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Life Insurance

Max life Insurance (Plans, Benefits, Claims & More)

A recent Max Life Insurance commercial

Max life Insurance (Plans, Benefits, Claims & More)

Max Life Insurance was formed in the year 2000. It is a joint venture between Max financial services Ltd ( MFS), India’s largest non-banking private life insurance company, and Mitsui Sumitomo insurance company based in Japan. The company began its operations in 2001 since it has established a prominent name in the insurance sector.

Max Life Insurance is one of the leading names in India when it comes to life insurance and its services. The company offers a wide range of insurance plans ranging from term insurance, child plans, pensions, endowment, savings plans, and much more.

This insurer has a PAN India presence with more than 250+ branches across the nation and more than 15,000+ associated employees. Max Life serves millions of customers all around the year and has a robust claim settlement ratio of 99.35%.

The company has been awarded numerous awards such as ‘Life Insurance Provider of the Year’ and ‘Excellence in Claims Service’ to name a few.

In this article, we will discuss the following:

  • Company specifications
  • Awards received
  • Plans offered by Max Life Insurance
  • Why choose Max Life Insurance?
  • How to buy Max Life Insurance Plans?
  • Max Life Insurance claim process
  • Max Life Insurance plan renewal process

Important company details

Claim settlement ratio     

99.35%

Headquarters

New Delhi

Solvency Ratio

207%

Branches

250+

Website

www.maxlifeinsurance.com

Customer care

Toll free number: 1800 200 5577, 1860 120 5577

Awards received

Below given are a few awards and recognitions won by Max Life Insurance.

  • ‘Best Claims Service Leader award’ by CMO Asia Awards 2019.
  • Ranked 24th among ‘India’s top 100 companies to work in’ by great places to work institute.
  • Awarded ‘Best Term Plan company of the year’ by CMO Asia 2019.
  • ‘Life Insurance Provider of the year’.

Max Life Insurance plans

Max Life Insurance term plans

Plan nameAbout the plan
Max Life Smart Term PlanIt is a customizable term plan that offers a death benefit, protection from 40 critical illnesses, and a return of premium option. This is a long-term plan that provides coverage up to 85 years of age and returns 100% of the premiums paid upon surviving the maturity period.
Max Life Online Term PlanThis term insurance plan offers high life cover at an affordable premium. It offers a lump sum payout under death benefit to the beneficiary of the policy in case of the death of the policyholder. This plan is available in 3 variants: Basic Life Cover, Basic Life Cover + Monthly Income, and Basic Life Cover+ Increasing Monthly Plan.
Max Life Premium Return PlanAs the name suggests, this plan offers life coverage to the policyholder and the benefit of 100% of premium repayment on the maturity of the policy tenure.
Max Life Super Term PlanThis is a regular term insurance plan that only provides a life cover to the policyholder. It offers multiple payout option choices.
Max Life Smart Secure Plus PlanThis is an ideal plan to beat the rising cost of inflation as it offers a death benefit, and also increases the sum assured up to 5% annually up to a maximum of 200%.
Max Life Saral Jeevan Bima PlanThis term plan offers a life cover as low as Rs 5 Lakh to protect your family in your absence. This plan provides long-term coverage up to 70 years of age.
Max Life Short Term PlanThis plan offers a guaranteed payout on the maturity of the policy period or a lump sum death benefit in case of death of the policyholder, one of the two.

Max Life Insurance ULIP plans

Plan nameAbout the plan
Max Life Fast Track Super PlanThis plan offers the benefit of life coverage and the extra benefit of capital appreciation through the market invested returns.
Max Life Online Savings PlanThis plan offers a life cover and a wide range of market funds to invest in as per the investment style of the policyholder. This plan is available in 2 kinds of variants.
Max Life Shiksha Plus Super PlanThis is a child unit-linked insurance plan that is designed to secure your child’s future by generating a sound corpus through market-linked investments and also providing the benefit of life coverage.
Max Life Forever Young PlanThis unit-linked plan is intended to generate strong savings for your retirements through market returns and also providing the benefit of a life cover.

Max Life Insurance Savings and Income plan

Plan nameAbout the plan
Max Life Savings Advantage PlanThis plan offers a life insurance cover to the insured and partly guaranteed payment of the lump sum amount on policy maturity.
Max Life Monthly Income Advantage PlanAs the name suggests, this plan offers an assured monthly income payment up to 30 years after the completion of the premium payment tenure or provides a death benefit payout in case of the death of the insured.
Max Life Guaranteed Income PlanThis is a guaranteed income plan which gives the flexibility to choose the kind of payout you want. It gives an option of monthly income payout for 10 years or an immediate lumpsum payout in case of any sudden financial emergency.
Max Life Whole Life Super PlanThis is a whole life insurance plan that provides life coverage up to 110 years of age.
Max Life Assured Wealth PlanThis plan will provide a lump sum payout of the sum assured under death benefit or guaranteed lumpsum payout upon the maturity period.
Max Life POS Guaranteed Benefit PlanThis plan will offer lumpsum payment to the family members under death benefit or pay the entire amount if the policyholder survives the maturity period.
Max Life Wealth PlanThis plan is designed to offer financial protection to you and your loved ones. Max Life Smart Wealth Plan provides a death benefit and a guaranteed maturity benefit to boost your savings. It is available in 4 variants.

