February 2021 - Turtlemint

Violating Traffic Rules? You might end up Paying a Higher Motor Insurance premium

February 22, 2021March 23, 2021 Sidharth Hampanavar

The Insurance Regulatory and Development Authority of India (IRDAI) continuously makes changes in insurance plans to make them relevant to the changing dynamics of the market. Recently, with respect to motor insurance plans, IRDAI appointed a working committee to draft a proposal which would link your driving history to your motor insurance premium. Let’s have a look at what the committee has proposed.

Proposals of the working committee

A new section called the ‘Traffic Violation Premium’ (TVP) would be inserted into a motor insurance policy’s premium break-up. This section would record additional premium payable depending on your history of traffic violation
The TVP section would be included in both comprehensive and third party liability plans
The history of traffic violations over the last two years would be considered
In case of new vehicles, the TVP would be applicable from renewal
In case of second-hand vehicles, the TVP would be calculated after the vehicle has been sold to another individual. It would be applicable at the time of renewals
Even if you give your vehicle to another individual, any offence committed by another driver would reflect on your policy premium

How would be the TVP calculated?

To calculate the Traffic Violation Premium payable by you, a point system would be devised. There would be specific points for a specific violation. For example, according to the draft designed by the committee, 100 points would be allotted for drunk driving while wrong parking attracts only 10 points. The points would keep on accumulating over the policy year for the violations that you make. On renewal, the points would be aggregated. If you have up to 20 points, additional premium would not be charged. However, if your points are 21 or more you would have to pay the additional Traffic Violation Premium.

For two-wheelers, the additional Traffic Violation Premium ranges between INR 100 and INR 750 while for four-wheelers, both private and commercial, the premium can range between INR 300 and INR 1500.

How would the system work?

The committee stated that the Insurance Information Bureau (IIB) would co-ordinate with the traffic police of different States as well as the National Informatics Centre. The IIB would collect the data of traffic violation and calculate the violation points of every vehicle. This information would, then, be shared with general insurance companies offering motor insurance policies so that they can charge the Traffic Violation Premium when they issue the policy for the respective vehicle.

Objective behind this move

The main objective behind implementing the concept of Traffic Violation Premium is to make individuals aware about traffic rules. This move is expected to reduce traffic violations and make Indian roads safer. The additional premium would discourage traffic offenders who manage to dodge traffic penalties as their insurance policy would become expensive for their habits.

In many foreign countries, the motor insurance premium is linked to the driver’s driving history and by bringing this system in India, IRDAI is trying to match motor insurance policies with international standards.

What it means for you, the customer?

As a customer, you can benefit from a reduction in premium if you have a clean record. Though the committee has not mentioned it in their proposal, experts believe that insurance companies would give good drivers a discount in their premium while penalizing offenders. So, if you clear your driving history, you can benefit from reduced motor insurance premiums.

Though the proposal is still in the development stages, it is expected to be rolled out, on a pilot basis, in National Capital Territory Delhi. So, let’s see when and how the proposal unfolds but for now, try and avoid traffic violations as much as you can. If the proposal is implemented, your traffic history would increase your premium.

A Millennial’s Guide to Health Insurance

February 22, 2021March 23, 2021 Ankita Sejpal

Millennials have become aware about the importance of a health insurance policy. They understand the need of a financial cover if medical emergencies strike and so, they are investing in a health plan for themselves as well as their family. Health insurance, however, is a technical cover and so, here is a simple guide to the policy if you are thinking of investing in it –

There are different types of plans
Health insurance is not only available for covering your medical bills in case of hospitalisation, there are different plans that you can avail of for comprehensive coverage. Besides the basic plan for covering hospitalisation, you can buy critical illness cover for protecting against major illnesses. Then there are COVID plans if you are worried about being infected. So, expand your coverage. Opt for other plans and build a layered coverage against medical contingencies.
Check for sub-limits
Some health insurance plans impose room rent sub-limits which restrict your coverage. Check for these sub-limits. Try and avoid plans which have such limits because your claim would be considerably affected if the actual amount exceeds the limit. Moreover, there are coverage limits on various benefits like ambulance costs, maternity expenses, AYUSH coverage, domiciliary treatment, etc. Check the limits when buying and try and opt for a plan which has a higher coverage limit so that your out-of-pocket expenses reduce.
Riders are beneficial
Health insurance plans allow optional riders that you can choose by paying an additional premium. Riders like critical illness cover, maternity and new born cover (if you are planning a family), personal accident cover, etc. make for good coverage additions as they provide a wider scope of coverage. So, look for the available riders and try and add them for an inclusive coverage in your policy.
A healthy lifestyle is rewarding
Modern day health insurance plans reward you for living a healthy life. Daily exercising, walking, meditation, Yoga, balanced and nutritious meals, etc. not only keep you fit but also help in reducing your health insurance premium. So, if you are a health conscious millennial, use your healthy lifestyle to get rewarded under your health plan. If not, it’s time you adopt a healthy lifestyle, both for your health and your wallet.
Insure parents separately
If you are buying a health insurance plan, try not to include your parents under the same cover. There are two reasons for this –
1. Since your parents would be the eldest members, the premium would be calculated based on their age. This would drive up your health insurance cost
2. If they make frequent claims on the policy, you would not be able to accumulate the no claim bonus
So, opt for a separate health plan for your parents and buy another plan for yourself. Besides ensuring a suitable coverage, you would also be able to avail additional tax benefits on the premium paid.

