in Finance, Insurance

Is it just your insurance company’s fault?

Do we always have to blame insurance company? Guest author Shalin Tejpal Jain shares his experiences below.

  • “The insurance agent mis-communicated to me the product features and is now not responding to my calls.”
  • “The insurance company is not addressing my complaints.”
  • “The insurance company is not refunding back my premium.”

Aren’t these the common set of woes we hear from the insurance policyholders who say they have been cheated by the insurance companies? For most of us it is a tendency to blame the seller in case any product or service we bought didn’t turn out as it was expected to. The reason why there are a high number of insurance policyholders who’re not happy with their insurance products is because unlike buying other products and services, they do not understand the insurance product before buying it. Quite often it has been noticed that customers do not care to thoroughly go through the insurance plan’s brochure/leaflet before deciding to buy. They blindly believe the insurance agent and in some cases then skim through the brochure/leaflet to portray that they have gone through the product and understood it very well. To add to this, there have been innumerable cases where the customer simply fills in the personal details, signs the insurance application form and asks the insurance agent to fill in the rest of the details. And in certain cases, customers do not even care to fill in the personal details such as name, DOB (Date of Birth), communication address, etc. They simply sign on the application form and ask the insurance agent to fill in all the required details including personal details based on the documents of proof provided by him/her. Keep reading if this sounds anything familiar. SO, WHERE EXACTLY THE PROBLEM LIES? How many insurance policyholders even care to read their policy documents once they buy the insurance cover? Is it justified? And then amidst all this, we blame the insurance company for cheating us. This is not to justify mis-selling but as buyers, isn’t it our duty to ensure that we try and understand all the required details of the insurance product(s) we buy. It’s a familiar sentiment that the terms and conditions in the insurance policy documents are difficult to understand for someone who has no insurance background or any financial services background. But here’s the fact – it does not require any thorough knowledge of insurance domain or financial services to understand insurance products. There have been umpteen number of cases where the grievances are not on account of the typical insurance related terms and conditions mentioned in fine print, but on account of basic insurance cover features including payout of benefits, premium payment frequency, premium amount, type of product, etc. A quick question – Do we require an in-depth knowledge of insurance domain in order to know and understand the above mentioned basic details of an insurance plan? Spending just 15 minutes on our insurance policy document shall help us address any grievances if we think that the product cover we bought is not what we actually intended to buy. And remember, we always have the 15 days free-look option from the date of receipt of policy document to ask for a refund of premium. DID YOU IGNORE THESE WHILE BUYING INSURANCE? Quite often, buyers ignore or don’t care much about the below mentioned three basic stages of buying an insurance cover:

  • Understanding features of the insurance product including the benefits, term of the policy, premium amount, etc.
  • Duly filling the insurance application form.
  • Reading the policy document once an insurance cover is bought.

Now, is it fair to blame the insurance company alone when we ourselves didn’t put in considerable efforts to ensure that we buy the right insurance product that suits our needs? For an easy reference, below given is a checklist that includes a minimum set of things a buyer should verify while buying an insurance product:

Stage 1: Understanding the ProductStage 2: Filling the proposal/application formStage 3: What all to check once the policy document is received?
  • Type of the product – ULIP / Traditional (Endowment Plan) / Term Insurance.
  • Type of Premium – Single / Regular / Limited Premium.
  • Term of the plan.
  • Key Features.
  • Benefit Payouts – in the event of death and/or maturity.
  • Premium Payment Frequency – monthly / quarterly/ annually.
  • Premium payment term.
  • Tax benefits.
  • Premium amount.
  • Applicable charges, if any, under the plan.
  • Benefit Illustration, if applicable.
  • Duly fill in the personal details.
  • Correctly mention the address of communication.
  • Clearly write the proposed sum assured amount.
  • Fill in the required details of the insurance plan that you intend to buy (don’t leave it upon the insurance agent to do it).
  • Correctly and honestly answer the health related questions asked in the application form.
  • Name and other personal details of the policyholder and the life assured.
  • Name and type of the insurance plan.
  • Premium amount.
  • Type of Premium – Single / Regular / Limited Premium.
  • Premium Payment Frequency – monthly / quarterly/ annually.
  • Term of the policy.
  • Sum Assured.
  • Benefit Illustration, if applicable and the signature of the policyholder on the same.
  • Nominee’s name.
  • Details of the fund opted for, if applicable.
  • Exclusions, if any.

