Today we live in a fast-paced, stress-filled life and we are knowingly and unknowingly exposed to many risks to life, health and property. Managing these risks becomes an essential aspect of our wealth management journey in life. Risks can be mitigated in many ways like taking precautionary measures, avoiding risks or by transferring risks. Insurance is one way of managing risks where we are transferring the financial risk from the insured to the insurer. 

There are many different types of insurance available in India, and it can be difficult to know which ones you really need. As an important tool for financial security, individuals and businesses can protect themselves from financial hardship in the event of a covered loss by choosing the right insurance policies. In this article, we will try to understand the different risks faced by us, how we can protect against the same and the benefits of buying adequate insurance.  

The 4 Ds of Risks:

Insurance protects against the financial risks at a personal level arising from the four Ds of death, disease, disability, and damages in a variety of ways.

Death: 

Life insurance is the most important type of insurance for everyone, regardless of age or income. Life insurance provides financial support to the policyholder's beneficiaries in the event of the policyholder's death. This can help to pay for the comfortable sustainance of the family left behind, cover for the outstanding debts/obligations, and also cover the financial goals for the family to live a respectable life. 

The risk of death is typically best covered by pure-term insurance policies. However, life cover can also be obtained under personal accident policies for death occurring due to accidents and traditional life insurance plans which is a blend of protection and investment and may thus not provide the maximum affordable protection desired.  

Disease: 

Health insurance helps to pay for the cost of medical care, including hospitalization, any operations/surgeries, doctor visits, prescription drugs and so on. This can help to prevent financial hardship in the event of a serious illness or injury. Proper health insurance would also give you access to quality medical care even if your personal finances are limited and thus can prove to be invaluable when needed.   

There are two main types of health insurance plans in India: individual health insurance plans and family health insurance plans. Individual health insurance plans cover only one person, while family health insurance plans can help cover the entire family. Critical illness plans are also great to have to protect against the common big lifestyle diseases we are exposed to and are very affordable. The base health insurance policies can be further complemented with top-up and super-top up health plans to extend the cover available.    

Disability

Disability can be permanent or temporary and can be partial or full. Disability brings with it its’ own challenges in terms of care, the ability to live life normally and the ability to earn. Adequate protection against these risks becomes very crucial for everyone, especially the earning members of the family. Traditionally, disability is a risk most of us often ignore and can prove to be very costly.   

Personal accident policies provide the best cover against disability, whether temporary or permanent. Moreover, such policies are affordable and easy to buy. Further, some health and personal accident policies may even provide you for your loss of income during hospitalisation or disability. Agains the personal accident policies also provide cover against accidental death and are very affordable - something everyone must have in their insurance portfolio.     

Damages

A damage or loss to any property/asset can occur due to any reason. There are risks to your car, home, valuables, shop, factory and so on. Adequate protection isrequired to cover the risk of damages. Thankfully, on motor insurance, at least third-party liability is mandatory for all vehicles in India which protects the policyholder’s interests from damages caused to a property or an individual by the policyholder. We would always suggest one to buy a comprehensive motor insurance policy though. Home insurance is another product to protect you against damages and typically cover should be taken for both the structure and the contents. Beyond vehicle and home coverage, there are many other policies available that business owners and professionals can buy depending on their specific requirements and can cover shops, factories, offices, professional indemnity, travel, and so on.   

Benefits of Insurance: 

By now, everyone would be familiar with the numerous benefits of insurance. Yet, to summarise, we would highlight the three key benefits offered by insurance…. 

• Financial protection: Insurance can help you to pay for unexpected expenses and emergencies. This can help you avoid going into debt or having to sell assets in order to cover these costs. Insurance acts as your umbrella at a small cost.
  

• Continuity: Insurance is your hedge against financial shocks. With adequate insurance, financial distress and disruptions in life can be avoided, ensuring continuity of life at comfortable levels, even after the occurrence of the event.  
  

• Peace of mind: Insurance can give you peace of mind knowing that you are financially protected in the event of a loss or tragedy. This can allow you to focus on other things, such as your family, your business, or your hobbies. It gives the confidence and the ability to afford critical medical intervention which may otherwise be difficult in the absence of insurance.
  
• Tax benefits: In some cases, premiums paid for insurance can be tax deductible. This can help to reduce your overall tax burden. However, tax savings should never be seen as the primary factor for insurance purchase and shoud only be seen as a by-product or side benefit.  

Buying Insurance: 

We hope this article has helped you to understand the different types of risks faced by us and the options available in insurance to protect ourselves against the same. Before choosing the right insurance plan, we would advise you to have a proper understanding of your needs - the type of insurance policies and the amount of coverage required. Next, look out for and compare policies from different insurance companies before you buy. Make sure that you read and understand the terms and conditions of the policy before you sign on the dotted line. We would recommend that you evaluate your insurance portfolio at least every couple of years and update your portfolio as needed. Your trusted insurance advisor /broker can be of great help in the process of understanding your insurance needs and finding suitable products. Needless to say, this is one critical aspect of wealth protection which you cannot afford to ignore. 

