Why take a personal accident cover when you already have term insurance?

Insurance is a very important financial planning tool for an individual who has dependent family members. Hence, it is crucial to buy insurance judiciously with a good amount of research. When looking to buy life insurance, many people do not understand the basic differences between the various types of policies available in the market. Besides this confusion, they are also unsure if they need to amplify the coverage by investing in multiple policies.

In this article, we take a look at the main differences between a term insurance plan and a personal accident cover and how you can work out an optimum financial strategy that utilises both these plans in the best possible manner.

What is term insurance?
term insurance policy is a pure protection plan that is offered by almost all life insurance companies in India. It provides insurance coverage to an individual for a specific period of time.

A term plan can be taken for a duration of 5, 10, 20, or 30 years. If the life assured passes away during the policy tenure, his/her family will be offered compensation, i.e., the death benefit under the plan. This way, the life assured is able to secure the family’s financial stability even when he/she is no more. The policy benefits are paid out to the nominee under the policy in the form of a lump sum amount or as regular payments periodically. However, it is very important that the policyholder informs the family about the insurance, so that they do not miss out on the benefits in case of his/her unexpected demise.

Term insurance is the most basic form of life insurance coverage and it offers extensive protection for the lowest premiums. There is no savings component or maturity benefit provided by the policy. So, if you are disciplined enough to make investments independently, it is best to refrain from buying a life insurance planwith a savings component. Instead, buy a term insurance policy for enhanced life insurance protection.

What is a personal accident cover?

Even if an individual acquires an appropriate life insurance cover and a health insurance policy, he/she may not opt for a personal accident cover. You should know that health insurance companies offer the personal accident cover as a rider, and it is very profitable to club this add-on coverage with the base plan. You save considerably on premium and get extended coverage in the bargain.

Personal accident cover, as the name suggests, protects the life assured from accidental injuries and death. It safeguards the individual from financial loss due to his/her inability to work after the accident. This plan is provided as add-on coverage under motor insurance, life insurance, and health insurance plans.

●  Motor insurance – A car insurance plan that offers comprehensive coverage has an in-built personal accident cover. This protects the owner/driver of the insured car from accidental disabilities and death. However, the passengers in the vehicle are not offered protection under this cover. The policyholder can opt for a separate add-on cover that safeguards the named passengers in the vehicle from accidents. Personal accident cover can be purchased along with the insurance of a two-wheeler as well.
●  Life insurance – In life insurance, this coverage is offered as the accidental death and disability rider that can be opted for at the time of purchase of a policy. The maximum sum assured under this rider can go up to Rs.50 lakh, subject to a maximum of 100% of the sum assured under the base policy. This rider offers tax benefits under Section 80C and 10(10D) of the Income Tax Act.
●  Health insurance – In health insurance, the personal accident cover can be extended to the family members of the policyholder as well. Some general insurance companies offer personal accident cover with a sum insured of up to Rs.25 lakh. The policy usually covers all types of accidents, i.e., mishaps such as rail accidents, road accidents, accidents due to terrorist acts or natural calamities, etc. Worldwide coverage is another significant feature of the rider.

Difference between term insurance and personal accident cover
Now that you have a basic understanding of both types of insurance, here is a rundown of the main differences between the two:

●  Policy benefits – In case the life assured under a term plan dies during the policy tenure, his/her nominee will be compensated. The benefits are paid out irrespective of whether he/she passes away in an accident or naturally. On the other hand, the personal accident cover will pay out the benefits only when there is death or disability arising out of an accident. In the event of death due to natural causes, the personal accident cover will not pay the benefits.
●  Premium – In the case of term insurance, younger customers are offered lower premiums. The cost of insurance increases as the individual grows older. However, in a personal accident cover, the premium for insurance depends on the profession of the insured apart from the age. If you work in a mine or as a technician installing high-tension wires, you are in a high-risk profession as far as insurance companies are concerned. You will then be required to pay a higher premium amount for personal accident cover.

It is important to choose the right level of insurance coverage to protect your family’s financial future. So, you can consider buying a term insurance policy with a personal accident rider to avail extensive coverage. Remember to compare plans between insurance providers to find the most suitable one for your needs.

Source- Forbes India

Date- 7th March 2018



Irdai proposes to lower third-party insurance premium on small cars

New Delhi, March 7 (PTI) Insurance regulator Irdai today proposed reduction in premium on insuring small private cars and certain types of two-wheelers, but plans to raise the same for several categories of goods vehicles.