Max Life Insurance health plans

Plan nameAbout the plan
Cancer Insurance PlanThis plan offers comprehensive coverage against all stages of cancer. It offers a sum insured payout to the policyholder at diagnosis of each stage of cancer.
Critical Illness BenefitThis plan is designed to provide a lump sum payout in the event of any diagnosis of listed critical illnesses.
Individual Health Insurance PlanThis plan provides extensive coverage to the insured in the treatment of any illness or injury.
Family Floater Health PlanThis is a family floater health plan that covers the hospitalization expenses of immediate family members up to the sum insured in one single policy.
Group Health CoverThis is a group health plan that covers the hospitalization expenses of individuals working together in a company or an organization.

Max Life Insurance Child plans

Plan nameAbout the plan
Max Life Future Genius Education PlanThis plan assists young parents to create a corpus for their children’s education expenses in the future. The company will pay a lump sum payout in case of the death of the insured parent.
Max Life Siksha Super PlusThis is a unit-linked insurance product designed to secure your child’s future by generating a sound corpus through market-linked investments and while also providing the benefit of life coverage.

Max Life Group Insurance Plans

Plan nameAbout the plan
Max Life Group Super Life Premier PlanThis plan offers life coverage to the insured group members. It also provides surrender benefits in which if in case the employee exits the company the policy will continue to provide coverage until the end of the policy term.
Max Life Group Gratuity Premier PlanThis plan offers a death benefit, surrender benefit, and maturity that provides a lump sum amount on policy maturity.
Max Life Group Term Life Platinum Assurance PlanThis term plan provides a high sum assured coverage at an affordable premium.
Max Life Group Saral Suraksha Bima PlanThis plan is designed to protect against accidental death or any disablement suffered due to an accident.
Max Life Group Credit Life Premier PlanThis plan is designed to repay any loan obligations in case of the untimely demise of the policyholder. The sum assured can be utilized to pay off any loan or debt by the family members in the absence of the insured.

Why choose Max Life Insurance?

Claim settlement ratio

Max Life Insurance has built a great track record over the years when it comes to settling claims. The company has a staggering claim settlement ratio of 99.35% suggesting that the company is extremely reliable and committed when it comes to settling genuine claims not depriving its customers of their rights.

Solvency ratio

According to IRDA, all life insurance companies must maintain an ideal solvency ratio of 1.5% in India. The solvency ratio is a parameter that measures the financial reliability and trustworthiness of a company. Max Life has a strong solvency ratio of 2.07% which is much higher than the required ratio signifying that the company is reliable and capable when it comes to meeting its long-term obligations.

PAN India presence

The company has a widespread presence with more than 250+ branches all across the nation making it handy for people anywhere in India to avail of their services.

Customer support

The company has a 24/7 online customer service portal that assists its customers in matters about claims, renewals, or any other insurance-related queries.

Plethora of plans

The insurer provides a wide range of plans that cater to the needs and requirements of all kinds of customers and insurance buyers.

Tax benefit

You can avail of the benefit of tax exemption on your premiums paid towards your policy under U/S 80C and 10(10D) of The Income Tax Act.

Max Life Insurance plans benefits

High life cover

Multiple plans provided by the company offer a high life coverage from 18 years of age. You can avail the benefit of high life coverage overcoming the rising cost of inflation that will financially assist your loved ones in your absence.

Affordability

Plans offered by the company give the privilege of high life coverage at an affordable premium. Plans offered by the company provide a life coverage of sum assured of Rs 1 Crore at just Rs 500 per month.

Customizable payout

The company offers multiple payout options to select at the beginning of the policy period. The policyholder can choose yearly monthly or lumpsum payout as per the family’s financial requirements.

Premium waiver

Multiple plans offered by the company will waive off any future premiums in case the policyholder is met with any unfortunate event like accidents or critical illness. Max Life Waiver of Premium Plus rider is one plan that waives off all future premiums in such circumstances just at a nominal premium price.

Premium return benefit

In some plans, 100% of the premium paid will be provided back to the policyholder upon policy maturity. Max Life Premium Return Protection and Guaranteed Lifetime Income Plan are among such plans.

How to buy Max Life Insurance Plans?

You can easily buy a health plan with us on InsuranceLiya.com.

Step 1: Simply furnish us with your name, email, and mobile number.

Step 2: We will call you shortly and assist you with a suitable plan for you or your family.

Max Life Insurance claim process

In case of the unfortunate death of the policyholder, the nominee or the claimant needs to follow these simple steps to claim the policy benefits.

Step 1– Inform the company about the event on their toll-free number: 1800 200 5577 or email them at claims.support@maxlifeinsurance.com. You can also inform your agent advisor or visit the nearest branch to do the same.

Step 2– Visit the official website of the company and download the claim form available there. You can also get the form by visiting the nearest branch.

Step 3– Fill the form carefully and submit it to the company along with other relevant documents.

Step 4– The company with review the claim request along with the terms and conditions of the policy and will approve the claim respectively within 30 days of receipt of the claim.

Step 5– You will receive the claim amount as per the option that you have chosen at the time of submitting the claim documents.


Documents to be submitted to file a claim

  • Original policy documents
  • Original/attested copy of death certificate issued by a local municipal authority
  • NEFT mandate form attested by bank authorities along with a canceled cheque or bank account passbook
  • Nominee’s photo identity proof such as a copy of Passport, PAN card, Voter identity card, Aadhar (UID) card, etc.
  • Death claim form ( Form A)

Additional documents

In case of medical or natural death

  • Physician’s statement (Form ‘C’)
  • Medical records, admission notes, test reports, etc
  • discharge/death summary

In case of accidental or unnatural death

  • Copy of FIR ( First information report)
  • Report of post mortem
  • Autopsy or viscera report
  • Copy of the FPIR( Final police investigation report)

Max Life Insurance plan renewal process

It is imperative to renew your life insurance policies on time to avail of its continuous benefits. Follow these simple steps laid down by us to renew your Max Life Insurance policies online.