Don’t depend on your group health plan only
If you are employed, your employer might provide you with a group health scheme. Though the plan provides the basic coverage, the coverage is limited and not customizable. Moreover, the coverage is available for as long as you are employed. Invest in an independent policy so that you can get optimal coverage that can also be renewed life-long.

Understand the basics of health insurance and invest in a suitable policy. You might be a modern age individual in the prime of your health but, remember, contingencies come unannounced. Prepare yourself against medical contingencies by investing in health insurance plans. Believe me, you would be thankful that you did!

Buying Health Insurance? Use this checklist

February 9, 2021March 23, 2021 Rupanjali Mitra Basu

Buying a health insurance policy is important to face the rising medical costs. Thankfully, this awareness is slowly spreading across the Indian population and people are investing in health insurance plans for financial protection. However, when it comes to buying health insurance, buying the right policy is important so that the policy delivers on your expectations. Your health insurance purchase decision should, therefore, be backed by careful consideration and research.

For simplifying the health insurance purchase process, here is a complete checklist which can guide you to buy the right plan –

Choosing the right type of policy
Health insurance plans come in different variants. As such, the first step is to pick the right type of plan. Here are some tips to do so –
- If you don’t have health insurance coverage at all, buy a family floater health insurance plan.
- If you have a health plan but the coverage is low, you can opt for super top-up health insurance plans. These plans would help in increasing your coverage at affordable premiums
- Critical illness health insurance plans are also essential as they pay a lump sum benefit in a critical illness. Add these plans to your portfolio for added protection
Opt for an optimal sum insured
After deciding on the type of policy, the next step is to choose an optimal sum insured. Remember that the health plan would cover you only up to the chosen sum insured. Given the high medical expenses, a high sum insured is essential. If the high premiums make a high sum insured difficult to avail of, go for super top-up plans and supplement your coverage. Whatever you do, ensure that your coverage is sufficient to cover the expensive medical treatments.
Cover all the family members
The next step is to ensure that all family members are being covered under the health insurance policy. Don’t leave any member out. For parents, opt for a separate senior citizen policy. Do not include them in your family floater policy as it would drive up the premium and eat into the no claim bonus. Moreover, a separate plan would also give you additional tax benefits. So, buy a floater plan covering yourself, spouse and dependent children and another plan for your parents.
Check the coverage benefits
You should ensure that the health insurance plan has all the necessary coverage features that you and your family needs. If, for instance, you would are planning to have a child in the near future, ensure that the plan allows maternity coverage. Similarly, if there are frequent consultations and outpatient treatments, check for OPD coverage. The plan’s coverage benefits should suit your coverage requirements so that all possible medical costs get covered.
Also, health plans allow optional coverage benefits too called riders or add-ons. Check the riders available in the plan. If the riders are suitable to your needs, add them to your basic plan for an enhanced coverage. For example, if you want coverage against critical illnesses and the plan offers the critical illness rider, choose the rider and get covered against critical illnesses. Similarly, the maternity cover can also be offered as a rider which you can choose if you would be planning a family in future.
Check for coverage sub-limits
Many health plans impose a sub-limit or restriction on their coverage benefits. The most common example is the room rent sub-limit. These sub-limits restrict the scope of coverage and incur out-of-pocket expenses. So, check the sub-limits applicable under the plan. Try and avoid plans with sub-limits, especially in case of room rent. Except room rent sub-limit, if there are other limits in the plan, like limit on ambulance cost, domiciliary treatments, AYUSH coverage, etc., check the extent of such limits. The higher the limit, the wider would be the scope of coverage.
Check the no claim bonus and health check-up benefit
Health plans allow no claim bonus if no claim is made in a policy year. This bonus can either be an increase in the sum insured or a reduction in the renewal premium. Check the bonus allowed. Try and opt for cumulative bonus which increases the sum insured free of cost.
Moreover, free health check-ups are also allowed either annually or after 2-4 continuous years. Look for the limits of such check-ups and their frequency.
Check the hospital list
For cashless claims you need to take treatments in a networked hospital. So, when buying health insurance, consider the hospital network list. Ensure that the hospitals in your city and locality are featured on the list so that you can avail easy cashless settlements in emergencies.
Check the exclusions
Knowing what is covered under the plan is not enough. You need to know what is not covered as well. Check the exclusion list of the policy to find out what the policy won’t cover. Check the pre-existing waiting period, especially if you or any family member suffers from a pre-existing condition, to know when such conditions would be covered by the plan.
Compare the premium
Lastly, compare the premium charged by different health insurance plans when buying. Compare the premiums vis-à-vis the coverage benefits to ensure that you don’t miss out on the coverage while seeking out the lowest premium. Choose a plan which offers the widest scope of coverage at the lowest premium rate.