The Insurance Regulatory and Development Authority of India (Irdai) has released exposure draft on premium rates for motor third-party (TP) insurance covers for 2018-19 fiscal and has invited stakeholders comments till March 22.

The draft proposes to increase the premium on e-rickshaw from the existing Rs 1,440 to Rs 1,685 in the next financial year starting April 1.

The regulator has proposed to lower the premium for third-party insurance, which is mandatory, on cars with engine capacity of less than 1,000 cc to Rs 1,850 from the existing Rs 2,055.

The draft does not propose any change in the existing rate for cars with engine capacity higher than 1,000 cc.

If the draft is approved, the premium on two-wheelers with less than 75 cc engine will fall to Rs 427 from the current Rs 569. No change has been proposed for entry level bikes (75 to 150 cc).

The Irdai proposes to more than double the premium on super-bikes (exceeding 350 cc) to Rs 2,323. Also, an increase has been proposed in the case of performance category bikes (150-350 cc).

The regulator has proposed to either increase or maintain status quo in premium rates in most of the categories of commercial vehicles. The proposed premium on goods carrying vehicles (exceeding 40,000 kg) is Rs 39,299 from the current Rs 33,024.

The exposure draft said that in case of vintage cars, a discount of 50 per cent would be allowed for private cars certified as vintage cars by Vintage and Classic Car Club of India.

There is a proposal to reduce the third-party premium on in certain category of vehicles (four wheeled) used for carrying passengers.

There is also a proposal to increase the premium in case of agricultural tractors up to 6 HP from Rs 653 to Rs 816.

The data provided by the Insurance Information Bureau of India (IIBI) has been used for arriving at the Motor TP premium rates proposed for 2018-19 financial year, the Irdai said.

Motor third-party insurance is mandatory for vehicles. PTI NKD CS ANZ SBT

Source- Indiatoday

Date- 7th March 2018

How to choose a health insurance policy wisely

With medical expenses going through the roof, hospitalisation can be a nightmare for the middle class. Health insurance can be a good tool that can help surmount the difficulties arising out of increasing healthcare costs. While having a health insurance has almost become a necessity today, one needs to be mindful of a handful of factors before taking up a policy. According to experts, choosing a policy is akin to investing in mutual funds or stock markets.


All these require proper a n a lysis and care f u l planning. In fact, in the case of health insurance policies a lot more careneeds to taken as the terms and conditions are replete with jargons which only mavens can decipher. Some of the things one needs to look at while choosing the policy are: ensure that claims process is easy; have access to a large network of hospitals, etc. “Before buying a health insurance policy, one needs to assess one’s lifestyle and health status.

The best option would be to cover all family members,” says Adhil Shetty, CEO of BankBazaar.com, adding that the sum insured should be finalised after taking inflation into account. “Health insurance is for lifetime. While one may feel that one could always buy another insurance policy a few years down the line, premiums become more expensive with age of the insured.

Therefore, it is better to buy health insurance for lifetime,” he adds. Several policies come with a cap on the room rent, ICU charges and doctor’s fees. “This is one key factor one should consider while deciding an insurer, as this factor could depreciate the value of health insurance with inflation. Assume that the room rent for a privateroom today is Rs 4,000. In 10 years, at an inflation of 7.5 percent, the room rent would be more than Rs 8,000. If one has a cap of Rs 5,000, one would be paying close to 40 per cent of the room rent from his pocket. In 20 years, the same room would cost approximately Rs 18,000.

So, less than 25 per cent of the room rent would be borne by the insurer, while the remaining has to be paid by policy holder,” says Shetty. Ideally, one should opt for a policy with private room eligibility.Most policies come with clauses on sub-limits and copay. The former puts a limit on particular expenses, usually as a fraction of the sum assured. For example, a particular surgery may be capped at 50 per cent of the sum assured. On the other hand, in case of co-pay, a part of the total expense would have to beborne by the insured, even if the total amount is well within the sum assured of the policy.

“There are several trade-offs here, and people optingfor health insurance should make sure that they understand what all these mean and compare different policies on these factors before taking a decision,” says Shetty. Experts aver that understanding the policy iscritical as it involves financial implications. If you haven’t understood properly, seek expert advice.

