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Insurance

PMJJBY: The 330 Rupees Insurance Scheme

PMJJBY: The 330 Rupees Insurance Scheme

The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a new life insurance scheme for the growth and development of the poor and lower-income fraction of society.

This 330 rupees insurance scheme is a pure term insurance plan for the tenure of one year and renewable from year-to-year. Despite being quite a popular scheme, many remain unaware of its full scope. This article will cover the key features of the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme.

Features of Pradhan Mantri Jeevan Jyoti Bima Yojana

Enrolment period

You can enroll for the Pradhan Mantri Jeevan Jyoti Bima Yojana from June 1st of every year to June 31st of the subsequent year. During this year-long period, subscribers give their auto-debit consent.

Coverage

The 330 rupees insurance scheme offers coverage of 2 lakh to the nominee of the scheme. The death benefit entitled to the nominee is tax-free.

Tenure

The PMJJY offers coverage for the tenure of 1 year from the date of signing. The insured person can renew the scheme every year till the age of 55 years. The insured person can discontinue and rejoin in the future by providing a health certificate and paying the premium.

Premium

The scheme offers coverage at the minimum premium of Rs. 330 per annum. It is a good opportunity to get a term insurance at a very low rate.

Tax benefit

The premium paid under the insurance scheme is tax-free under section 80C of the Income Tax Act.

Payment mode

The premium is automatically debited from the saving accounts of the subscribers. This is the only available mode of payment for the premium of the policy. The PMJJY is to be renewed between May 25th and May 31st.

Benefits of the330 Rupees Insurance Scheme

  1. Death benefit: A death benefit of Rs 2 lakhs is provided to the nominee in case of the insured passes away.
  2. Maturity benefit: Being the pure term insurance plan, the PMJJY does not offer any maturity benefit.
  3. Tax benefit: The premium paid is tax-free under section 80C of the income tax act. However, if the insured fails to submit form 15 G/ 15 H, any proceeding exceeding 1 lakh will be taxable by 2%.
  4. Risk coverage: The Pradhan Mantri Jeevan Jyoti Bima Yojana provides risk coverage of 1 year, renewable annually.

 

Eligibility Criteria for the 330 Rupees Insurance Scheme

  • Anyone aged between 18-50 years with a savings account
  • Aadhar-linked bank account
  • Medical certificate to prove that the candidate is not critically ill. (applicable to those applying after the period August 31st, 2015 to November 30th, 2015)

The 330 rupees insurance scheme is a great way for salaried professionals to get reliable insurance coverage. At a premium amount of just Rs 330, this scheme is an affordable investment tool for those starting with insurance or those in the low-income group. Moreover, with the tax benefits and coverage it offers, PMJJBY is a scheme to consider when thinking of insurance policies.

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PMSBY Scheme: The 12 Rupees Insurance Scheme

rupees

PMSBY Scheme: The 12 Rupees Insurance Scheme

The Pradhan Mantri Suraksha Bima Yojana (PMSBY), popularly known as the 12 Rupees insurance scheme is one of the three social security schemes announced by the Modi Government as a part of the 2015 Budget. Despite being a revolutionary scheme, the awareness surrounding it is limited. This limits the number of people leveraging this scheme for their benefit. Through this article, you will understand what PMSBY is and its benefits.

What is PMSBY?

PMSBY is an accident insurance scheme that offers an accidental death and disability cover. It can be renewed annually.

The cover is provided for a one-year period, starting from 1st June to 31st May every subsequent year. The option to join or pay has to be given by 31st May of every year. Subscribers must give their consent for auto-debit before 31st May for successive years to extend the cover beyond one year.

Features of PMSBY

Let’s now look at the key features of the 12 Rupees insurance scheme:

1. Coverage

  • PMSBY offers risk coverage of Rs 2 lakh for accidental death and permanent total disability.
  • Permanent partial disability cases get a Rs 1 lakh claim payment.
  • Rs 12 per annum is deducted from the bank holder’s account by the auto-debit facility in just one instalment as a premium
  • The cover will be in addition to the subscriber’s other insurance plans, if any. However, the scheme is not a Mediclaim; that is, there is no provision for reimbursement of hospital expenses.

