Sector Update: Insurance

Sector Update: Insurance

After 7 years wait, Indian parliament has approved long pending insurance bill. According to insurance bill, now FDI has been raised to 49% from 26% with Indian ownership control. Penalty for non compliance raised to 25 crore. It is Modi govt’s first major reform sign. Industry expert hopes that this insurance bill help bring in over Rs 50,000 crore in fresh capital which will stimulate the insurance sector.

From 1st April 2015, the premium rates for third party motor insurance cover has been raised after issuing new draft by IRDA. IRDA is also planning new investment norms for general insurance companies. According to new norms, investment limit in securities other than those approved would be now 10% earlier it was 25% of total premium collected in a fiscal. It may reduce the earning of general insurance companies.

The Bombay High Court has asked to IRDA to ensure that insurance companies should not involve TPA in the claim settlement. As per ruling of health insurance, allowing or rejecting claim should decide by insurance companies not by the TPA.

According to British Medical Journal, India’s private healthcare sector treating patients as revenue generators. Doctors get Rs 30,000 to 40,000 to refer patients for angioplasty. Unnecessary tests are being carried out and fabricated reports were generated. Large sums were paid for the same only to fill the pockets of referring doctors and pathologists. There is serious need for stringent, transparent and mandatory regulation.

IRDA said that insurance companies can appoint individual agents on their own from 1st April 2015. As per current practice, IRDA grants license to a person to become an agent of insurance company. After the new norms, whole licensing systems will go.

To bring more transparency, IRDA is planning to treat health insurance as a stand alone segment. As per current rule health insurance come under non life insurance category. Now, separate regulation will be made by IRDA for medical insurance.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Health Insurance : Myths and Facts

Health Insurance: Myths & Facts

All of us know very well about the importance of health insurance. Today, everyone realize the benefit and need of having health insurance. For sales points of view it is very easy product which can be offer to the clients by the non life insurer. I have also written many blogs about it. Yesterday, I came across very useful information in the news paper which I want to share with all of you. A very well known insurer called ICICI Lombard has conducted the survey about health insurance. According to this survey that people have many misconceptions about health insurance which we will be discuss in today’s blog.

Myth1:

52% people believe that health insurance policies settle the claim only in case of hospitalization.

Reality:

9 out of 22 non life insurance companies offer OPD benefits, including dental treatment, diagnostic test expenses, vaccinations, hearing aid, eye check up, spectacles and preventive health care services.

Myth2:

27% people said I don’t need health insurance if I am fit.

Reality:

Many illnesses like dengue, malaria, food poising and critical illness can happen in healthy people due to hectic life style and pollution. Health insurance also covers injuries due to accident or violence.

Myth3:

29% people said that they have group health cover. So they don’t need a separate health insurance policy.

Reality:

Due to increasing medical cost day by day, group cover may not be enough in case of medical treatment. In case of job loss, you will need the cover. The group health insurance policies have some defined limits and constraint.

Myth4:

49% people was not sure in survey whether they can get health cover or not as they smoke or consume alcohol.

Reality:

Insurance companies offer health insurance to these types of people. In these cases loading increase the premium can be higher due to high risky habits.

Myth5:

26% people do not intend to cover their family as they think that only earning member need the health insurance cover.

Reality:

Unlike life insurance, health insurance should cover the entire family including children and parents of the customer.

Myth6:

Pre- existing diseases will be covered after waiting period so no need to declare in the proposal form.

Reality:

As per IRDA guidelines, any ailment not declared by a customer is considered an un-disclosed pre existing disease and it leads to claim rejection.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

How to choose best insurer?

How to choose right Insurer..?

Now a days, people are realizing the importance of insurance. In India, the penetration of insurance is still low when compare with the rest of the world. However, now more and more people are to cover themselves. The financial adviser and regulator also play very vital role to spreading the insurance cover across the country. Now the big question is how to select the good insurer. There are many private companies in insurance sector and it has become difficult to choose the best one. We are going to discuss here some parameter about the insurance companies which we should consider before purchase any insurance product.

Financial strength of Insurance company:

It is very vital parameter which you should consider before purchase any insurance product. For all insurers, IRDA has set the working Solvency Margin Ratio which should be minimum more than 1.5 times. Solvency Margin Ratio is a ratio of actual solvency margin to the required solvency margin. In simple world, Required Solvency Margin is the amount of company’s capital exceeds its projected liabilities. It tells the financial health of the insurance company. It means the more higher ratio the more safer company.

Past Performance:

If you go with traditional plans then you should know about past declared bonuses by the company. If company controls the expenses and policy lapse rate successfully on a consistent basis then there is possibility to get good return. In reality the companies are not beating inflation so real return almost nothing or negative from insurance product. It is better go with pure term insurance plan as insurance is not good for investment product according to me.

Claim Repudiation Ratio:

It shows the number of claims settled against the number of claims processed with consideration of amount of claim. The company with the lowest Claim Repudiation Ratio is considered a good life insurance company.

Credit Ratings:

In India, credit rating agencies like CRISIL, ICRA and CARE gives the rating to insurance companies after evaluating the financial health, claim ratio, expenses and many other factors. It is an opinion of the credit rating agencies after assessment of the company. Many companies are still not rated by any agencies in India.

Expenses in insurance product:

Many of policyholder don’t know the charges of the policy which they are here going to purchase. In ULIP product the charges are clearly mentioned in the policy document which comes after purchase the policy. You can cancel the purchase if you are not satisfied with the charges within 15 days after issuing the policy. You must read your policy document carefully to know the exact term and condition.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

How to Choose Best Health Insurance?

Do you have Proper Health Insurance?

Health insurance is the vital part of every individual financial plan. We also call it mediclaim policy also. In India, it comes under general insurance category. In our country the penetration and awareness of health insurance is still very poor. In metro and big cities now people are considering it. In my personal opinion, it should be compulsory for every individual as without good health all wealth have no mean.

Why it is so important?

Healthcare costs are increasing day by day in our country. The annual growth rate of increasing cost is around 15% to 20% YoY. Any emergency hospitalization due to any illness or accident makes a big hole in your pocket. I feel very surprise when people say purchasing health insurance is wasting your money as there is no return if you do not get hospitalized. Health insurance is a protection tool, it is not for investment. It should be your first priority that protect your family and yourself with proper amount of mediclaim policy.

How to choose good health insurance?

Choosing good and proper health insurance is not easy task for everyone. If you do not have enough time and resources, contact any IRDA certified and skilled health insurance planner. There are more than 25 general insurance companies exist in our countries so it becomes very difficult to choose the best one. For health insurance buyer premium would be the first criteria to judge the policy. But your focus should not be only on premium amount there is another important factor you must judge that is claim settlement ratio. You should check the claims settlement ratio of particular insurance company. There is no mean of cheap premium if company do not settle the claim in proper time. If settlement happens after a long waiting period that is also the concern.

Health insurance companies publish this data quarterly or annual basis. IRDA does not report the claims settlement ratio in its annual report whereas in case of life insurance IRDA publish the same. Choosing a health insurance is vital for your financial plan and choose it very carefully. Only cheap premium should not be parameter for purchasing the health insurance. You should consider the other important factor like settlement time taken by the company, settlement ratio etc. After all it is for you and your family’s wellness.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in