November 2020 - Turtlemint

Now FASTags to become necessary for Third Party Motor Insurance cover

November 12, 2020March 25, 2021 Ankita Sejpal

FASTags were introduced for easier inter-city travels as the tag allowed automated payments of toll tax at every toll plaza. Though the Government promoted the use of FASTags and also made them mandatory in certain cases, many vehicle owners ignored them. However, in a recent draft issued by the Ministry of Road Transport and Highways, dated 1st September, the Government has stated its intent on making FASTags compulsory for vehicles. But before we get into the new proposal, let’s have a quick understanding of what a FASTag is.

What is a FASTag?

A FASTags is a prepaid tag which is affixed on the windshield of vehicles. The tag is either brought through a bank or a mobile wallet and is linked with the same. Once you recharge the FASTag, it would contain a balance, much like your mobile wallet. Thereafter, whenever you cross any toll plaza, the FASTag would be scanned and the applicable toll would be deducted from the balance in the FASTag. You can recharge the FASTag any time and with any amount and the tag is valid lifetime. Every vehicle needs an independent FASTag. The FASTag allows you to drive conveniently without having to wait in queue for the payment of the toll tax.

What were the earlier rules on FASTags?

After FASTags were introduced, the Government made them mandatory for four-wheelers for the purpose of registration. This mandate became effective from 2017. The Government asked the vehicle manufacturers or their dealers to supply new vehicle owners with the required FASTags. Moreover, for transport vehicles which renewed their fitness certificates, the renewals were allowed only after the vehicles had FASTags fitted on them. For National Permit Vehicles, FASTags were made mandatory since 1st October 2019.

What changes does the Government want?

In the circular issued by the Ministry, the following changes were proposed by the Government to promote FASTag usage –

FASTags would become necessary for new vehicles when they buy a third party insurance policy. This mandate would be effective from 1st April 2021. The details of the FASTag would be recorded in the third party insurance policy
From 1st January 2021, FASTags would be made mandatory for vehicles sold before December 2017

What it means for you?

If you are planning to buy a new vehicle in the next financial year, you would have to opt for the FASTag in order to get the vehicle insured once the rule is passed. Moreover, for vehicle owners who have bought their vehicles before 2017, having a FASTag would become necessary. Both these changes would have a positive impact on you especially when you are travelling inter-city. Payment of toll tax would become easier and you wouldn’t even have to carry the required tax in cash.

The Government has introduced this rule, which is still pending confirmation, to ease the traffic flow on highways and to ensure that the payment of toll tax is not avoided. Once the proposed changes become the rule, travel would become easier and convenient. You should, however, fit your vehicle with a FASTag whether or not the proposed changes become a rule for your own convenience.

What happens to Insurance Policies if the Policyholder Dies?

November 12, 2020March 25, 2021 Sidharth Hampanavar

Insurance plans cover the different types of financial risks that you might face and compensate you for the financial loss that you suffer. You buy different types of insurance policies to avail a comprehensive scope of coverage against possible risks that you might face. Life insurance, health insurance and motor insurance plans are the most basic and important coverages needed for financial security. But what happens under these plans when the policyholder dies?

Each type of plan is affected differently on the death of the policyholder. So, let’s assess the plans independently for a clearer picture.

Life insurance plans

Life insurance plans cover the risk of premature death. Under these plans, the policyholder and the life insured can be two different individuals. For example, if you buy a life insurance policy on your life and you pay the premium, you would be the policyholder as well as the life insured. However, if you buy a life insurance policy on your wife’s or children’s life, you would be the policyholder but your wife and/or children would be the life insured.

Life insurance plans pay the death benefit if the life insured dies. If the life insured and the policyholder are the same person, the death benefit is paid on death of the policyholder and the plan is terminated. However, if the life insured and policyholder are different individuals and the policyholder dies, the insurance policy would not be affected. The policy would continue till the life insured is alive and the due premiums should be paid under the plan for receiving full benefits. If the life insured dies, the plan would pay the death benefit and terminate.

Let’s understand with an example –

Suppose, Mr. Verma buys three life insurance policies as follows –

Policy 1 for himself
Policy 2 for his wife
Policy 3 for his child Rahul

Here’s what would happen to the policies when Mr. Verma, the policyholder, dies –

Policy details	Policyholder	Life insured	Benefit payable
Policy 1	Mr. Verma	Mr. Verma	Death benefit would be paid and the policy would be terminated
Policy 2	Mr. Verma	Mrs. Verma	No effect on the policy. The policy would continue since Mrs. Verma is alive. The premiums should be paid for complete coverage
Policy 3	Mr. Verma	Rahul	No effect on the policy. The policy would continue since Rahul is alive. The premiums should be paid for complete coverage. If this is a child plan, the premiums would be waived and the plan would continue unaffected

If the death benefit is payable on the policyholder’s death, the benefit would be paid to the appointed nominee, beneficiary or legal heir of the insured.