2. Inclusions and exclusions

  • The scheme only covers death or disability caused due to an accident. Death caused by natural reasons like a heart attack will not be covered.
  • Death caused by suicide is also not covered. The family will not be able to claim any insurance benefit should the subscriber commit suicide.

3. Eligibility

  • Bank account-holders (single or joint) in the age group of 18-70 are eligible to join the scheme. In case you have multiple bank accounts in one or multiple different banks, you will be eligible to join the scheme from one bank account only.
  • If you have a joint account, all holders of the account may join the scheme.
  • NRIs are also eligible, but if a chance for claim benefit arises, the amount will be paid only in Indian currency.

4. Cover period

The cover will be invalid to avail in any of the following events:

  • Subscriber attains age 70.
  • Bank accounts get closed, insufficiency of balance in the bank account to keep the insurance in force.

What to do in case of a claim?

Under PMSBY, death due to an accident has to be confirmed by documentary evidence. The accident should also be reported to police in case of incidents like road, rail, and other vehicular accidents and death by drowning or involving any crime. A hospital record is required in case of snakebite, fall from a tree, etc.

The 12 Rupees insurance scheme is a great initiative by the PM Narendra Modi government. At the one-time premium payment of Rs. 12, policyholders are covered for death or disability due to an accident. You can enroll in this scheme with ease through an insurance company or nearby bank.

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Health Insurance

What is a waiting period in health insurance?

What Is Waiting Period in Health Insurance?

Earlier, people’s health degraded with age. But in today’s world, age is not the only factor that affects an individual’s well-being. The changes in lifestyle have made us prone to diseases even at early ages. Excessive intake of junk food, a sedentary lifestyle, and no physical activities are the most prominent reasons that have reduced our immunity, increasing the chances of us falling ill. Therefore, health insurance is of utmost importance in today’s world.

Most health insurances come with a certain waiting period. You might be wondering what is a waiting period in health insurance? This article is all about it. So let’s understand the concept of a waiting period.

What is a waiting period in health insurance?

The waiting period is the time span during which you cannot file an insurance claim. It is a buffer period where the policyholder cannot make a claim even though his policy is active. The waiting period varies from insurer to insurer and policy to policy.

This concept of the waiting period was introduced to put an end to the unethical use of health insurance policies. It was also initiated to prevent the policyholders from filing hoax claims.

Types of waiting period

There are various types of waiting periods that differ from one health insurance policy to another. Out of these, the three major categories are discussed here:

1. Initial waiting period

In case, the policyholder gets hospitalized in the first 30-90 days after taking up the policy, he will not be able to avail of any claim benefits. To enjoy the benefits of the insurance policy this initial waiting period has to get over.

Note: Accidental hospitalization is covered from the first day itself.

2. Pre-existing disease waiting period

If a person declares that he or she is suffering from any diseases at the time of taking up the policy, the illnesses are then given the term of pre-existing diseases. Diabetes, blood pressure, thyroid, etc are a few common examples of pre-existing diseases. In such cases, a medical test is conducted to determine the impact of these diseases. Usually, a waiting period of 4 years is prescribed in these circumstances. This implies that any medical costs will be covered after the completion of 4 successful years of the policy.

3. Maternity benefits waiting period

The waiting period for availing of maternity benefits usually varies from 9 months to 36 months depending on the insurance company. A few insurance policies also offer protection to infants, but they have a waiting period too which usually lasts for 90 days.

4. Disease-specific waiting period

There is a specific waiting period that is prescribed for a few particular ailments like, tumors, ENT disorders, hernia, osteoporosis, etc. It depends upon one company to the other, but mostly the waiting period for these diseases varies from 1 to 2 years.

Other than the type of insurance policy opted and the insurance provider, there are various other factors that affect the waiting period too. The medical history of the insured, the age of the buyer, the number of people covered under the insurance policy, etc are few such factors. It is advisable to take up health insurance at an early age to avoid the chaos that might be caused during the waiting period.

AUTHOR BIO

This article is written by Team InsuranceLiya.com, an independent website that writes about insurance, finance, health, and more. Our writers have a wealth of knowledge, experience, and degrees in the fields of insurance, finance, economics, and beyond.