Online

Step 1– Visit the official website of the company i.e www.maxlifeinsurance.com and click on “Pay online”
Step 2– Enter the existing policy number, registered mobile number, and date of birth.
Step 3– Verify your premium details and make the premium online.
Step 4– The policy will be renewed within minutes. You will receive confirmation about the same along with a premium payment receipt on your registered email id.

Offline

You can also renew your life insurance policy by visiting the nearest branch you for the same.
You can also contact customer care on 1800 200 5577 or email them at online@maxlifeinsurance.com.

 

 

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Life Insurance

When was the life insurance sector nationalized?

When was the life insurance sector nationalized?

The insurance industry is one of the most important sectors in the Indian Economy, it contributes greatly to the Indian economy by providing stability and growth. The insurance sector contributes to the Indian economy as a financial intermediary and also mitigates the risks effectively.

The nationalization of the Life insurance sector was implemented keeping in mind the smooth conduct of the insurance sector and the welfare of the general people of India.

In this article, we will talk about the following:

  • Why was the insurance sector nationalized in India?
  • When was the life insurance sector nationalized in India?
  • What were the aims and objectives of nationalizing the life insurance sector?

Why was the insurance sector nationalized?

  • The Oriental Life Insurance Company was the first-ever insurance company to be formed in India, in 1818.
  • It was started by the Europeans in Calcutta with the purpose of safeguarding the interests of the European community. This company only insured European lives. Indian natives were not being insured by such companies.
  • However, after the pre-independence era, there was an immediate need to change this biased system of discrimination between foreign and Indian Lives. The foreign companies started insuring Indian natives but they were charged heavy and unjustifiable premiums.
  • To combat this injustice, The Bombay Mutual Life Assurance Society (established in 1870) was the first Indian Insurance company formed In India that covered Indian lives at reasonable rates.
  • With the coming of the twentieth century, many Indian insurance companies were formed. In the year 1912, the Life Insurance Companies Act and The Provident Fund Act were passed to regulate the insurance sector. This act made it mandatory that the life insurance premium rates and periodic valuations of companies needed to be certified by an actuary.
  • To eradicate any disparities in form of discrimination between any Indian or foreign life insurance company, The Government of India issued an ordinance on the 19th of January, 1956 nationalizing the life insurance Sector In India.
  • With the nationalization of the life insurance sector, about 156 insurance companies, 16 non-Indian companies, and 75 provident societies were all absorbed together, giving birth to the Life Insurance Corporation of India (LIC).

When was the life insurance sector nationalized In India?

The Government of India passed an ordinance on 19th January, 1956 nationalizing the life insurance sector in India.

What were the objectives of Nationalizing the life insurance sector in India?

  • To regulate, control and nationalize the life insurance business in India.
  • For multinational growth and development of the economy.
  • To create the awareness of life insurance business in India.
  • To stretch out the insurance business in rural and social sectors of the economy.
  • To avoid any fraud/malpractices.
  • To provide security protection and complete transparency to the policyholders.
  • To steer clear of biased and unhealthy competition
  • For efficient conduct of insurance business in India.

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What is the time limit for approaching an Insurance Ombudsman?

What is the time limit for approaching an insurance ombudsman?

 

There are rare occasions where you are not satisfied with the grievances redressal of your insurance company. On these rare occasions, you may want to escalate your issue to a higher forum. The Insurance Ombudsman was formed with exactly this in mind. The Insurance Ombudsman looks after the interests of the policyholders and provides arbitration and resolution services.

That being said, one must be cognizant of the time limit for approaching an insurance ombudsman, and ensure that their case is raised within the stipulated time limit.

In this article, we will cover all the nitty-gritty of how you can approach the insurance ombudsman with your complaint and get a resolution.

This article will be covering the following:

  • What is an Insurance Ombudsman?
  • Where can you find the Insurance Ombudsman?
  • Who can approach the Insurance ombudsman?
  • When can you approach the Insurance Ombudsman?
  • What are the steps to follow while approaching the Insurance ombudsman?
  • What is the time limit for approaching the Insurance Ombudsman?

What is an Insurance ombudsman?

The Institution of Insurance Ombudsman was formed by the Government of India in November 1998.
Its main objective is to handle customer grievances systematically and bring fair resolution. The policyholders can get their complaints resolved in an unprejudiced and efficient manner.

Location of Insurance Ombudsman

There are 17 main insurance ombudsmen offices located in India. The website of IRDA mentions all the details and contact information of all the Ombudsman centers. An aggrieved policyholder can accordingly choose to visit the nearest insurance ombudsman center.

Who can approach Insurance Ombudsman?

Any policyholder, their legal heirs, or nominees can approach the insurance ombudsman to file their complaints.

When can you approach the Insurance Ombudsman?

If a policyholder has approached his insurance company and they were not satisfied with the resolution provided by the company, the policyholder can approach the Insurance Ombudsman within 30 days of the initial grievance.

You can approach the Insurance Ombudsman for the following reasons:

Any issues about the violation of provisions of the Insurance Act 1938 or the guidelines and regulations issued by the Insurance Regulatory and Development Authority (IRDA)

  1. Total or limited rejection of your claims.
  2. Any matter related to premiums payable or paid.
  3. Holding up the claim process.
  4. Not providing the policy documents to the policyholder after the premium has been paid.

Steps to be taken while approaching the Insurance Ombudsman?

Step 1 – As mentioned above, if you have already addressed your grievances with the insurance company and are not satisfied with the outcome, you can approach the insurance ombudsman within 30 days of your issue.

Step 2 – You can get in contact with the Insurance Ombudsman center in your jurisdiction.