Insurance is the cornerstone of financial security, offering individuals a safety net against life's uncertainties. At its core, insurance is built on principles of transparency, good faith, and accurate information exchange. When purchasing an insurance policy, individuals are required to disclose all relevant information to their insurer. This practice, known as the disclosure of material facts, forms the foundation of a fair and equitable insurance contract. 

However, just like any contractual agreement, the omission of relevant information or the non-disclosure of material facts can have serious repercussions for both policyholders and insurers, undermining the very foundation of trust that insurance represents. In this article, we will explore the significance of disclosing material facts and the potential consequences of failing to do so.

Understanding Material Facts:

The contract of insurance is based on the doctrine of ‘Utmost Good Faith’, which means a person applying for an insurance cover has to disclose and reveal all material information required by the insurance company. Material Information means all the information based on which the underwriter accesses the risk profile of the person and decides to accept the risk and issue the insurance policy or decline the same or to determine the terms and conditions of coverage, and establish appropriate premiums. Examples of material facts relevant for an individual would include a person's profile like age, personal & family medical history, occupation, hobbies, criminal record, etc., and other information like income, previous claims, policies from other insurers, and so on, depending on the nature of insurance policy. 

Insurers heavily rely on the accuracy of the information provided by policyholders during underwriting to assess risk effectively. Policyholders have a legal and moral duty to provide complete and accurate information to their insurers during the application process. This duty is outlined by the IRDAI guidelines and is applicable to all types of insurance, be it life, health, or general insurance. 

Consequences of Non-Disclosure

Non-disclosure of any material facts may result in the policy being considered null and void from the very beginning and the insurer will not pay out any claims or return any premiums. Policyholders will be left without the protection intended and financial well-being may be compromised. Non-disclosure can also lead to claim denial leaving the policyholder to bear the entire financial burden. It can also affect a policyholder's ability to obtain insurance in the future as insurers have access to shared information and a record of non-disclosure can make it challenging to secure coverage or result in higher premiums. Thus, it becomes very important that accurate and complete information is shared in the proposal form. 

Understanding the Reasons Behind Non-Disclosure:

Non-disclosure of material facts in insurance in India can occur for a variety of reasons as we we can see below:

1. Lack of Awareness/ Misunderstanding: Many policyholders may not fully comprehend what constitutes a material fact due to a lack of awareness or misunderstanding. They might unintentionally and unknowingly withhold specific information required to be revealed in the proposal form. Few might encounter difficulties in understanding or accurately filling out the proposal form because of language or literacy challenges. Additionally, some may presume that some information may be irrelevant and not important to be mentioned. 

2. Intent to Quickly Fill Forms: Some people may view the proposal form filling and the disclosure procedure as time-consuming and difficult. They may take the entire process casually and refrain from delivering complete and accurate data while filling out lengthy forms or providing extensive information. Policyholders who are anxious to get insurance may speed up the application procedure and omit crucial information because they believe it to be unimportant. 

3. Intentional Fraud: In certain cases, policyholders may purposefully omit relevant information to influence the underwriting procedure in order to get coverage or cut premiums under false pretenses. Other times, even brokers or insurance agents would encourage policyholders to omit information in order to hasten the approval procedure or close a deal.

4. Confusion or Forgetfulness: Policyholders might genuinely forget to mention certain details. There might also be instances where people do not really have a complete understanding of their medical history and status. 

5. Depending on Others to fill the Form: There can also be instances where some important information is missed when the proposal form is filled by someone else, likely the insurance agent /broker or say a relative of the applicant. Such a scenario may arise when the applicant is uncomfortable filling out the form due to literacy or language limitations.

How to avoid non-disclosure?

As we can see from the reasons for non-disclosure of material facts, it becomes clear that the same can be easily avoided once we understand the importance of full and fair disclosure. The best way to do this is to take appropriate time to properly read and understand every piece of information asked carefully. You may seek clarification from your insurance agent if something is not clear. Please do not hurry and take time to remember any past medical history, ask spouse and parents for relevant information if you are not sure. Having an experienced insurance agent from a reputed firm also helps a lot in ensuring that the proposal form is properly filled. 

Bottom Line

In summary, material facts are essential as they enable insurers to make informed decisions and ensure that insurance contracts are fair and equitable. Both policyholders and insurers must uphold the principle of utmost good faith, fostering transparency and trust. If everyone gives proper information, the pricing of the policies can be appropriately made and the overall premiums would also become more affordable for everyone. Applicants should understand that failure to disclose material facts can have severe repercussions in times of need and thus is never a wise thing to do. Lastly, a good insurance agent /broker can be of great help not only during the application process but in the entire journey from understanding the need, finding suitable policy cover, helping in the application process, and then especially in the claim process helping you manage all comfortably.