During Stage 3, if you find a discrepancy between what you opted for in the insurance application form (a copy of which is also attached in the policy document) and what has been actually mentioned in the policy document, quickly get in touch with the insurance company and exercise the free-look refund option. You only have 15 days from the date of receipt of policy document to request for a free-look refund. Also ensure to write the correct address of communication in the insurance application form so that the policy document reaches you on time and you can verify it and act accordingly. About the author: Shalin Tejpal Jain is an insurance professional and a blogger. He runs India’s first stand-alone insurance complaints forum, On the forum, insurance complaints are addressed by an Insurance Experts Team, representatives of Insurance companies and other members.

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  1. I have one query on one of the insurance policy ( new india assurance ) that has been provided by my corporate for covering myself and family dependents. As per policy – there is a co-pay applicable for all claims for parents.

    The sum insured amount for family was 5 Lacs. during the course of the year – i submitted various claims. For the last claim – the limit remaining was 3.13 Lacs. when i submitted a claim of 3.78 Lacs – to my suprise – they paid me 3.13 Lacs – 15% ..while i was expecting ( 3.78 – 15% of 3.78 ) subjected to a cap of limit remaining i.e 3.13 lacs.

    In other word if some body presents a claim of 7 lacs under this policy he will get 5 lacs or ( 5 lacs – 15% of 5 lacs ).

    Could you please clarify. I felt strongly cheated by the insurance company as i understand hat co-pay means to share the claims amount but it should not reduced the sum insured.

    • @Ajit
      Most of the insurance companies follow the same practice in co-payment. Most of the employer provided policies have this catch.
      Therefore its always advisable to have your own medical insurance policy without any co-pay clause.

    • Most of the general insurance policies including health insurance policies have a “deductibles” clause like the one you have mentioned above… If not, the premium will be relatively higher and a few more T&Cs will be included. Insurers typically do these to avoid fraudulent claims…

  2. Thanks Pankaj for your reply..

    I have couple of comments and queries

    1) what is the standard industry practice for co-pay ?. I have googled it a lot but unable to find a industry standard document or IRDA guidelines on this. My perspective in co-pay is ..if i am already paying from my pocket an amount that should be considered as a co-pay. As an example – I have a policy cover of 5 lacs and i had a medical bill of 7 lacs. The 2 lacs extra for the bill anyway i am paying why the insurance company is deducting another 15% co-pay from 5 lacs.

    2) In India – apart from corporate company issues a policy for elder parents and even if they issue they have lots of clauses and condition which are practically impossible to met ( as an example – will not pay for existing diseases for 5 yrs etc …)

    • @Ajit
      1. Corporate policies don’t have any standard practice but are formed based on agreement between insurer and company. Most of the employers have their own policy with different conditions on co-pay, maternity, parent inclusion, child inclusion etc.
      You are right in saying that if you are already paying from your pocket, then co-pay should not come into picture after deducting max coverage amount. Unfortunately insurers are not that consumer friendly and they try to save their money by creating such rules.
      It would be better if you can get a copy of detailed policy document from your employer and study that. If same rule has been mentioned in it, you won’t have any option. If its not mentioned on policy, Try to raise your concerns with company HR and they may be able to settle it with insurance company. Or raise a complaint against insurer with IRDA.

      2. Because of high medical expenses at old age, no insurance company want to take risk with their profits. So they discourage senior citizen policies and if they good coverage, they charge huge amount for same. That’s the reason its said that one should take medical insurance as early as possible in life.

  3. What’s about when we buy the insurance policy with monthly premium mode by ECS and insurance company did not present any ECS in our bank account and said after sometime that your policy has been lapsed and that policy bought from same bank where the ECS should be present by insurance company?

  4. Sir,
    I have invested in ICICI Pru Pinnacle Super High NAV Fund B ULIP. 10yrs policy term / 50k yly premium for 5yrs / 2.5 Lac insurance cover. Is it worth to keep in force. Please advise.

    • All ULIP Plans are very costly and expensive. Just ask the Agent who sold you the policy that if you gave you 100 rs as a premium – how much of that will be invested in the plans & how much will be the fund managment , Premium allocation charge , Mortality charges. In some cases the charges are as high as 25% for the first few years.