For Instance, if the policyholder is staying in Mumbai and his insurance company is located in Mumbai, he may file a complaint with the Insurance Ombudsman center located in Mumbai.

Step 3 – You must register a written complaint by writing a letter to the Insurance Ombudsman. You could also email your complaints to the Ombudsman, but you would also need to send a formal letter to them.

Step 4 – All valid and important information must be provided in the letter. Details such as name, policy number, date of the policy, etc.
You must provide a detailed explanation of your grievances and the details surrounding them. Also, all relevant documents must be enclosed with the letter and should be sent to the Ombudsman center.

Step 5 – You will be required to fill in P-II and P-III forms (These are simple forms used for taking down the complaint details in a particular format). You can also fill the forms and send them by post to the Insurance Ombudsman and they will reach back to you shortly.

Step 6 – Once you register the complaint and submit all the appropriate documents, you will be given a date where you and a representative of the respective insurance company will be called for a hearing.

An executive will be assigned by the Insurance Ombudsman to represent you free of charge. Usually, the matter will be solved within just one hearing as there is no system of providing further dates.

What is the time limit for approaching the Insurance Ombudsman?

You will have to register your complaint with the Ombudsman within one year of your claim rejection by the insurance company.

Process of judgment

During the hearing, the Insurance Ombudsman will pay detailed attention to what the policyholder and the insurance company have to say. The Ombudsman will decide on a fair conclusion. It will pass an unprejudiced judgment and the minutes will be prepared.
If the policyholder accepts the Ombudsman’s judgment as full and final, it will intimate the insurance company and the company must comply with the terms of the settlement within 15 days.

However, If the policyholder does not accept the terms of the settlement the Insurance Ombudsman will pass an award within 90 days after receiving all the requirements from the complainant. This will be binding on the insurance company.
The insurance company cannot challenge this settlement decision further and is bound to comply with the terms of settlement within 30 days of award receipt.

However, if the policyholder is not satisfied with the terms of the settlement he is free to go to court and challenge the order passed.

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Life Insurance

What is an endowment policy? (Meaning and types)

What is an endowment policy? (Meaning and types)

With so many types of life insurance products available in the market, we may tend to get confused. In this article, we will talk about what is an endowment policy? and the types of endowment policies.

What is an endowment policy?

An endowment policy is a life insurance policy with dual benefits. It provides you the benefit of a life insurance cover along with a savings plan. It helps the policyholder save regularly over a specified time so he/she can receive a lump sum amount on the maturity of the policy. However, in case the policyholder dies during this period, the insurance company will be liable to pay the sum assured as well as any accumulated bonus to the policy nominee.
An endowment policy is a well-suited plan for post-retirement.

Now, let us understand the various types of endowments policies

Types of endowment policies

Unit-linked endowment Plan (ULIP)

A unit-linked endowment plan is a policy that is a combination of life insurance and investment. In this plan, part of ur premium will be taken towards your life coverage and part will be systematically invested in equity/debt securities (based on the plan you choose). The return on your investment will depend on the performance of the fund.

Full/with profit endowment plan

As the name suggests, A full/with profit endowment plan provides the policyholder with the sum insured as well as any bonus accumulated with it on the maturity of the policy. In case of death of the insured, the nominee will receive the sum insured as well as the bonus amount. The final payout will be relatively higher than the sum insured as it is combined with profits generated from the bonus.

Low-cost endowment plan

Low-cost endowment plans have been specifically designed for individuals who want to save their funds (savings) and use them for a specific purpose after a certain period of time such as repayment of loans etc. If the policyholder dies, the nominee will receive the entire fund amount.

Endowment policy for child

A child endowment policy is specifically designed to protect and cater to the financial requirements of your child in the future. It offers protection, savings, and investment. The sum assured as well as return from the investments will be payable to your child as a lump sum when your child attains maturity between 18-22 years of age.

Non-profit endowment plan

Under this plan the sum assured will be paid to the policyholder on the maturity date of the policy or the nominee of the policy in case the policyholder passes away. As the name suggests, only the sum assured will be paid no additional bonus will be included.

Now lets us look into some benefits of an endowment policy and how they may help you.

Benefits of an endowment policy

  1. Insurance cover: An endowment policy provides life insurance coverage to the insured. In case the policyholder passes away, the nominee of the policy will receive the assured sum. This provides your loved ones financial stability.
  2. Dual purpose: It provides a dual purpose of life coverage as well as investment-related benefits.
  3. Additional bonuses: It gives the benefit of accumulated bonus and the sum assured leading to a relatively higher payout.
  4. Low risk investments: Endowment plans are safer investment options compared to other options in the market.
  5. A Long-term savings plan: It is a systematic long-term savings plan that helps you secure funds that you can use in the future.
  6. Tax benefit: You can get tax exemption on premium payments and final payment Under Sec 80 and Sec 100 of The Income Tax Act,1961.
  7. Rider benefit: If you choose so, you can add optional rider covers to your base policy. This will make your plan more customized to your needs.

Types of optional rider cover that can be applied are

  • Disability rider– This offers coverage in case the insured meets with a permanent or partial disability.
  • Accidental rider– This rider protects you from the financial losses incurred due to an accident. It provides compensation to the beneficiaries of the policy in case of accidental death of the policyholder.
  • Critical Illness rider– If at any point the policyholder has been diagnosed with a critical illness the insurance company provides them with financial assistance in a lumpsum amount.

 

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Insurance

What is a deductible in insurance? (With examples)

What is a deductible in insurance? (With examples)

Sometimes complicated terms used in insurance policies can be confusing. Don’t worry, let us help you understand them simply and easily. Let us understand what is an insurance deductible.

