the nominee needs to submit a claim form that is issued by the insurer. The nominee is also required to submit documents like the original policy papers, the death certificate of the insured and his death summary in case he died due to an illness. If death was accidental, these documents need to be supported by an FIR and a post-mortem report. In addition to these documents, the claimant also needs to provide an identity proof to establish that he is the nominee of the policy. The identity proof can be anything bearing the nominee's photograph and signature. That makes the PAN card, driving licence and passport eligible as identity proofs. The process of claim settlement begins once the insurer verifies these documents.
How long does take?
It usually takes a week to 10 days to settle a claim after all the relevant documents are verified by the insurer.
The Insurance Regulatory and Development Authority (Irda), the insurance regulator, has stipulated that claims should be settled within 30 days of receipt of all the relevant documents. The insurer can ask for clarifications or supporting evidence if he is dissatisfied with the documents. If this happens, a deadline of six months from the date of intimation of the claim is laid down for its settlement. If the insurer fails to meet the deadline, he has to pay an interest on the sum assured. The nominee can approach the insurance ombudsman if the insurer fails to pay the claim on time.
It is important for both the insured and the nominee to know the process of insurance claim settlement. A false step can lead to denial of the benefit for which life cover is bought.
What is a claim?
A life insurance policy is a contract between the insurance company and the insured in which the insurer agrees to pay a pre-defined sum upon the death of the insured. This sum is claimed by the nominee of the policy -- the person designated to make a claim in the event of the death of the insured.
Making a claim
In order to make a claim, the nominee needs to submit a claim form that is issued by the insurer. The nominee is also required to submit documents like the original policy papers, the death certificate of the insured and his death summary in case he died due to an illness. If death was accidental, these documents need to be supported by an FIR and a post-mortem report. In addition to these documents, the claimant also needs to provide an identity proof to establish that he is the nominee of the policy. The identity proof can be anything bearing the nominee's photograph and signature. That makes the PAN card, driving licence and passport eligible as identity proofs. The process of claim settlement begins once the insurer verifies these documents.
How long does take?
It usually takes a week to 10 days to settle a claim after all the relevant documents are verified by the insurer.
The Insurance Regulatory and Development Authority (Irda), the insurance regulator, has stipulated that claims should be settled within 30 days of receipt of all the relevant documents. The insurer can ask for clarifications or supporting evidence if he is dissatisfied with the documents. If this happens, a deadline of six months from the date of intimation of the claim is laid down for its settlement. If the insurer fails to meet the deadline, he has to pay an interest on the sum assured. The nominee can approach the insurance ombudsman if the insurer fails to pay the claim on time.
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