Health insurance has always acted as a crucial safety net, giving people and families access to financial security against unanticipated medical expenses. Despite its importance, there are still many complaints that arise in the world of health insurance. Policyholders frequently experience difficulties and annoyances due to a variety of reasons, such as coverage restrictions, claim rejections, postponed settlements, and insufficient customer service. 

When there is a perceived mismatch between policyholders' expectations and the services offered by insurance firms, grievances related to health insurance arise. These grievances can undermine the intended purpose of health insurance, creating stress and financial burdens on individuals when they are in need of the most support. In this article, we will bring light to some of the common challenges or grievances that buyers of health insurance policies may experience if they are not careful and have not been fully honest.

1. Mis-selling: When an insurance advisor gives the policyholder inaccurate or misleading details about a policy's features, benefits, or terms, this is known as mis-selling. This may result in the policyholder buying a policy that does not meet their needs or may not offer the coverage they had been expecting for. Thus, individuals should be cautious when buying insurance coverage to safeguard themselves from mis-selling. It's crucial to thoroughly understand the policy terms, read the fine print, ask questions, and compare policies from different insurers before making a decision. In order to make sure they select the insurance products that best suit their needs and financial objectives, one can make sure that you are dealing with established and reputed brokers in the market. 

2. Wrong Policy Documents/ Copy: This complaint happens when an insurance policyholder pays the premium but does not receive the policy copy as intended. Alternatively, they may receive a policy document that contains inaccurate information about the policyholder, the scope of coverage, or the type of policy. In these situations, receiving the appropriate policy paperwork is essential for ensuring the validity and accuracy of the policyholder's coverage.

The policyholder should speak with the insurance advisor or the insurer right away to get this anomaly resolved. To assist the organization in locating the payment and determining the problem, they should offer documentation of premium payments as well as all pertinent information. Policyholders should constantly double-check their personal, contact and other crucial information before giving it to the insurance firm to avoid such problems. They should also keep track of any premium payments, correspondence with the insurance provider, and other pertinent information associated with the acquisition of the policy for future reference.

3. Claim Approval Delays: Claim approval delays happen when an insurance provider takes an unusual long time to examine and approve a submitted claim. When a policyholder relies on the claim amount to pay for immediate needs like repairs, medical bills, or other urgent needs, such delays might put them in a difficult financial situation and cause them inconvenience.

The following actions can be taken by policyholders to reduce claim approval delays:

• Submit the claim with correct and comprehensive documentation.
• Engage completely in any investigation that your insurance provider requests.
• Maintain ongoing communication with the claims department and check in on the status of the claim.
• Be familiar with the terms and conditions of the policy to avoid any unpleasant surprises when filing claims.
• In case the insurance provider asks for more details or supporting documents, provide it as soon as possible.

However, several times, the guidelines of the insurer may call for extra caution in situations where the claim amount is very high. In such cases, after the claim is handled at one end, a certain length of time passes before your claim is sent and you receive the insurer's consent. The transmission of information pertaining to your claim to you may be delayed as a result of this gap in time.

4. Claim Rejection: When an insurance company rejects a claim for various kinds of reasons, it is known as a claim rejection. It can be as a result of relevant information not being disclosed during the insurance application, the claim not satisfying policy requirements, or the claim falling under policy exclusions. Rejecting a claim can be upsetting, particularly if the policyholder sincerely feels that their claim should be accepted.

Policyholders should thoroughly study their insurance plans, comprehend the coverage, and make sure all requirements are met in order to avoid having claims denied. During the application procedure for a policy, it's imperative to provide all pertinent information honestly. If your claim gets rejected, the insurance provider is required to disclose the reason. Additionally, you can discover the grounds for the denial of your claim. However, the IRDAI, Insurance Regulatory and Development Authority of India, mandates that insurance providers provide justification for denial of claims.

Grievance redressal: 

In India, the IRDAI is the regulator overseeing the insurance industry and defending the rights of policyholders. In case of any grievance or anomaly, the policyholder should first make sure that he/she has read all the policy related documents and fine print carefully and that the complaint or claim is genuine and can be backed with relevant supporting facts, communications and documents. Once convinced, the policyholder can initially get in touch with the insurance advisor for further clarification and guidance. One can also contact the concerned insurer customer service or grievance department for the resolution. Ideally all common and addressable complaints would be resolved by now. However, in rare cases of a genuine complaint yet not resolved, the last option left is for the policyholder to escalate the situation to IRDAI for additional support and resolution. 