“Another important factor to check is if the policy pays for medicines or not, as these expenses make up a major portion of overall bill. Also, focus on the network of hospitals covered by the insurance company. Insurance holders should compare the hospital network covered by the insurance provider and see if the areas and hospitals they and their family members likely to be hospitalised come under this,” says Subba Rao Anupindi, senior chartered accountant from Hyderabad.

Source- The Indian Express


How HR can better use technology to drive talent strategies

           Behavioral economics is a term that is increasingly entering the lexicon of the world at work. Last October, renowned behavioral economist Richard Thaler won the Nobel Memorial Prize in Economic Sciences for the research in his book “Nudge,” about how subtle policy or system shifts can influence individual decision making on a broad scale – in government, in the economy, and in the workplace.

          Behavioral economics is about understanding the true nature of human behavior and decision-making. Human beings are not always driven by rational self-interest. In fact, much of human behavior and decision-making is actually irrational. But irrational does not mean unpredictable, allowing behavioral economists to anticipate human reactions in order to structure more productive interactions. When BE strategies are used at work, they can help leaders anticipate what truly matters in helping employees feel more engaged, thereby better serving the organization’s mission and the employee experience.

Sound familiar? To an HR professional, it should. Most likely, you’ve been implicitly employing behavioral economic strategies since the beginning of your career even if you’re unfamiliar with the terminology.

In fact, there is one area HR professionals have historically deployed what can only be considered behavioral economics intervention: the structured interview. The structured interview was created to help interviewers overcome biases in hiring decisions, which has been critical in developing diverse and successful teams. Behavioral economics and human resources have always gone hand-in-hand because they’re both people-centered. Given its rising notoriety within business, it’s likely we’ll see a BE “boom” within the next few years in the HR space.

While early BE-influenced strategies like the structured interview have generated positive results for improving hiring decisions, as we dive further into the digital age, technology is becoming increasingly important for how we build and deliver tactics designed to shift behavior. As work becomes more digitized, automated, and connected, HR leaders will need to use technology to deploy behavioral economic strategies aimed at optimizing employee engagement, structuring learning and development programs, and improving performance appraisals.

Here are some ways behavioral economics is influencing the future of work, and how HR leaders can utilize technology to help deploy its strategies.

The Team Leader 2.0: Assisted by Technology

Let’s consider the technique of “priming” and how it can be used to make managers more aware of the needs of their teams. Priming is based on the principle that the more frequently a person experiences an idea or concept, the more often she will find opportunities to act upon that concept in day-to-day life. Leveraging flexible and customizable technology platforms like e-mail can enable interventions – nudges – to prime team leaders to pay more attention to the needs of their people. For example, the ADP® talent activation solution, Compass℠, assesses the leader-team dynamic to determine which fundamental team needs require the most attention. It then provides leaders with personalized email coaching. The emails always use keywords in the subject line in order to prime leaders on their area of their focus, such as “Recognition,” or “Development.” This is one way to prime managers: To remind them in small, frequent bursts to focus on that particular aspect of leadership. This type of coaching helps nudge team leaders to address team needs more proactively, and also serves as an example where technology can step in to help overloaded managers, who might otherwise place certain management responsibilities on the backburner.

Idiosyncratic Rater Effect, Recency Bias, and the Performance Review

Much like with the interview, managers enter performance evaluations with all sorts of rater biases. Some managers are notoriously harder (or easier) raters than others, which can skew the results across an organization. The bias of conflict avoidance can make it difficult for some managers to deliver constructive feedback, leading to inflated rankings. Perhaps the greatest challenge to performance reviews is “recency bias” in which managers are prone to evaluate the entire year based on whatever has been happening most recently. These challenges are significant, because if employees are being deployed, paid, and promoted based on these evaluations, companies should want them to be as objective as possible.

An equalizing behavioral economics tactic is based on the availability heuristic – ensuring managers have the most relevant and useful information in mind prior to providing ratings or entering performance evaluations. Technology can be a crucial tool in this regard. Data analysis can help identify the particular biases that drive a given manager’s ratings historically, and customize interventions around that, allowing HR leaders to provide digestible and tailored trainings. Technology can be used to provide snapshots of an employee’s entire year so that the manager does not succumb to recency bias. Then, the moment before a performance review is scheduled to start, an automated text message can be sent to the manager, reminding them of their training takeaways. Many experiments in social science demonstrate the significant impact of providing salient information at the right time to influence behavior.