Tick off all the above-mentioned points when buying a health insurance policy. The checklist would ensure that you get a right policy which would cover you against medical eventualities. After all, if the plan is right, you get complete financial security, don’t you?

2020 – The year of Digitization and Standardization in Insurance

February 9, 2021March 23, 2021 Sidharth Hampanavar

The year 2020 was in the news for the Coronavirus pandemic, an unprecedented event which rocked the whole world. While the world was reeling from lockdowns, infections and deaths, the insurance industry reinvented itself. The pandemic revolutionized both the products and practices of the insurance industry. Whether it was life insurance or health insurance, the industry witnessed standardization in products and digitization of operations. Let’s have a look at how the industry reinvented itself in 2020 –

Health insurance segment

The health insurance segment saw the launch of standardized insurance plans and policy clauses. Here’s a look at the major developments in the health insurance segment –

The launch of the Arogya Sanjeevani policy
To offer uniform coverage benefits under a single plan, the Insurance Regulatory and Development Authority of India (IRDAI) asked insurers to launch a standard Arogya Sanjeevani policy. The policy allows coverage of up to INR 5 lakhs and has uniform coverage benefits across insurers. Only the premium differs based on the company’s pricing policies. The Arogya Sanjeevani policy, therefore, offers standardized coverage for someone looking for a basic health cover.
Launch of COVID specific health plans
Understanding the need of coverage against COVID, the IRDAI introduced two standard COVID-oriented plans – Corona Kavach and Corona Rakshak. While the former is an indemnity oriented policy without deductibles or limits, the latter is a fixed benefit plan that pays the sum insured in lump sum in case of hospitalisation for 72 hours or more due to COVID. Both these plans are short-term plans that have standard coverage features. Like Arogya Sanjeevani, the premium for these policies differs across insurers.
Inclusion of telemedicine
To ease up OPD consultations during the pandemic, IRDAI asked insurers to include coverage for telemedicine if the plan allowed OPD coverage. This made health plans more inclusive in their scope and also allowed policyholders to avail of digitized treatments without the risk of infection.
Introduction of instalment premiums
To increase health insurance penetration and to make health plans affordable, the concept of instalment premium was launched. Now, policyholders can opt to pay premiums in monthly, quarterly or half-yearly instalments if the annual premium is too heavy on their pockets.
Standardization of policy clauses
To ensure that policyholders understand the technical nature of their health insurance plans easily, IRDAI standardized various clauses. The concept of pre-existing illnesses, policy exclusions and proportionate deductible in room rent was simplified. An indisputability clause was added which limited the power of insurers to reject claims after 8 years of coverage. Moreover, the health insurance policy was made more comprehensive by the inclusion of mental illnesses and modern treatments under the purview of the plan.

These changes have made health insurance plans more customer-friendly which have also driven up the demand of these plans.

Life insurance segment

In the life insurance segment too, standardization and digitization were observed in insurance policies. The life insurance segment saw two major changes which are as follows –

Elimination of wet signatures
In the time of social distancing and lockdowns, the need of physical signatures was replaced by digital signatures in proposal forms. Life insurance plans, thus, became digitized allowing customers to buy the policies without having to step out from their homes. Insurance companies resorted to video calls and email verification links to sell insurance policies entirely digitally so that the consumer’s needs could be met remotely.
Introduction of a standard term plan
Following in the footsteps of the health insurance industry, the IRDAI introduced the concept of a standard term insurance plan called Saral Jeevan Bima. The idea of the plan was launched in 2020 though the plan itself was offered for sale from 1st January 2021. Saral Jeevan Bima, thus, became the first standard term plan, with uniform coverage benefits across insurers.

The year 2020 was, therefore, the year of standardization and digitization in the life and health insurance industry. It has paved the way for a more developed and consumer-friendly market so that insurance penetration in India increases over the coming years.