Health insurance plans

Health insurance plans cover medical expenses incurred if the insured is hospitalised. They also have the concept of policyholder and insured members. If you buy the policy for yourself, you would be the insured and the policyholder. If, however, you buy a family floater plan or a senior citizen policy for your dependent parents, you would be the policyholder while your family members would be covered under the plan.

Whether you are the insured or not, if you die, no benefit would be paid by the health insurance policy since death is not covered under such plans. However, if the policyholder dies during treatments or after incurring a claim under the health plan, the claim process would have to be handled by the nominee. In case of cashless claims there would be no problems as the insurance company would settle the medical bills directly with the hospital. However, for reimbursement claims, the nominee should complete the claim formalities and the claim amount would be reimbursed to the nominee’s account.

If, after the death of the policyholder, the spouse wants to continue the family floater policy, he/she can submit a written request to the insurance company to change the policyholder at the time of renewals. The death certificate of the policyholder should be submitted along with original policy document for the change. The insurance company would recalculate the premium for the family and renew the family floater policy with the spouse acting as the policyholder.

Motor insurance plans

Under motor insurance plans, since the vehicle is insured, in case of death of the policyholder, no claim is payable. However, death of the policyholder results in change in ownership of the policy as well as the vehicle. For doing that, the legal heir should, first, get the ownership of the vehicle changed in the local RTO. An application should be made to the RTO for a change in ownership of the vehicle. The applicable RTO form, original RC book, death certificate of the policyholder, succession certificate and the identity proof of the legal heir would be needed for such change. Once the RC Book is updated with the name of the legal heir as the new owner, the insurance policy can be transferred too. The legal heir should inform the insurance company and submit the original policy document, updated RC book, death certificate of the policyholder, succession certificate and identity proof to get the motor insurance policy transferred in his/her name. The insurance company would do the needful and the legal heir would become the new policyholder.

Even if the vehicle is sold after the death of the policyholder, the insurance policy and the RC book need to be updated with the name of the legal heir to complete the sales. The legal heir would be allowed to sell the vehicle and transfer the ownership of the vehicle as well as its insurance policy to the new buyer subsequently.

You should understand the impact of the death of the policyholder under these common and important insurance plans. If you are the policyholder of your policies, educate your family on how they can claim the policy benefits in case of your unfortunate demise.

Get a Simplified Term Plan “Saral Jeevan Bima”

November 12, 2020February 25, 2022 Rupanjali Mitra Basu

A term insurance policy is a must for financial protection against the risk of premature death. If the breadwinner dies, the family needs sufficient financial reserves to help them meet their lifestyle expenses and financial responsibilities. A term insurance plan does exactly that and becomes important in financial planning. Given the importance of term insurance, every insurance company offers this coverage. Moreover, modern day term plans have become comprehensive and offer a range of coverage benefits to policyholders. Understanding these benefits and choosing an affordable plan might become challenging and so the Insurance Regulatory and Development Authority of India (IRDAI) has introduced the concept of a standard term insurance plan called Saral Jeevan Bima. Let’s have a look at what this plan is all about–

What is Saral Jeevan Bima?

Saral Jeevan Bima is a standardized term insurance plan which would be offered by all insurance companies with a uniform set of coverage features. The plan would launch on 1st January 2021 and insurance companies are required to file this product with IRDAI by 1st December 2020. The coverage benefits, exclusions and eligibility parameters of the plan would be uniform across all insurance companies. However, the premium rate can be fixed by the companies based on their pricing policies.

Salient features of Saral Jeevan Bima

Here are some of the salient features of Saral Jeevan Bima for your knowledge –

You can choose the sum assured within the minimum and maximum limits in multiples of INR 2.5 lakhs
You can pay the premium once, for a limited period or throughout the policy tenure depending on your affordability
The plan does not have any maturity benefit
On death, higher of the following would be paid –

10 times the annual premium or 1.25 times the single premium
Sum assured
105% of total premiums paid till death for limited or regular premium plans

- You can opt for two riders for a comprehensive scope of coverage. The riders allowed include Accident Benefit Rider and Permanent Disability Benefit Rider
- There is no surrender value or loan payable under the plan
- Death within 45 days of buying the policy, except due to accidents, would not be covered
- The plan has no exclusions except suicide. If the insured commits suicide within a year of buying or reviving the plan, the death benefit would not be paid only the premiums paid would be refunded

Eligibility conditions of Saral Jeevan Bima

Here’s a look into the eligibility conditions and coverage criteria of Saral Jeevan Bima –

Details	Minimum	Maximum
Entry age	18 years	65 years
Maturity age	23 years	70 years
Policy tenure	5 years	40 years
Sum Assured	INR 5 lakhs	INR 25 lakhs
Premium paying term	Regular premium – throughout the policy tenure Limited premium – 5 years or 10 years Single premium – once

What does the plan mean for you?