What is a health insurance deductible?

A deductible is a fixed sum that a person has to pay himself before the insurance company takes care of his medical expenses.

Example of a deductible in health insurance

Lets us understand this using a simple example. Let us assume that Mr. Jamnalal has taken a Rs 3 Lakhs insurance policy with a deductible amount of Rs Thirty Thousand. Let us further assume that Mr. Jamnalal is hospitalized and his hospital bill comes up to Rs 1 Lakh.

Since Mr. Jamnalal has opted for a health insurance policy with a deductible component of Rs Thirty Thousand, all expenses up to Rs Thirty Thousand will have to be paid by Mr.Jamnalal himself. Any expense over Thirty Thousand will be covered by the insurance company (up to Rs 3 Lakhs)

Thus, Thirty Thousand is the deductible component for Mr.Jamnalal which he will have to pay himself before the policy benefits kick in.

Deductible in a top-up health insurance policy

First, let us understand what is a top-up policy. A top-up policy is an insurance policy that looks after your hospital treatments and gives you extended coverage after your base policy coverage has reached its limit.

What is deductible in a top-up policy

In a top-up health policy, a fixed amount of the sum will be borne by the policyholder towards their medical treatments before the insurance company starts to cover their medical expense. This deductible cost will be paid by the insured after every claim.

What is deductible in car insurance

Lets us understand what a deductible is in car insurance with a simple example.

Example

Let us assume that Mr. Kishan bought a motor insurance policy from HDFC ERGO. He opted for a voluntary deductible component in his motor insurance policy so that he could reduce his premium. Mr. Kishan’s deductible is Rs 5000.

Now, let us further assume that Mr. Kishan’s car has met with an accident and the claim amount is Rs 10,000. As he opted for a deductible component of Rs 5000, Mr. Kishan will have to pay Rs 5000 from his pocket and the insurance company will pay the remaining expense.

Types of deductibles in car insurance

Now, there are two types of deductibles in car insurance, compulsory and voluntary deductibles. Let us understand them in detail:

Compulsory deductible

It is a compulsory amount that a car policyholder has to pay towards his policy claim. It is a mandatory expense a vehicle owner has to bear in case of a claim. It is as per the guidelines of the Insurance Regulatory Development Authority of India (IRDAI).

As per IRDA guidelines, the rates of compulsory deductibles in cars are given below accordingly: Rs 1,000 for cars upto 1,500 cc and Rs 2,000 for cars exceeding 1,500cc

Voluntary deductible

A voluntary deductible comes into action when a policyholder himself decides to pay an extra amount for his car expenses during his claim. The policyholder must carefully decide on the limit he chooses to pay according to his affordability with the help of his insurance advisor.

When one opts for a voluntary deductible they usually pay a lesser premium.
A voluntary deductible also encourages the insurer to drive carefully and take care of their respective vehicles by maintaining them. If a claim is made, the car insurance policyholder will have to pay both the voluntary deductible with the compulsory deductible.

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Utmost Good Faith in Insurance (Meaning, characteristics & Examples)

Utmost Good Faith in Insurance (Meaning, characteristics & Examples)

There are a few core principles of insurance that every insurer and insurance company must adhere to. Any violation of these core principles can lead to the termination of the insurance contract. Let us talk about one of the most important principles of insurance, the principle of utmost good faith.

What is utmost good faith in insurance?

  • The principle of utmost good faith states that both the insurer and the insured must be transparent with each other, and must reveal all pertinent and valid information to each other before the inception of the policy agreement.
  • The complete truth must be revealed about the subject matter of insurance and the conditions surrounding it.
  • For instance, if you buy a life insurance policy, it is your duty to disclose all correct and relevant details pertaining to your health to the insurance company. Details such as any pre-existing conditions, medical history, etc must be truthfully mentioned to the insurer.
  • Intentional withholding of relevant details is considered a strong breach of utmost good faith and can lead to the termination of the policy agreement.
  • Also, it is equally important that the policyholder is well aware of the insurance cover that they are buying. The insurance company also be equally truthful about the policy they are selling to the insured.

Characteristics of utmost good faith in insurance

The insured and insurer are legally bound to make full and truthful disclosure about the insurance contract. This responsibility applies to all kinds of insurance.

How breach of utmost good faith occurs

Breach of utmost good faith in Life insurance

Section 45 of the insurance Act 1938 states that If the insurance company finds out that the policyholder has misrepresented relevant details or provided false disclosure of facts, the insurer can deem the policy null and void. This can only be done within 2 years of the inception of the policy.

Breach of utmost good faith in Life insurance with an example

Example

Mr. Manilal bought a life insurance policy for himself. Mr. Manilal is a heavy smoker and he has not disclosed this fact to the insurance company, and within 2 years Mr. Manilal is diagnosed with lung cancer and passes away. In this case, the insurance company can reject the claim on the ground of non-disclosure or misrepresentation of facts. This would be a breach of utmost good faith.

Breach of utmost good faith in health insurance with an example

Let us assume, Mrs. Sushiladevi bought a health insurance policy for herself. Mrs. Sushiladevi deliberately chooses to withhold her diabetic status from her insurance company to reduce the premium sum.

Example

Let us now assume that Mrs. Sushiladevi gets admitted into the hospital due to complications caused by high blood pressure and sugar. The insurance company may choose to reject her claim on the ground of non-disclosure of facts, as her medical reports would indicate that she was already a diabetic and blood pressure patient before buying the policy.

Breach of utmost good faith in motor insurance

The principle of utmost good faith not only applies to life or health insurance, but all types of insurance agreements, including motor insurance.