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Insurance

Top 10 insurance terminologies you should know

Top 10 insurance terminologies you should know

Gone are the days when you would have to visit an insurance company or an agent’s office to buy a policy. Purchasing an insurance policy has become extremely easy today thanks to the internet.

You can complete all the formalities online and purchase the policy at the click of a button. While the process has become easier and quicker, the complete understanding of the important terms of insurance still remains unfulfilled.

Most of us who buy insurance policies, be it life insurance, car insurance, travel insurance, or health insurance policy, don’t completely understand everything mentioned in the documents.

One of the reasons for this is our inability to understand the terms in the policy document. Although these terms might seem complex, they are simple. Let us look at the top 10 insurance terminologies you should know.

1. Policyholder

The policyholder is the individual under whose name the policy is purchased. The policyholder can also be an organization in case of group life insurance policies. However, in certain cases, the policyholder might not be the one insured in the policy. The insured is the individual who is protected under the plan.

For example, a husband decides to buy an insurance policy for his wife. In this case, the husband is the policyholder, while his wife is the insured individual.

2. Nominee

A nominee is an individual who is included in the policy by the policyholder. The nominee is the person who gets to avail of the benefits of the policy in case of the policyholder’s demise.

3. Beneficiary

In life insurance, the beneficiary is the person who receives the compensation or other benefits upon the death of the policyholder or on the maturity of the policy. The name of the beneficiary is inculcated in the policy by the policyholder.

4. Assignment

An assignment is a process where an insurance policy is transferred from the initial policyholder to a different individual. This is typically done if the original policyholder has offered the insurance policy as collateral for their loan. If the original policyholder expires, the new holder of the policy will be paid the benefits after the assignment.

For example, X has taken a personal loan of Rs.5 lakh against his policy and has made his bank the assignee. In the event of X’s demise during the policy term, the bank would be paid the amount first after the assignment is completed. If any balance amount remains after the loan is cleared, it is paid to the nominee.

5. Claim

A claim can be defined as a formal request from the policyholder to the insurer. This request is made for the insurer to compensate for the losses that have incurred to the policyholder and that are to be covered under the policy.

6. Coverage

Every insurance policy provides coverage to the policyholder or the assured against some risk. This coverage or protection could range from life cover to certain ailments, accidents, etc. The coverage varies from policy to policy and is applicable for the tenure of the insurance contract.

7. Exclusions

There could be certain cases or parts of losses for which no protection is offered. These situations are termed exclusions. The policyholder is informed regarding such exclusions before the contract is finalized. For example, one common exclusion in life insurance policies is suicide. If the assured commits suicide, no or limited benefits are paid.

8. Premium

A certain amount of money is paid by the insured against the protection offered by the insurance company. This money is called the premium. The premium amount depends on various factors like the coverage, age of the policyholder, the sum insured, etc.

9. Maturity and death benefit

The maturity benefit is the amount paid to the assured after the completion of the entire policy term. Selective insurance companies and insurance plans offer a maturity benefit. A death benefit is an amount paid to the beneficiary if the policyholder expires during the policy term.

10. Rider

You can choose to increase the protection of your basic plan by using add-ons. These add-ons provided by the insurer are called a rider.

Today an insurance policy is not a luxury, but a necessity. We may be casual about not knowing these terms, but at the time of making a claim or understanding the policy, problems can arise. Being aware of these terms can help us make informed decisions and buy insurance according to our needs.

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Top 5 Insurance Companies in India

Top 5 Insurance Companies in India

Life is quite uncertain and unpredictable, we never know what the next moment has in store for us. Though we cannot see or control the future, we can for sure prepare for it. Insurance can be your rescue aid during mishaps. In return for a few payments, they can be your and your beloved’s financial security umbrella.

The most important thing when it comes to buying insurance is choosing the right company. Here’s a list of the top 5 insurance companies in India to help you select the best one for yourself:

1. TATA AIA

The most renowned and trusted insurance company in India is TATA AIA. TATA Sons and AIA group run the venture jointly with a 74% and 26% stake respectively. The company has high global recognition and has been awarded as the “General Insurer Claims Team of the Year” by Claims Awards Asia 2013. It serves both individuals and corporates

The company is striving to offer high-end insurance solutions and capitalize on the increasing opportunities present in the market. Offering a claim settlement ratio of 99.06%, there is no better insurance partner than TATA AIG.