Saral Jeevan Bima is a right step in the direction of standardizing term insurance plans. Given the range of policies available in the market with exhaustive coverage, choosing the best plan might prove difficult, especially when you are short on time. Moreover, affording a very high sum assured might not be possible for many. Saral Jeevan Bima overcomes these difficulties and allows you to buy a term plan with decent coverage at affordable premiums. You can also compare the plan across insurers based on its premium because the other features would be the same. So, comparing and buying a term insurance plan would become easier for you.

What does the plan mean for insurers?

For insurance companies, this standardization is beneficial. As the policy is simple to understand and easy to buy insurers can sell the plan over-the-counter and increase their revenue. Moreover, as the plan becomes popular, insurance penetration is expected to increase. Insurers can target low-income individuals who want suitable coverage at affordable costs and provide them with the much-needed insurance cover and boost their business at the same time.

The Saral Jeevan Bima plan is, therefore, beneficial for both customers and insurance companies and once the plan is launched, it is expected to become popular.

Which Cancer Cover is better? Cancer Care plans or Critical Illness Insurance

November 4, 2020March 25, 2021 Ankita Sejpal

Cancer has become a dreaded illness in recent times as more and more individuals are falling prey to one or the other form of the illness. According to a report from the National Cancer Registry Programme conducted by the Indian Council of Medical Research (ICMR), the projected incidence of cancer in India for the year 2020 was 94.1 per 1 lakh male lives and 103.6 per 1 lakh female lives. (Source: Ascopubs.org). The numbers are rapidly increasing and when cancer strikes, the medical expenses are too expensive to bear. In such cases, having a dedicated insurance cover for cancer seems to be like the most ideal solution.

Many individuals have realized the importance of coverage against cancer and are opting for specialized cancer care plans for themselves and their families. Even health insurance companies are offering multiple solutions to individuals for coverage against cancer. Besides a comprehensive health insurance plan, critical illness and cancer care plans are offered for specialized coverage against cancer. But which plan is better – critical illness or cancer care?

Let’s have a comparative analysis of both these options to find out –

What is a critical illness plan?

A critical illness plan is a health insurance plan which covers a list of critical illnesses, cancer included. If you suffer from any of the covered illness, the sum insured is paid in lump sum and the plan terminates.

What is a cancer cover plan?

A cancer cover plan is an illness-specific health insurance plan which covers only cancer. Under this plan, all stages of cancer are covered and the benefit pay-out depends on the severity of cancer that you suffer from. Usually, in a minor stage cancer, 25% to 50% of the sum insured is paid and future premiums are waived for some years. If the cancer advances, the remaining sum insured is paid and the coverage is terminated.

Difference between the two

Both critical illness and cancer cover plans differ from one another in the following respects –

Critical illness insurance	Cancer insurance
Covers a range of critical illnesses besides cancer	Covers only cancer
Coverage for minor stage cancer might not be available	Covers cancer at all stages
The sum insured is paid in lump sum on diagnosis of cancer	The sum insured is paid partly on diagnosis of minor stage cancer. However, for major stage cancer, the sum insured is paid in lump sum
The plan terminates once a claim is paid	The plan continues after payment of claim for minor stage cancer. However, if claim for an advanced stage cancer is paid, the plan would terminate

Pros and cons of critical illness and cancer care plans

Here are the advantages and disadvantages of both these types of plans so that you know which plan scores over the other and in what aspect –

Critical illness insurance

Pros

The plan covers other illnesses as well. This makes its scope wide and allows you coverage against other dreaded illnesses too
The sum insured is paid in lump sum which helps you take care of your financial obligations if you face any critical illness

Cons

The plan provides a generic coverage against cancer of a specified severity. It, therefore, has a restricted scope of coverage
Coverage for early stage cancer might not be allowed under the policy
Once the claim is paid, the coverage is terminated. If there is a relapse of cancer or if the cancer advances to a major stage after the payment of claim, you would not be covered

Cancer care insurance

Pros

Provides a comprehensive scope of coverage against all types and severity of cancer
In an early stage cancer, you get financial assistance as a part of the sum insured is paid. The premium waiver benefit helps you enjoy coverage without the strain of paying the premium after suffering from cancer.
If your cancer advances, the plan pays the remaining sum insured to help you meet the financial costs of the illness
Some plans also allow coverage against recurrence of cancer

Cons

This plan is limited to cover only cancer. If you suffer from any other illness, the plan would not give you any coverage benefits
Since the claim payment depends on the severity of cancer, the claim might be limited at an early stage cancer when you need funds to avail advanced medical treatments

So, both critical illness cover and cancer care insurance have their respective pros and cons. Assess these aspects and then make your choice. If you want a comprehensive scope of cover against different types of illnesses, a critical illness plan would be better. However, if you need only a cancer specific coverage, opt for cancer care plans for an inclusive coverage. Either of these plans would be a good addition to your existing health insurance plan and would provide enhanced protection against cancer. So, understand your coverage needs and then make your choice.

