Insurance-101

Steps On How To Process A Payment Protection Insurance Refund For Mis-Sold Policies

2012-11-14T12:41:00.001-08:00

"Let the buyer beware" is a very old quote, but it still rings the truth. It's especially so in these modern times where everything seems so sophisticated. Hence, we should always exercise utmost care, particularly when we engage in transactions involving money. Take the case of applying for loans or taking out insurance policies. These transactions have more or less one thing in common. You will be required to pay a minimum amount per month, known as amortized payments. With a loan, is repayment in monthly amortizations for the sum of money you borrowed. With insurance policies, it's the premium payments.

When it comes to insurance policies, one of those transactions you have to be extra careful of is the payment protection insurance policy. What is this all about? Basically, you take out this kind of coverage to answer for your outstanding obligations in case you become unable to repay them. For example, if you have a lot of loans, you can apply for this coverage. Hence, in the event that you're suddenly out of a job or become ill, your policy can cover the repayments until you get things sorted out. However, there have been a lot of issues about payment protection insurance policies in the last few years.

A lot of people have been mis-sold these policies. If you are one of them, then you should take action immediately and seek a refund. How do you do this? First, you have to write a formal letter to your lender and ask them to review your file. If you're not sure about the format, just download a standard template online. But what happens if the lender refuses to acknowledge for request? Then you have to proceed with the second step which is to take the matter to the Financial Ombudsman Service.

The Financial Ombudsman Service also has a website which you can easily access. There, you will also find the necessary requirements in indorsing your case to them. However, note that in some cases, unexplained delays occur. So, if you things to proceed more smoothly, go to the third step. This is to seek the proper legal assistance. The experts will be able to evaluate your situation and make the proper endorsement to the Ombudsman. Use your online resources to search for experienced and reliable legal professionals in this area. Last but not the least, do your research. Keep yourself updated with the latest developments so you can use them to your advantage as well.

A Beginner's Guide to Insurance

2012-09-30T23:23:00.000-07:00

Having the right kind of insurance is central to sound financial planning. Some of us may have some form of insurance but very few really understand what it is or why one must have it. For most Indians insurance is a form of investment or a superb tax saving avenue. Ask an average person about his/her investments and they will proudly mention an insurance product as part of their core investments. Of the approximately 5% of Indians that are insured the proportion of those adequately insured is much lower. Very few of the insured view insurance as purely that. There is perhaps no other financial product that has witnessed such rampant mis-selling at the hands of agents who are over enthusiastic in selling products linking insurance to investment earning them fat commissions.

What is Insurance?

Insurance is a way of spreading out significant financial risk of a person or business entity to a large group of individuals or business entities in the occurrence of an unfortunate event that is predefined. The cost of being insured is the monthly or annual compensation paid to the insurance company. In the purest form of insurance if the predefined event does not occur until the period specified the money paid as compensation is not retrieved. Insurance is effectively a means of spreading risk among a pool of people who are insured and lighten their financial burden in the event of a shock.

Insured and Insurer

When you seek protection against financial risk and make a contract with an insurance provider you become the insured and the insurance company becomes your insurer.

Sum assured

In Life Insurance this is the amount of money the insurer promises to pay when the insured dies before the predefined time. This does not include bonuses added in case of non-term insurance. In non-life insurance this guaranteed amount may be called as Insurance Cover.

Premium

For the protection against financial risk an insurer provides, the insured must pay compensation. This is known as premium. They may be paid annually, quarterly, monthly or as decided in the contract. Total amount of premiums paid is several times lesser than the insurance cover or it wouldn't make much sense to seek insurance at all. Factors that determine premium are the cover, number of years for which insurance is sought, age of the insured (individual, vehicle, etc), to name a few.

Nominee

The beneficiary who is specified by the insured to receive the sum assured and other benefits, if any is the nominee. In case of life insurance it must be another person apart from the insured.

Policy Term

The number of years you want protection for is the term of policy. Term is decided by the insured at the time of purchasing the insurance policy.

Rider

Certain insurance policies may offer additional features as add-ons apart from the actual cover. These can be availed by paying extra premiums. If those features were to be bought separately they would be more expensive. For instance you could add on a personal accident rider with your life insurance.

Surrender Value and Paid-up Value

If you want to exit a policy before its term ends you can discontinue it and take back your money. The amount the insurer will pay you in this instance is called the surrender value. The policy ceases to exist. Instead if you just stop paying the premiums mid way but do not withdraw money the amount is called as paid-up. At the term's end the insurer pays you in proportion of the paid-up value.