Example

Let us assume that Mr. Joy bought a motor insurance policy. In order to pay less premium, Mr. Joy deliberately hid the information that his car had an externally fitted CNG kit.

Let’s further assume that Mr. Joy’s car caught fire due to some complications in the CNG kit. The insurance company will reject Mr. Joy’s claim on the ground of non-disclosure of material facts. This would also lead to termination of the policy by breach of utmost good faith.

 

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Types of Fire Insurance (With Simple Examples)

Types of Fire Insurance (With Simple Examples)

It is important to ensure the safety of your property (flat, shop, goods, etc) from unforeseen accidents that can be caused due to fire. In this article, we will discuss the various types of fire insurance policies, but first, let us know what is fire insurance?

What is fire insurance?

Fire insurance is an agreement between the insured and the insurance company, in which the insurance company agrees to compensate the insured against the damages caused to the insured property due to fire. It can be bought as a part of property insurance or standalone insurance.

What are the types of fire insurance?

Floater policy

A floater policy covers various assets at different locations. All the assets can be covered within one single policy. The assets will be covered on a floater basis. This would be an ideal policy for a person who owns various warehouses at separate locations.
The policyholder needs to provide updated and correct details about the insured properties. If the provided details are falsified in any way it will lead to a breach of utmost faith resulting in the insurance contract being null and void, thus is imperative to provide the correct information to companies at all times.

Comprehensive policy

A comprehensive policy covers the insured against maximum possible accidents and setbacks. A comprehensive policy provides coverage against fire, earthquake, burglary, lightning, theft, explosion, labor unrest, third-party liabilities, and other dangers. It is also known as an all-risk policy.

Valued policy

A valued policy is issued when the value of the asset cannot be ascertained. In this case, a predetermined amount is fixed between the insurance company and the insured. in case a claim is made, the agreed value will be paid by the insurance company to the policyholder. A valued policy is opted to cover items such as Jewellery, artwork, craft, etc.

Specific policy

In a specific policy, a specified amount is fixed in advance for an asset. In case of an incident, the predetermined amount or the actual amount of the loss, whichever is less will be paid to the insured.
For instance, Mr. Roy has taken a specific fire insurance policy with a value of Rs 2 lakh, if there is a loss of Rs 2.5 Lakhs due to fire, the insurance company will be only liable to pay Rs 2 lakhs even though the loss caused is Rs 2.5 Lakhs.

Replacement policy

This is a policy where the insurer undertakes to replace the property or goods destroyed by fire. In this policy, instead of paying the compensation for the property lost by fire, the property is instead replaced.

While paying the compensation, the depreciation value of the property is not calculated.

Average policy clause

An average clause is added to penalize the insured for taking up a policy for a lesser sum than the value of the property. The compensation payable will be proportionally reduced if the value of the policy is less than the value of the asset. It discourages the insured from getting an undervalued policy

Example

If you have taken a policy of Rs 1 Lakh against the market value of 2 Lakhs and the loss incurred due to fire is Rs 50 Thousand, since you have only covered 50% of the asset, the company will be liable to pay only 50% of the loss amount. in this case, the insurance company will be liable to pay only Rs 25,000.

What will be covered in the fire insurance policy?

Subject to the following terms and conditions of the policy, a fire insurance policy provides coverage to the loss incurred due to accidental fire. Let us see some of the inclusions stated under the standard fire and special perils policy.

  • Fire
  • Aircraft damage
  • Explosion/ Implosion
  • Bush fire
  • Leakage from automatic sprinkler installations
  • Overflowing of water from tanks and pipes.
  • Riots and strikes
  • Damage caused to property from storm, tycoon
  • Rockslide, landslide


Not all situations are covered under the fire insurance policy. Here are some exclusions

Exclusions

  • Loss caused by nuclear perils, nuclear waste, or any radioactivity.
  • Loss due to war, civil war, invasion.
  • Loss due to planned intentional fire.
  • Loss due to earthquake.

Companies that provide fire insurance in India

  • Magma HDI General Insurance Company
  • Tata AIG General Insurance Company 
  • Cholamandalam MS General Insurance
  • Oriental Insurance Company

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Top 10 insurance companies in India

Top 10 insurance companies in India

The insurance sector has been the fastest expanding sector in India. The first insurance company to be established in India was The Oriental Life Insurance Company in 1818.

After the pre-independence era, the insurance sector has tremendously boomed in India giving birth to many insurance companies. In this article, let us cover a list of 10 life insurance companies in India.

In India, presently 24 insurance companies are have been legally approved and recognized by IRDA(Insurance Regulatory and Development Authority in India).
In this article we will talk about Top 10 insurance companies in India.

Top 10 insurance companies in India

Name of the CompanySectorHeadquarter Location
Life Insurance Corporation of India (LIC)GovernmentMumbai
HDFC Standard Life Insurance Co LtdPrivateMumbai
Max Life Insurance Co LtdPrivateMumbai
ICICI Prudential Life Co LtdPrivateMumbai
Kotak Mahindra Life insurance Co LtdPrivateMumbai
Aditya Birla Sun Life Insurance Co ltdPrivateMumbai
SBI life Insurance Co LtdPrivateMumbai
TATA AIA Life Insurance Co. Ltd.PrivateMumbai
Exide Life Insurance Co. Ltd.PrivateBangalore
Bajaj Allianz Life Insurance Co. LtdPrivateMumbai

Life Insurance Corporation of India (LIC)

  • LIC is the largest Life insurance company In India. Life insurance corporation of India (LIC) is a government-owned insurance and investment organization. Roughly around 245 insurance companies merged into a single organization to form LIC. LIC came into existence after the Parliament of India passed the Life insurance of India Act in 1956.
  • LIC operates with 2048 completely computerized branches, 8 zonal offices, 113 divisional offices, 1408 satellite offices, and central offices.
  • Life insurance corporation of India initially started its operations with around 300 offices, 5.7 million policies, and a corpus of ₹45.9 crores, which has now presently expanded to 350 million policies and a corpus of over ₹800,000 crores.
  • LIC contributed to around 7% of Indias GDP in the year 2006.
  • This massive insurance giant offers a wide range of products from pension plans, unit-linked plans, life insurance plans, child insurance plans, etc.