IRDAI makes Corona Kavach more customer-friendly. Let’s find out how

November 4, 2020March 25, 2021 Sidharth Hampanavar

With the Coronavirus pandemic becoming a major concern, the Insurance Regulatory and Development Authority of India (IRDAI) introduced two COVID-specific health insurance plans of Corona Kavach and Corona Rakshak. These plans were aimed to provide individuals the much-needed health insurance coverage against COVID-related hospitalisation expenses. While Corona Kavach was launched as an indemnity health plan, Corona Rakshak was a launched as a fixed benefit plan paying a lump sum benefit on hospitalisation due to COVID. After their launch, these plans became the ideal solution for individuals seeking short term coverage against COVID infections. However, since the pandemic is still a severe threat, IRDAI has asked insurance companies to provide continuity benefits in Corona Kavach policy. Let’s have a look at what IRDAI has proposed –

IRDAI’s changes in the context of Corona Kavach and Rakshak

IRDAI has allowed three new benefits in the Corona Kavach and Rakshak plans. These benefits are as follows –

Renewal
Portability
Migration

Let’s have a look at these three changes in details and what these changes mean for you.

Change#1 – Renewal benefit

Corona Kavach and Corona Rakshak were both launched as short-term health insurance plans having a tenure of 3.5, 6.5 and 9.5 months. However, since the pandemic is not under control and there has been no development of a successful vaccine, IRDAI has asked insurance companies to allow extended coverage under these policies. Policyholders are allowed to renew their existing Corona Kavach or Rakshak plans if the coverage tenure expires. You can renew the policy before the existing cover expires and also opt for enhancement of the sum insured. On renewal, the waiting period of 15 days would not apply. However, if you increase the sum insured, the waiting period would be applicable on the increased amount. Renewal would be allowed up to 31st March 2021.

What it means for you?

The Corona Kavach policy provides a comprehensive scope of coverage against COVID compared to normal health insurance plans. It covers the cost of consumables incurred on hospitalisation as well as home hospitalisation expenses which are not covered under normal health plans. Moreover, Corona Rakshak gives you a lump sum benefit to meet other financial expenses that you might incur. The facility of renewal is beneficial for you as you can extend your coverage till the vaccine is developed and you don’t fear the threat of infection.

Change #2 – Portability benefit

IRDAI has also allowed policyholders to port their existing Corona Kavach and Rakshak plans from one insurance company to another if they are dissatisfied with their current insurance company. Porting is also allowed from an existing Corona Kavach or Rakshak policy to a standard indemnity oriented health insurance plan. When the policy is ported, the new insurance company should allow a reduction in the waiting period in the new plan for the waiting period already applied in the existing policy. Policyholders are also allowed to increase their sum insured at the time of porting.

What it means for you?

With the option of portability, you can switch to another insurance company if you are not satisfied with the current company. You can also find a lower premium offered by another company for the same policy since insurers price their Corona Kavach and Rakshak policies differently. So, porting allows you the option of choosing the best insurance company for your coverage.

Change #3 – Migration

Through migration facility, you can convert your Corona Kavach or Rakshak plan to a standard indemnity health insurance plan which covers other illnesses besides COVID. Migration, therefore, allows policyholders to change their COVID specific plans to normal health insurance plans and expand the scope of coverage. When you migrate, you can carry forward the waiting period of the existing plan to the new plan. The premium would change when you migrate as the scope of coverage increases. Moreover, the new policy might have sub-limits on room rent and pre-existing waiting periods which you should factor in before you choose to migrate. You would be allowed to enhance the sum insured on migration but if the sum insured is increased, the waiting period would apply again on the increased amount of coverage.

What it means for you?

This is a beneficial change as it allows you to convert your COVID policy to a more comprehensive plan when your COVID coverage need is fulfilled. Thus, you can enjoy wider coverage and also enjoy the continuity benefit of the existing policy.

These changes by the IRDAI have widened the scope of both Corona Kavach and Rakshak health insurance policies and made them more customer-friendly. These plans now offer better benefits and you can insure yourself and your family under these policies to protect against COVID and its related expenses.