2. Bajaj Allianz

Starting its operations in the year 2001, Bajaj Allianz is one of the most successful insurance companies in India. It is a joint venture between the world’s leading insurance company Allianz SE and Bajaj Finserv.

The company has been receiving the ICRA’s iAAA rating for 10 consecutive years. This proves the excellence offered by Bajaj. It provides hassle-free claim settlement processes with an impressive claim settlement ratio of 91.67% for general insurances and 95.01% for life insurances.

3. Aditya Birla 

a) Aditya Birla Sun Life Insurance Company

A joint undertaking between the two extremely successful multinational enterprises, Aditya Birla Group and Sun Life Financial, this company started its operations in January 2001. It is one of the most trustworthy and premium life insurance companies operating in India. Its products cover almost all walks of a customer’s life including health, wealth, retirement and pension, children’s future plans, and a lot more. With an extremely vast network of branches and agents, the company has managed to excel in its field. It offers a claim settlement ratio of 97.15%.

b) Aditya Birla Insurance Brokers Limited

A subsidiary of the leading Insurance brokers, Aditya Birla Capital, the company was initiated to simplify the general insurance services to people. With a product range covering individuals, families and business organizations, ABIBL provides the right and the most affordable protection to its customers. They have policies to cover all stages of life. It is the largest general insurance company in the private sector which operates in more than 35 countries across the world. Offering a claim settlement ratio of 96%, the company gives every reason for one to trust them.

4. Bharti AXA

It is one of the largest private insurance companies in India. It is a joint venture between Bharti enterprises and the French MNC, AXA group. The majority of shares of 51% are held by the Bharati group.

The only objective of the company is to fulfill the financial requirements of an individual in times of need, in the best possible manner. It accomplishes that by offering a wide range of insurance products. It offers plans covering protection, savings, investments, health, assets, and family.

The company has operations in more than 200 cities in India. It is the first company to receive dual recognition, ISO 9001:2008 and ISO 27001:2005 within one year of its operation. It offers an excellent claim settlement ratio of 94.7% making it a reliable insurance partner.

5. Life Insurance Corporation of India (LIC)

LIC offers a multitude of life insurance products. Fulfilling its objective to offer satisfaction and convenience to its customers, LIC is recognized in every nook and corner of the nation.

With offices and intermediaries across the length and breadth of the country, LIC is a dominant player in the insurance industry with a huge customer base. It offers excellent digital customer assistance and services ensuring easy processing, hassle-free settlements, and quick grievance management to its clients.

It has been recognized and awarded for its quality and standards. LIC is consistently being chosen as India’s most trusted brand in the BFSI category for providing end-to-end services pan India. It has won the ‘Best Life Insurance Company of the Year’ and ‘Most Preferred Life Insurance Company of the Year’ awards for offering an excellent claim settlement ratio, standing by its commitments to offer nothing but the best.

Choose your insurance partner wisely, as you’re trusting them for safeguarding your and your family’s future.

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Things You Must Know about an e-Insurance Account

Things You Must Know about an e-Insurance Account

Ever wished to have an account that could manage all the important documents of the insurance policies you and your family members hold?. Well, consider your wish granted as an e-insurance account does exactly that for you!

An Electronic Insurance Account or eIA is a repository that helps to manage your or your family member’s insurance policies by storing them in one place. Available in electronic mode, the insurance policies can be easily maintained and one can get access to them anywhere and at any time.

Features:

  1. You can only hold one single e-insurance account under your name.
  2. Each account is allotted a custom account number that can be used for future activities.
  3. All electronic insurance policies even of several insurers can be maintained under the account.

Procedure:

You can open an e-insurance account via an insurance company that has a tie-up with repositories or any of the four IRDA approved insurance repositories. They are:

  • NSDL Database Management Limited
  • Central Insurance Repository Limited
  • Karvy Insurance Repository Limited
  • CAMS Repository Services Limited
  • SCHIL Projects Limited

Here are a few steps to open an account

Step 1: Select your preferred Insurance Repository and then download the opening form.