HDFC Standard Life Insurance Company

  • HDFC Standard Life Insurance Company is one of the largest life insurance companies in India.
  • HDFC Life was established in the year 2000 becoming the first private sector insurance company in India. It is a joint venture between HDFC Limited and Standard Life Aberdeen.
  • HDFC Life settled its first claim in 2001. Presently, HDFC Life has over 420 branches and runs its operations in more than 980 cities in India. Its headquarters is in Mumbai.
  • The company provides individual and group insurance products. It also provides pension, savings, protection, women and children plans. You can also customize your plan by opting for additional covers called riders by paying additional premium charges. The current claim settlement ratio of the company is 96.76%.

Max Life Insurance

  • Max Life Insurance Company (formerly known as Max New York Life Insurance Company) was founded in the year 2000 after the liberalization of the insurance sector in India. It is the largest non-banking private sector life insurance company in India.
  • Max Life Insurance provides insurance products such as unit-linked, participating, and nonparticipating products. Along with life insurance, it also provides Health, pension, retirement, child protection, and growth plans.
  • The headquarters of Max Life Insurance Company is at Worli, Mumbai.

ICICI Prudential Life Insurance

  • It is a joint venture between ICIC Bank and Prudential Corporation Holdings. ICICI prudential was incorporated in the year 2001.
  • ICICI Prudential offers its valuable services in Life insurance and asset management. It offers long-term life insurance policies.
  • ICICI Prudential has an impressive claim settlement ratio of 97.88 % during the year 2018.
  • The company’s total assets accounted for US$22 Billion in 2020 and have made a net income of US$150 million in 2020.

Kotak Mahindra Life Insurance

  • Kotak Mahindra life insurance was established in the year 2001. It is a subsidiary of Kotak Mahindra Bank, a part of the Kotak group founded by Mr. Uday Kotak.
  • Kotak Mahindra Life Insurance company currently caters to more than 20 million customers. It presently has 232 branches in 167 cities with approximately 100,000 agents.
  • Kotak Life Insurance provides a wide range of products ranging from investment plans, rural plans, retirement plans, term plans.
  • The company presently offers 32 products including 9 group products, 10 ULIP plans, and 18 rider options as of 2016.

Aditya Birla Sun Life Insurance

  • Aditya Birla Sun Life Insurance Ltd (formerly known as Birla Sun Life Asset Management Company Limited) was established in the year 2000.
  • It is a joint venture between Aditya Birla Group of India and Sun Life Financial Inc of Canada.
  • It offers various kinds of insurance schemes, endowment plans, debt and equity schemes, and saving schemes.

SBI Life Insurance

  • SBI life insurance company is a joint venture between the State bank of India and BNP Paribas of Cardiff.
  • It was founded in the year 2001.
  • SBI Life Insurance Company caters to millions of families in India with its vast range of insurance, health, savings, pension, and protection solutions.
  • SBI Life insurance company currently operates with 947 offices, approximately 18,000 employees, and a giant network of about 169006 agents, 57 co-operate agents, and more than 28000 partner branches.
  • Their claim settlement ratio was reported at an impressive 96.69% during the year 2016-2017.

Tata AIA Life Insurance 

  • Tata AIA Life Insurance company Ltd was founded by the Tata Group in Mumbai in 2000.
  • It is a joint venture between Tata Sons Pvt Ltd and AIA Group Ltd. It is one of the largest Pan-Asian life insurance companies in the world.
  • Tata AIA offers multiple life insurance plans such as protection plans, wealth plans, group plans, child plans, micro insurance plans, and many more. Its headquartered in Mumbai
  • Tata AIA life insurance presently has a claim settlement ratio of 99.06%.

Exide Life Insurance

  • Exide Life Insurance company is an Indian-owned life insurance company.
  • It is a subsidiary of Exide Industries and was founded in the year 2001.
  • Exide life insurance company caters to more than 15 lakh customers in the country. It provides various life insurance products, long-term protection plans, and savings plans.
  • Exide Life has a claim settlement ratio of 98.15% in FY 2019-2020.

Bajaj Allianz Life Insurance

  • Bajaj Allianz Life Insurance company was founded in 2001 as a joint partnership between Bajaj Finserv Limited and Allianz SE.
  • It received a certificate of registration on 3rd Aug 2001 by Insurance Regulatory and Development Authority (IRDA) to provide Life insurance operations in India.
  • It has 759 branches in India, and its headquarters is in Pune and provides a vast array of insurance schemes.

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What is proximate cause in insurance? (With Examples)

What is proximate cause in insurance? (With Examples)

Have you ever wondered what is a proximate cause in insurance? Wonder no more, this article will explain to you the concept of proximate cause (closest cause) in detail with 2 easy to understand examples.

Proximate cause is an elemental principle in insurance. It deals with finding out what is the closest/first cause of the loss. This principle states that the closest cause for any particular loss will be considered when it comes to making an insurance claim payment.

Example

For instance, Mr. Rishi has taken a fire insurance policy for his workshop. Let us assume that his workshop caught fire and Mr. Rishi filed a claim with the insurance company.