Bottom line: 

The chances of any grievance happening can be greatly reduced if one is following proper due-diligence procedures, has researched and read all the policy related documents (especially policy terms), inclusions and exclusions, and has provided all the necessary and correct details. Also, working with established and reputed insurance brokers in the market helps a lot in all these aspects. The right advisor will also help you in identifying the suitable products as per your requirement and needs. Ultimately though, your active participation and understanding is crucial in your entire experience of having insurance policies.

Are you unhappy with your current health insurance company or plan? Do you find other health insurance plans to offer a comprehensive scope of coverage or is cost-effective or have lower or minimal coverage restrictions and even have a simpler claim settlement process? Then portability can be a good option for you. The process of portability involves moving existing insurance to a new one with a different insurer without forfeiting any accrued benefits, such as the No Claim Bonus (NCB), waiting period credit, etc. The IRDA guidelines states that no insurer, whether new or existing, is allowed to charge a fee for transferring a health insurance policy.

To ensure an effortless switch and avoid any potential pitfalls, insured should take into account key details before porting their current health insurance policy. 

What is Portability?

The term "portability" describes the ease with which something may be carried, moved, or relocated from one place to another. In the context of health insurance, the ability of policyholders to switch from one health insurance provider to another without losing the benefits accumulated under their present policy is referred to as portability. It enables people to change insurance companies while keeping their policy's waiting periods, pre-existing disease coverage, and other benefits in place. The Insurance Regulatory and Development Authority of India (IRDAI) launched health insurance portability in India in 2011. By allowing people the freedom to select a different insurer that better meets their needs, it is aimed to empower policyholders and encourage competition among health insurance providers.

After shortly outlining portability, let's move on to the most frequently asked question, "Why portability is important?" 

Why Portability?

With portability, when a policyholder changes to a new health insurance provider, they do not forfeit any accrued renewal benefits. However, there are numerous concerns with the decision to switch health insurance providers. The answer is simple; with increased competition among service providers, insurers may be hesitant to keep their current insurance due to reasons including existing insurer's services are insufficient, they charge excessive premiums, and their products have sub-limits. On top of that, an insured person's needs may vary during the course of his policy schedule, and portability can be the ideal way to accommodate these new needs. While porting would enable people to change to a health insurance plan with improved coverage, such as higher sum insured at lower premiums, additional perks, or coverage for certain treatments.

In order to better meet their healthcare needs and address gaps in their current coverage, policyholders may enhance their coverage. Before making the transfer from their existing health insurance to a new one, it is crucial that you give your insurance advisor all pertinent information, such as any pre-existing / present illnesses / major accidents, recent insurance proposal / claim denials, or illnesses that have been cured. Make sure that the new plan will cover any pre-existing medical conditions which you have, without any waiting periods or restrictions if you have any. Although keep in mind that portability is only feasible at the time of policy renewal.

How to port?

1. To begin the procedure, you may need to fill out the IRDA portability form. It should be noted that a policyholder might seek portability when the insurance is up for renewal. You must contact the insurance company where you want to move your current health insurance coverage. The new insurer will give you two documents: a portability form and a proposal form. They may also send information on the company's numerous health insurance policies. 
2. Once you have submitted the relevant documents to your new insurance provider, they will contact your old insurer and obtain your medical records and other pertinent information. They may also request your claim history. When your old insurer receives such a request, it is obligated to share this information.
3. When the new insurer receives all of the necessary information, they will decide whether or not to provide you with a health insurance policy. This is known as policy underwriting. An underwriter will examine your data and consider your risk profile before deciding whether or not to provide you with health insurance. If your new insurance provider decides to insure you, they must underwrite your policy within 15 days. If you miss this deadline, you are assumed to be insured by the new insurance company.

Can requests for Health Insurance Portability get denied?

While IRDAI gave all policyholders the ability to request portability, it also granted health insurance providers a right to refuse these requests. As a result, the underwriter examines each request for portability just like a new request.

When a health insurance provider receives a request for portability, the underwriter evaluates the risk exposure to determine the premium required to be charged. If the insurer determines that the plan is not favourable, it may be rejected. In that situation, the policyholder won't have any choice but to keep his or her existing insurance policy.

Bottom Line:

By carefully considering all the factors, the policyholder can make informed decisions on switching the health policy, and ensuring that the new policy meets his present requirements.

Dwight D. Eisenhower rightly said that “A people that values its privileges above their principles soon loses both.” Thus, if individuals prioritize their privileges (e.g., seeking the lowest premium or most extensive coverage) above their principles (e.g., equitable access, affordability for all, continuity of care), they may compromise the very principles that underpin the purpose of their health insurance cover. Therefore, the quote serves as a reminder that it is crucial to prioritize and uphold the common need of your health insurance policy, rather than simply pursuing short-term/ certain influencing privileges, to ensure a robust and equitable healthcare system for yourself.