      My suggestion would be
      1) Buy a Pure Term plan. For 5000 rs a Year – You may get 15-20 lac of Insurance cover

      2) Invest in Mutual funds ( Debt/Equity ) or Recurring deposits or Corporate deposits for good return over a period of time

      • @Kedar
        I agree to Ajit’s comments.
        ULIP are bad product both for investment or insurance.
        If you have already invested a huge amount in ULIP, don’t exit it and stay invested for long term. Stop all future premium payment. Pay only till 3-5 years (till which payment is mandatory).

        Get a term insurance for risk coverage and invest into mix of equity and debt based mutual funds for growth.

    • @ Kedar – When did you buy this ULIP plan? If it’s after Sep. 2010, there will be a minimum premium payment term of 5 years, otherwise 3 years. If you stop your premium payment prior to that, your policy will go in to lapsation stage and after 2 years, surrender value will be provided or paid premium will be shifted to insurer’s policy discontinuance fund.

  5. Sir Can we buy Term insurance from same insurance company as the one I have already bougth ULIPs for different stages. endowment , child and pension.

    • @Prabhu
      Most of the insurance companies sell term plans as well apart from ULIPs, endowment, children and retirement plans.
      You should be able to buy term insurance from same company.

    • Yes… You can buy term plan from the same insurance co. If it’s a term plan, also check online term insurance plans. They’re relatively cheaper. Also ensure to compare the term plans of a few insurers before buying one.

  6. I have invested in SBI ULIP for 15 years paying a premium of 25k annually. The fund value as on date is equal to the investment value. would like to whether it is advisable to continue the policy or exit out

    • @ Annapoorani – ULIPs typically should be seen as a long-term investment. So, either you can hold on to your ULIP plan (based upon your planned financial needs) or ditch it to buy a term cover and a mutual fund. Also, consider the charges that are currently applicable under your plan, performance of your ULIP, sum assured, etc. and then decide upon your course of action.

  7. Hi pankaj

    I want to know why some companies pay less for same premium and some other companies pays very high – for eg, child plan if we pay 20k the sum assured is 10lacs some other companies pay 25- 35lacs, can we trust these companies

    • @Aravind
      Each company have different operating margins, risk ratio, use different mortality charts etc, on basis of which premiums are computed.
      New companies may give more sum assured for less premium in order to attract more customers.

      • Dear Pankaj

        Thanks for the reply, people call me for investing in insurance, but i dont get the clarity in which plan to invest in, can u suggest, which insurance would be good for me and my family, i have invest in 2 insurance 1. Child plan 2. retirement plan. can suggest me good insurance plan.
        Thanks in advance
        Aravind S

        • @Aravind
          Only insurance good for your family is Plain Term Life insurance. Any insurance plan mixed with investment is not that good.
          For investment purposes better invest into Equity mutual funds, PPF and NPS.

  8. Pankaj Sir,
    I want to share an important issue with this forum: One Mr. Omar Ali purchased a life insurance policy(Pol.No. 004482496 SA: 3.789Lacs) on 28-10-2010 from Birla Sunlife Insurance, Barpeta branch, Assam where he nominated his cousin Abdul Latif and died on 25-01-2011 leaving behind two small daughters with his poor wife Ms. Shajeda Begum. The policy was in force and the said company settled the death claim through the concerned branch and a cheque was issued on 31-03-2011 in the name of the nominee, Abdul Latif. Ms. Shajeda Begum handed over the policy bond and other supporting documents to the nominee for speedy settlement the claim and kept nothing with her. But the nominee became belligerent when he received and encashed the cheque saying that he neither knew about such policy nor did he encashed any such cheque i.e. he is refusing altogether about all this things. Ms. Shajeda Begum met the Branch Manager(BM) with an application u/s 4 of the RTI Act. and prayed for a proof in support of the death claim settlement but the BM didn’t receive the application saying that the branch is not authorised to receive such application and disclose any information ( off course he admitted verbally). Pls help by giving opinion and suggestion.

  9. I have made a proposal with eagon religare to purchase online term insurance of 60 lakh on 11/06/12.My proposal 512073029429.I have made online payment of premium towads this proposal on 11/07/2012.I have send cancel request to insurance company before my medical test doen due to non cooperation from insurance company.They do not handle my proposal propely.I want to know that after how many days i will get refund of my money?Is any amount will be deucted by insurance company? If insurance company do not pay me refund within stipulated period to whom & where should i complaint to getmy refund?

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