Step 2: Provide the necessary details mentioned in the form and attach self-attested KYC documents.

Step 3: Submit the attested documents along with the form to the insurance repository.

Documents required to open an eIA account

  • Passport Size Photo
  • A Cancelled Cheque
  • KYC documents (Any One):
    Address Proof: Ration Card, Aadhar Card, etc
    Identity Proof: Voter ID, PAN card, Aadhar Card
    Date of Birth Document: Domicile Certificate, Passport, PAN card, etc

Benefits:

The e-insurance Account offers multiple benefits, a few of them are as follows:

1. Provides safety

The policies under the account are available in an electronic format. This grants you the leverage to be free of all the worries of losing an original document, theft, damage to the papers and more.

2. Effortless premium payment

Once your account is open and active, you can easily pay the insurance premium amount online. The payment can be easily done via the account rather than waiting in long queues for hours to pay the premium in cheque or cash.

3. Easy monitoring

A yearly statement of the account along with the details of the various policies held by you is shared by the insurance repository. The account also enables you to receive notifications for the renewal of policy and reminders for premium deadlines too. This makes monitoring an easy task for the insured individual.

4. No resubmission of KYC details

Once the KYC documents are submitted and the account is active, you aren’t required to submit the documents again for every insurance policy bought in the future. All you need is to mention the insurance policy account details and the policy will be issued.

5. Easy conversion of old policies

You can easily convert an old policy into an e-policy and add it into the account seamlessly. You can also open an account if you haven’t purchased any insurance policy.

Now that you’re aware of an e-insurance account, it’s now time for you to reap its benefits. Open an account today to avail yourself of convenience for the future.

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Life Insurance

Tax Benefits on Life Insurance (Calculation & Break up)

Tax Benefits on Life Insurance

Life insurance policies are an extremely useful way of ensuring your family’s financial security after your demise. This is the foremost reason one takes up a life insurance policy but it has other benefits too. Life insurance policies are an extremely effective tax planning tool. They can help you save up a lot on taxes. Tax benefits on life insurance can be availed by policyholders under the Income Tax Act 1961.

There are two types of tax benefits available on life insurance policies, Deductions, and exemptions. Let’s understand them in detail.

Deductions under section 80C of the Indian Income Tax Act

Insurance premiums paid for policies taken for one’s own self, spouse and children are eligible for deduction under the income tax act, section 80C.

  1. The deduction on the child’s premium is allowed in every case. Irrespective of the fact the child is dependent or independent, married or unmarried, minor or adult.
  2. The premium can be claimed by an individual or a Hindu undivided family, under section 80C.
  3. The deduction is allowed only if the amount of premium paid does not exceed more than 10% of the sum insured. This is for the policies issued after 1st April 2012.
  4. For policies issued before 1st April 2012, the claim can be put forward for premiums paid for up to 20% of the total amount.
  5. For policies issued after 1st April 2013, a tax benefit for up to 15% of the amount is allowed in case if the policyholder suffers from a disability or an illness mentioned under 80(U) and 80DDB.

Exemption of the maturity amount received under section 10(10D) of the income tax act

  1. The policies issued after 1st April 2012 that have premiums more than 10% of the sum assured, receive the entire amount on maturity and are exempted from taxes.
  2. The entire amount of maturity is also received by policyholders whose policies are issued prior to 1st April 2012 and have premiums more than 20% of the sum assured.
  3. The policies issued after 1 April 2013 that are held by individuals that suffer from disability or illness mentioned under section 80(U) and 80DDB, and the premium for which exceeds 15% are also liable to receive full amount on maturity.

Life Insurance policies and TDS (Tax Deducted at Source)

  1. For policies that are not covered under any exemptions, and the amount received under these policies is above 1 lakh, the insurer deducts a TDS of 1% before making the payment. This TDS is also deducted from bonus amounts.
  2. For an amount less than 1 lakh, there are no TDS deductions made. Although this amount is fully taxable to the receiver.
  3. This rule is applicable for policies issued and payments made in and after October 2014.
  4. Credits can be claimed for TDS deducted in the income tax returns.