Data-Discovered Holes, and the Tools to Patch Them

Many of the tools deployed by HR leaders appropriately have a fairly narrow focus. There are tools for goal-setting, recognition, team alignment, and many other aspects of leadership, engagement and productivity. Despite how well-designed these tools may be, HR practitioners inevitably run into challenges when introducing the tools into the company. One important reason – not everyone at the company needs them. (If your team is already great and setting and hitting goals, why would you want a new system to help you?)

The good news is, today, more data than ever is available at the fingertips of HR mangers to identify places for improvement for leaders, teams and individual employees. This allows for greater discretion in the targeted prescription of tools. The idea is to use targeted technology to provide the support that is both relevant and realistic for people – meeting them on their schedule, on their devices, in the ways that support their particular challenges.

The first step for HR leaders is to initiate data collection to gain understandings where the opportunities lie. This data offers an incredible advantage: Clarity around the actual challenges that need to be addressed, not just the theoretical ones. The second step: Disseminating that information and support to target and train leaders, teams and employees at specific interventions. This approach utilizes the behavioral economics principle of salience, by which the relevance of the intervention to a particular individual goes a long way in determining its impact.

Although incorporating behavioral economics into HR-related product-design and technology is still in its early stages, it’s important for HR leaders to begin thinking now about the place of BE strategies in the future of work. Right now, as a first step, HR leaders should begin to consider what technology platforms they use, and how their employees interact with and respond to those platforms. Deploying technology that is both designed for the end-user and anticipates the potential for irrationality of humans will become the technology most valued and used by your workforce, giving you an edge in the ongoing war to attract and retain top talent.

Source– Benefitnews

Date- 21st February 2018

Ministry seeks mergers of three PSU non-life insurers without much disruption

Examination date for the promotion may be declared by GIPSA in May, sources familiar with the development said. It means that there will not be any forceful retirement or exit for the time being. Redeployment will be done which  means excess staff will be transferred to other offices and places, the sources said, adding, that things are yet to clear whether there will be `VRS and Pension”.

Ravi Mittal, additional secretary, Ministry of Finance

After finance minister Arun Jaitly made a Budgetary proposal for the merger of three state owned general insurers,   , finance ministry officials met the CMDs of these companies,_Oriental Insurance, National Insurance and United Insurance- in New Delhi on Friday.

GIPSA, the umbrella body of all the four state-owned non-life insurers, in course of time will appoint a consultant to prepare the strategies for the merger, said sources who attended the meeting.

Ravi Mittal, additional secretary, Ministry of Finance (MoF) in his address in the meeting, had asked the the three CMDs to keep their ongoing business as usual including effecting all promotional exercises, without causing any major disruptions

GIPSA had earlier stalled the internal promotional exercises among the five members including GIC Re in January due to some technical reasons and incidentally, after a few days, Jaitley had announced the merger of the three state-owned non-life insurers by the next fiscal-end.

As the government has made it clear that business will be as usual, it means that the year’s promotion exercise will be conducted soon, said sources..

Examination date for the promotion may be declared by GIPSA in May, sources familiar with the development said. It means that there will not be any forceful retirement or exit for the time being. Redeployment will be done which  means excess staff will be transferred to other offices and places, the sources said, adding, that things are yet to be clear on sensitive issues like `VRS and Pension’..

K Sanath Kumar, CMD, National Insurance Company

When contacted, K Sanath Kumar, CMD, National Insurance Company, who had attended the meeting, said,“ Today there was a meeting with officials of Department of Financial services and CMDs of three PSU Insurers identified for merger, the first such meeting after Budget announcement.”

The discussions, he said, were preliminary and it was agreed that there would be more discussions at various levels to work out a road map and the time lines.

“Till that time it would be business as usual including promotion exercise etc. The Government assured that neither the customers nor the employees will have any grounds for any concern,’’ he said..

