The life insurance industry in India has grown phenomenally since the market opened in 2000. insurance penetration has increased from 1.39 percent in 1999 to 1.1 per cent in 2006. These figures clearly highlight the growth rate and the opportunity that the Indian market presents.
Today, there are more than 16 companies in the life insurance industry with may more waiting to enter the market and tap the 400 million insurable population.
Initiatives by the industry and the regulator.
With a large number of players in the market and with the rapid growth that the market has experienced, the Insurance Regulatory and Development Authority (Irda) and the insurance companies have taken it upon themselves to self-regulate in the interest of the customer.
One such joint initiative was the model code of conduct on illustrations ( projections of returns on investment) that the industry adopted in 2004 wherein all sales illustrations can be shown at 6% and 10% investment returns only
In 2006, Irda issued guidelines for unit-linked insurance plans (Ulips) again keeping the interest of customers in mind. Despite these and many other initiatives, there are a few examples of mis-selling in the it is critical that the customers are aware of what to look for while buying insurance.
Need for vigilance.
The Indian customers is spoilt for choice as he has many products from different companies to choose from. Keeping this in mind, the customer today needs to make an effort to learn more about insurance products to ensure that his hard-earned money is invested in the right plan.
Before deciding on any specific insurance plan, one should undergo a detailed financial analysis. Every individual has a unique financial portfolio with different needs. A Financial Health Check will help one determine their long-term savings and insurance needs to choose the right investment plan. A new policyholder should run a few checks.
1. Read terms and conditions carefully before signing. Policies can be called within 15-day free look period.
2. Ask for illustrations and keep a copy
3. Seek clarifications on guarantees on investment, partial withdrawal and surrender penalty, implications in case of a lapse in premium payment flexibility of policy to change as per your needs, and charges on policy to change as per your needs, and charges on policy.
4. Look company’s past fund performance and the history of its operations in India as well as other countries.
5. Check if returns shown are net of charges or not
Issues customers face.
For existing customers, these are usually related to post-sale customer services and claims. It is also advisable that regular contact is maintained with the company and the customer may approach the company directly for any clarifications. Now days, every company has a customer services cell and a dedicated call centre. Some customers may also face an issue of claims getting rejected or delayed. Claim dispute cases within the jurisdiction of the insurance ombudsmen can be represented to him.
Irda clearly articulates that insurance companies should pay claims within 30 days from the date of receipt. In case the claim warrants an investigation, the insurer has to complete it not later than six months from the time of lodging the claim. However, the customer needs to be completely honest when filing in the Declaration of Good Health. It has been seen that most claims are rejected as incorrect information had been communicated to the insurance company.
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