Life insurance companies in India offer various policies. Out of these, you must choose the one that meets your requirements. While choosing a policy, the tax considerations must also be studied and understood clearly as they can make a huge difference in your financial planning and standing.

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Health Insurance

Tax benefits of Health Insurance

Tax Benefits of Health Insurance

Health insurance just like life insurance is an imperative financial tool. Purchasing health insurance is exactly like a buy 1 get 1 bonus offer. You get both financial security from a medical emergency and tax benefits too. The tax benefits of health insurance act like a cherry on the cake that can help you reduce your annual income tax liability and save you money.

Let us explore more to get a better understanding of the tax benefits.

How much tax benefit can you get on health insurance?

The tax benefits of health insurance are offered for the premium paid for the policy under Section 80 D of the Income Tax Act. The deductibles are highlighted in the table given below.

Total Deduction

Scenario

Rs 25,000

For family and self.

All individuals are required to be below 60 years of age.

Rs 25,000 + Rs 25,000 = Rs 50,000

For family, parents and self.

All individuals are required to be below 60 years of age.

Rs 25,000 + Rs 50,000 = Rs75,000

For family and self.

All individuals are required to be below 60 years of age.

This also includes Parents who are senior citizens.

Rs 50,000 + Rs 50,000 = Rs 1,00,000

For family and self.

The eldest member is required to be above 60 years of age.

This also includes Parents who are senior citizens.

The savings one can avail of may vary depending upon the policy they hold and the amount of premium they pay.

What documents are required to claim the benefit?

The documents required to claim the tax benefits are-

  1. Payment receipt of the premium
  2. A copy of the insurance policy. The copy should clearly state the name of the family members, their relation and age.
  3. You will also need an 80D certificate if you have purchased the health insurance policy for your parent.

Essential points to consider while claiming tax benefits

  1. Always make sure to go through tax exemptions in your policy carefully. Do not miss any small details.
  2. Always use cheques or online transfers or other modes for payment of the premium and avoid cash payments. You can pay for preventive health check-ups in cash.
  3. The maximum tax benefit offered under section 80D is up to Rs 1,00,000. This is applicable for health insurance for yourself and your parents. This is also applicable if both- you and your parents are senior citizens.
  4. The tax benefits can also be claimed by HUF (Hindu Undivided Family). This is applicable for a premium paid for insuring the health of any member of the HUF.
  5. The tax benefits offered to senior citizens can also be spent on their medical expenses.
  6. The tax benefits are applicable for the total tenure of the insurance cover if you pay all the health insurance premiums at once.

Tax benefits of Health Insurance add to the efficacy of the insurance policy. Make sure to purchase a health insurance policy to avail of benefits and for the betterment of your family. The policy not only acts as a beneficial tax planning tool but also is a wise investment opportunity. It’s time to invest in one!

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What are Perils in Insurance? (And Its Types)

Perils in Insurance and Its Types

Perils in insurance are defined as any event, situation, or incident due to which damage has been done to the insured property or asset. 

It is very important for insurance owners to understand what are the perils that have been covered under their policy. This is to get a clear idea about when to reach your insurance company to get the compensation.

Let’s know about perils in detail.

Perils Covered under insurance policies

No insurance policy provides coverage for all types of losses. Perils covered differ from policy to policy and insurer to insurer. There are two types of coverages that are provided under insurance policies namely, Named perils and Open perils or All risk.

Named Perils

Named Perils policies provide broad and basic coverages. The events or perils that are to be covered under such policies are specifically mentioned in the insurance contract.
Here is a list of the perils that are usually covered under such policies:

  1. Lightning or fire
  2. Hail or windstorm
  3. Explosion
  4. Aircraft crashes
  5. Civil commotions or riots
  6. Vandalism
  7. Smoke
  8. Volcanic Eruptions
  9. Thefts
  10. Damage due to heavyweight of ice, snow, or sleet
  11. Damages caused due to any falling object
  12. Steam or accidental water overflow
  13. Freezing
  14. Accidental and Sudden damage caused due to electrical current that is artificially generated.
  15. Accidental and sudden cracking, tearing apart, burning, or bulging of any household systems.
  16. Damages caused by vehicles

These are the losses that are covered under named perils insurance policies. Except for these, it does not provide protection against any other risks which might also lead to problems for the insured.

