Happily Insured by Kapil Mehta

Author:Kapil Mehta
Language: eng
Format: epub
Tags: null
Publisher: HarperBusiness
Published: 2022-09-15T00:00:00+00:00

PART 2

Processes

7

Buying and Claiming

THE PREVIOUS SECTION described insurance products and the risks they address. However, in insurance, it is not just the product that is important but also the buying and claiming process. The principles discussed here cut across insurance products. Following a disciplined process prevents surprises. Consider these examples:

•One of my cousins has a health insurance with a sum assured of ₹5 lakh. This insurance has been running for several years and all waiting periods are over. Recently, his wife was diagnosed with breast cancer and the treatment costs so far have been about ₹20 lakh. The out-of-pocket cost is ₹15 lakh and this has been difficult to put together.

•A senior executive bought an expensive, gold-plated insurance from a health insurer because he felt that it was a good brand. This insurance cost about ₹1.5 lakh. However, several of his claims were initially rejected and required considerable follow-up to be approved. He was left wondering whether he had overspent and should have instead bought cheaper insurances from providers with better settlement rates.

•A colleague bought a motor insurance because it was about ₹5,000 cheaper than all the other options that he had. However, when he had an accident and filed a claim, he was rather shocked to see that only ₹60,000 of his ₹90,000 bill was paid, because this low-cost insurance deducted depreciation and did not cover tyres. He would have been better off paying the additional ₹5,000 while buying the insurance.

•A batchmate travelling overseas posted on a social-media-group of friends asking which travel insurance to buy. There were five suggestions based on everybody’s first-hand experience and he selected one. During his travel, my friend, who was diabetic, had to visit an emergency room because of a sudden increase in his sugar level. The bill was USD 2,400 and the insurer turned it down because issues related to pre-existing conditions were excluded. Had my friend depended less on social media perspectives and more on research and informed opinion, he would have picked an insurance that covered emergency care even for pre-existing conditions.

•A business colleague bought a life insurance where the agent told him that he could earn as much as 25 per cent per annum based on the insurer’s track record. His actual returns were 10 per cent over a five year period. Not bad, but well below his expectation. Had he read the formal illustration that came with the policy copy he would have seen that the insurer clearly specified a range of 4 to 8 per cent returns. From the insurer’s perspective they had outperformed, yet my colleague felt let down.

•A client kept ignoring the repeated messages to renew her insurance. These messages came from the insurer and an intermediary over emails, the phone and via SMS. Six months after the life insurance had lapsed the client decided to renew her insurance. To her surprise the insurer refused to renew it because she had developed hypertension over the past year. The client had no choice but to buy a new insurance that cost her ₹27,000 more than her initial policy of ₹50,000.

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