Upon investigation, the insurance company found out that the proximate cause (closet cause) of the fire was a minor earthquake in that area which lead to the warehouse ceiling collapsing upon the electric meter, which then caused the fire.

Under the terms of the fire insurance policy, earthquakes were not covered and the earthquake being the proximate cause of the loss, Mr. Rishi’s claim was rejected.

Let us understand the concept of proximate cause with another simple example.

Example 2

Let us assume that Mr. Shakuni took an accidental insurance policy. While walking on the road, Mr. Shakuni had a heart attack, which caused him to collapse and get hit by a car.

While making a claim, it was noted that the proximate cause of the loss was a heart attack which lead to the accident. Since heart attack was not covered in Mr. Raj’s accidental policy, the insurance company rejected Mr. Raj’s claim.

Thus if Mr. Raj would have taken a comprehensive health insurance policy his claim would have been accepted as the proximate cause (closest) of the loss was the heart attack and not an accident.

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Life Insurance

Pradhan Mantri Insurance Schemes (2 most important schemes)

Pradhan Mantri Insurance Schemes (2 most important schemes)

The Central Government has launched two social security schemes under its administration for the welfare and growth of the lower-income groups. In this article, we will cover two such prominent schemes.

  • Pradhan Mantri Jeevan Jyoti Bima Yojana
  • Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Jeevan Jyoti Bima Yojna

Pradhan Mantri Jeevan Jyoti Bima Yojana is a government-supported life insurance scheme introduced in the 2015 budget speech by the then finance minister, Mr. Arun Jaitley.

PMJJBY is a renewable term insurance policy that provides life insurance coverage of Rs 2 Lakhs in case of death of the insured individual at a reasonable premium amount of Rs 330 per year. The beneficiaries will be provided the sum assured in case of the death of the policyholder.

This policy is obtainable by people between the age group of 18years- 50 years.

Let us go through the features of PMJJBY to understand it better.

Features of PMJJBY

Sum assured

Nominee of the policy will receive 2 Lakhs

Maturity benefit

Not applicable

Premium charge

Rs 330 per year/per individual

Policy tenure

1 year term. Policy can be renewed every year up to the age of 55 years

Eligibility

18 years up to 50 years

Maximum maturity age

55 years

payment method

Premium will be auto debited from policyholders savings bank account. Premium can be paid via a bank account only.

Tax benefit

Yes, under Section 80C of The Income Tax Act

Some Important points to note while opting for Pradhan Mantri Jeevan Bima Yojna (PMJJBY)

  1. Any individual having a savings bank account between the age of 18 years-50 years can avail of this scheme with their respective banks.
  2. You can avail of this scheme with only one savings account in that particular bank, irrespective of how many accounts you have.
  3. It is mandatory to link your Aadhar card to the participatory bank account.
  4. Individuals who want to opt for this scheme after the primary enrolment period ranging from 31st Aug 2015- 30th November 2015 will have to provide a self-attested medication certificate as proof that they do not have any preexisting illness mentioned in the policy declaration form.
  5. The premium will be debited from the linked bank account from the 25th of May to 31 May every year.
  6. If the savings account linked to the plan is closed, the policy shall also be canceled.
  7. If the policy gets terminated due to any mentioned reasons, it can be renewed by paying the total premium along with evidence that proves the healthy medical condition of the individual.

Pradhan Mantri Suraksha Bima Yojna

Pradhan Mantri Suraksha Bima Yojna (PMSBY) is a government-supported accidental insurance scheme in India.
It was introduced in the 2015 budget speech by then Finance Minister Arun Jaitley, and then formally introduced by Prime Minister Narendra Modi.

PMSBY offers to provide accidental coverage of Rs 2 Lakhs in case of accidental demise, coverage of Rs 1 Lakh in case of permanent partial disability, and Rs 2 Lakhs for total irrecoverable disability.

Individuals between the age of 18 years to 70 years can apply for this policy.

With just a premium charge of Rs 12 per annum, it is one of the most ideal and cost-effective insurance policies for the lower-income group.

What is covered under Pradhan Mantri Suraksha Bima Yojana(PMSBY)

  • PMSBY provides a sum insured of Rs 2 Lakhs in case of accidental death.
  • PMSBY provides a sum insured of Rs 1 Lakh in case of partial disability.
  • PMSBY provides a sum insured of Rs 2 lakhs in case of total irrecoverable disability or loss of both eyes, loss of both hands and feet, paralysis, etc.

Features of PMSBY

Features of PMSBY

 

Sum assured in case of accidental death

2 Lakhs given to the nominee

Sum assured in case pf partial disability

1 Lakh

Sum assured in case of total disability

2 Lakh

Eligibility

18 years-70 years

Tenure

One year, can be renewed annually

Payment method

Premium will be auto debited from policyholders savings bank account. Premium can be paid via a bank account only.

Tax benefit

Yes, under Section 80D of The I.T Act, and sum insured of Rs 1 Lakh is non-taxable under Section 10  (10D) of The Income Tax Act.

Premium charges

Rs 12 per year.

Major exclusion under the Pradhan Mantri Suraksha Bima Yojna (PMSBY)

  1. Suicide or attempted suicide
  2. Murder

Important Point to note

  • You can avail of this scheme with only one savings account in that particular bank, irrespective of how many accounts you have.
  • The policyholders can avail of the benefits of the policy up till all the annual premiums are paid until attaining 70 years of age as on the annual renewal date.
  • In the case of a joint account, all holders can avail of the scheme.
  • The renewal premium of the policy will be debited from the saving bank account from 25th May to 31st of May every year.
  • In case you wish to discontinue the policy, a cancellation form must be submitted to the bank before the 30th of April of the year.

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