Opened Perils or All risk

Under an open perils policy, all losses are covered except for those listed as exclusions in the insurance contract. It is just the opposite of how named perils policy works. In an open perils policy, more losses are covered as compared to the named perils policy. In a few policies, you can also opt for additional protection against any excluded peril by paying an extra fee.

Exclusions under these policies may vary from state to state, policy to policy, and insurer to insurer. Therefore, it is very necessary to have knowledge about the perils that are excluded from your open perils policy.

Here are a few common exclusions under such policies:

  • Land movements like earthquakes, landslides, etc.
  • Water and flood damage like sewer loggings etc. (Storm surges are covered only under flood insurance)
  • Failure in power supply
  • Damages caused due to the owner’s negligence or irresponsible behavior.
  • Wars
  • Possible nuclear hazards
  • Losses made on purpose
  • Damages caused due to frozen pipes in properties that are vacant.
  • Excessive pressure caused due to water or ice
  • Normal wear and tear
  • Thefts during construction
  • Mischiefs and Vandalism in a vacant property
  • Mechanical faults or breakdown of home appliances
  • Damages caused due to corrosion, dust, smog, or rot
  • Industrial or agricultural smoke
  • Animals of the owner and other insects or birds

Often perils and hazards are the two words that are used interchangeably, but in the insurance industry, perils in insurance and hazards are considered to be two completely different things. Perils are the events that are the cause of the damage whereas hazards are the factors that lead to perils.

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What is No Claim Bonus (NCB) on Car Insurance?

No Claim Bonus on Car Insurance

Car Insurance is taken in order to seek protection for a car from instances that cannot be avoided. It acts as a personal arsenal that provides assistance in case of accidental losses, theft, and any other liabilities. In addition to this, there are other interesting features that make a car insurance policy more effective. One of them is the No Claim Bonus on Car Insurance.

What is a No Claim Bonus on Car Insurance?

No Claim Bonus (NCB) refers to a discount that is offered by the insurer to the insured. The concession is offered when the insured doesn’t make any claim on the Own Insurance Policy premium during its entire tenure. The discount can be applied during the renewal of the policy in the subsequent year.

Benefits of No Claim Bonus

There are multiple benefits that NCB offers to car owners under a car insurance policy. Let’s have a look.

1. Low premium payment

With NCB a policyholder can receive a minimum discount of 20% and a maximum of 50% discount on the car insurance premium. For every claim-free year, the policyholder gets to avail of the NCB discount. This particular discount can help to lower the Own Damage premium amount that the policyholder is supposed to pay at the time of the insurance renewal.

2. A Benefit for the policyholder

One of the biggest advantages offered by NCB is that it’s granted to the car owner and not the car. This allows the policyholder the freedom to either sell the insured car or purchase a new one without the worry of losing the NCB. It stays with the policyholder as long as the individual renews the car policy.

3. Easily transferable

In a situation when the policyholder decides to change his/her car, an NCB can be conveniently transferred to the other car. Furthermore, the policy can also be transferred from one insurance company to the other in a case where the car owner decides to purchase insurance from any other company.

Transfer of NCB to a new car insurance

The transfer is an easy process however it may vary depending on whether the car owner purchases the new car insurance online, offline or via an agent. The process is as follows:

Online: The car owner is required to update the new insurance company about the NCB, the previous insurance company details, and the old policy number.

Offline/Agent: The following steps are required to be followed:

  • Contact the previous insurer.
  • Put in a request to transfer the NCB and submit all the necessary documents.
  • An NCB Certificate will be issued by the insurance company.
  • Submit the certificate to the new insurance company.
  • The new insurer will then transfer the NCB.

Point to Note: NCB can only be availed via an Own damage cover and not through car insurance that involves only third-party cover. It’s also not applicable to any other add-on except NCB Protector.

Now that you’re aware of the No Claim Bonus on Car Insurance, it’s time for you to spread the word and explain its benefits.

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