Source: Asia  Insurance Post

Date: 16th February 2018

Prem Watsa earns a net profit of $930 mn from stake sales in ICICI Lombard General

“The results improvement was driven by net after-tax gains in excess of $1.9 billion related to the reduction of Fairfax shareholding in ICICI Lombard and the sale of its 97.7percent equity interest in First Capital. The reduction of our shareholding in ICICI Lombard to about 10 percent resulted in a net after-tax gain of $930 million,” said Prem Watsa,, CEO, Fairfax

Windfall gains from its Indian operations have swung  Prem Watsa’s Canada-based Fairfax Financial Holdings to the profit in the fiscal year 2017. Aided by a massive profit in its ICICI Lombard deal, the multinational re/insurer has reported net earnings of $1.74 billion in its global operations for 2017 compared to a net loss of $512.5 million in 2016.

The results improvement was driven by net after-tax gains in excess of $1.9 billion related to the reduction of its shareholding in ICICI Lombard and the sale of its 97.7 percent equity interest in First Capital.

Watsa, who through one of his companies Lombard was holding 36  per cent in ICICI Lombard General Insurance till July 2017, had to pair it down to below 10 per cent in tranches for regulatory compliance as he intended to set up another general insurance company -Digit- along with the partnership of Kamesh Goyal, who quit his job in Allianz before joining hands with Watsa. The joint venture was 17 years oldwhen Watsa had to bring down his stakes in it.

“Our results in 2017 were the best in our thirty-two-year history, in spite of some of the largest catastrophe losses in history as a result of hurricanes Harvey, Irma and Maria and the California wildfires,” said Prem Watsa, CEO, Fairfax while announcing results of the company.  .

“We also ended the year with a record $2.4 billion in cash and marketable securities at the holding company level. The reduction of our shareholding in ICICI Lombard to about 10 percent resulted in a net after-tax gain of $930 million; and we entered into a strategic alliance with Mitsui Sumitomo Insurance Company resulting in the sale of First Capital for cash proceeds of $1.7 billion and a net after-tax gain of approximately $1.0 billion.”

Meanwhile , the company, with a 49 per cent stake, has established another general insurance company-Digit-  in India and has also applied for a license from India’s insurance regulator, IRDAI to set up a reinsurance branch in India.

Overall, Fairfax grew gross premium written to €12.21 billion in 2017 from $9.53 billion in 2016.

The combined ratio of the insurance and reinsurance operations was 106.6 percent on a consolidated basis, including 11.2 consolidated combined ratio points of losses from hurricanes Harvey, Irma and Maria, and the California fires.

For 2016 the combined ratio was of 92.5 percent. As a result, the operations produced an underwriting loss of $641.5 million compared to an underwriting profit of $575.9 million in 2016.

The insurance and reinsurance operations produced an operating loss (excluding investment results) of $215.7 million, compared to an operating income of $1.04 billion in 2016, reflecting $906.1 million of hurricane losses from hurricanes Harvey, Irma and Maria.

Source: Asia Insurance Post

Date: 16th  February 2018

United India Insurance chief expects PSU insurers’ merger by March 2019

Move may not affect competition or manpower, says United India Insurance MD

The proposed merger of three public sector insurance firms may be completed by early 2019, said M.N. Sarma, chairman and managing director ofUnited India Insurance Co. Ltd.

Talking to the media on the sidelines of a National Insurance-ASSOCHAM Summit, he said that a meeting of all the three heads of the respective insurance PSUs had been convened on February 16 in New Delhi to discuss the budget proposal.

Finance Minister Arun Jaitley had in the Budget, proposed a merger of three general insurers — National Insurance Co. Ltd., United India Insurance and Oriental Insurance Company Ltd.

‘Operational advantages’

“There are a lot of operational advantages and savings that will accrue from this proposed merger,” Mr. Sarma said even as he expressed confidence that neither competition nor manpower would be affected by the creation of a single entity. “The issue is to make the companies stronger,” he added.

To a question on the management of the assets of these three companies, he said that all the finer points would be worked out progressively.

Earlier at the event on connecting wellness to health awareness, he mooted the idea of pursuing a carrot-and-stick policy to incentivise people to buy health insurance coverwhile leading a more healthy life. “Unless the rod is used, people will not fall in line.. insurers could then give discounts to the insured for staying healthy,” he said.

National Insurance chairman-cum-managing director K. Sanath Kumar said that an awareness campaign was needed to remove the air of distrust between the insurer and the insured while encouraging people to take care of their health. R. Chandrasekharan, secretary general of the General Insurance Council said that health insurance was not for aggrandisement of the hospital chains but for helping a person in health distress.

Source: The Hindu

Date: 13th February, 2018