Now that you know the terms this is how insurance works in plain words. An insurance company pools premiums from a large group of people who want to insure against a certain kind of loss. With the help of its actuaries the company comes up with statistical analysis of the probability of actual loss happening in a certain number of people and fixes premiums taking into account other factors as mentioned earlier. It works on the fact that not all insured will suffer loss at the same time and many may not suffer the loss at all within the time of contract.

Types of Insurance

Potentially any risk that can be quantified in terms of money can be insured. To protect loved ones from loss of income due to immature death one can have a life insurance policy. To protect yourself and your family against unforeseen medical expenses you can opt for a Mediclaim policy. To protect your vehicle against robbery or damage in accidents you can have a motor insurance policy. To protect your home against theft, damage due to fire, flood and other perils you can choose a home insurance.

Most popular insurance forms in India are life insurance, health insurance and motor insurance. Apart from these there are other forms as well which are discussed in brief in the following paragraphs. The insurance sector is regulated and monitored by IRDA (Insurance Regulatory and Development Authority).

Life Insurance

This form of insurance provides cover against financial risk in the event of premature death of the insured. There are 24 life insurance companies playing in this arena of which Life Insurance Corporation of India is a public sector company. There are several forms of life insurance policies the simplest form of which is term plan. The other complex policies are endowment plan, whole life plan, money back plan, ULIPs and annuities.

General Insurance

All other insurance policies besides Life Insurance fall under General Insurance. There are 24 general insurance companies in India of which 4 namely National Insurance Company Ltd, New India Assurance Company Ltd, Oriental Insurance Company Ltd and United India Insurance Company Ltd are in the public sector domain.

The biggest pie of non-life insurance in terms of premiums underwritten is shared by motor insurance followed by engineering insurance and health insurance. Other forms of insurance offered by companies in India are home insurance, travel insurance, personal accident insurance, and business insurance.

Buying Insurance

There are an umpteen number of policies to choose from. Because we cannot foresee our future and stop unpleasant things from happening, having an insurance cover is a necessity. But you need to choose carefully. Don't simply go with what the agent tells you. Read policy documents to know what is covered, what features are offered and what events are excluded from being insured.

1. Know your Needs

Determine what asset or incident must be protected against loss/damage. Is it you life, health, vehicle, home? Next determine what kinds of damage or danger exactly would the assets be most probably be exposed to. This will tell you what features you should be looking for in a policy. Of course there will be losses which cannot be foreseen and the cost of dealing with them can be very high. For instance nobody can predict that they'll never suffer from critical illnesses no matter if they're perfectly healthy at present.

The biggest mistake while it comes to buying insurance, particularly life insurance is to view it as an investment. Clubbing insurance and investment in a single product is a poor idea. You lose out on both fronts because for the premiums you're paying more cover could've been got in a term plan and if the premiums were invested in better instruments your returns could've been several times more.

Be wary of agents who want to talk you into buying unnecessary policies like child life insurance, credit card insurance, unemployment insurance and so on. Instead of buying separate insurance for specific assets or incidents look for policies that cover a host of possible events under the same cover. Whenever possible choose riders that make sense instead of buying them separately. Unless there is a fair chance of an event happening you do not need insurance for it. For instance unless you are very prone to accidents and disability due to your nature of work or other reasons you do not need an Accident Insurance policy. A good Life Insurance policy with accidental death rider or waiver of premium rider or a disability income rider will do the job.

2. Understand Product Features and Charges

The worst way of choosing an insurance product or insurer is to blindly follow the recommendation of an agent or a friend. The good way to do it is to shop around for products that suit your need and filter out the ones offering lower premiums for similar terms like age, amount of cover, etc. All details you need about the product features and charges will be provided on the company's website. Many insurance policies can now be bought online. Buying online is smarter because premiums are lower due to elimination of agent fees. If buying offline in case of life insurance, tell the agent that you're interested only in term insurance.

Before you sign on the contract make sure you have understood what items are covered and what items are exempted from the cover. It would be so devastating to learn in the event of damage or loss that the item you hoped to cover with the insurance was actually excluded. So many people rush to their insurers after being treated for diseases only to realize that the particular disease was excluded. Understand details like when the cover begins and ends and how claims can be filed and losses be reported.

Don't choose an insurance company because your neighbourhood friend is their agent and never let them coax you into buying from them. Insurance premiums run for years and it means a sizeable amount of money. Apart from the premiums charged look for the service provided. When you are faced with a peril you want the claims collection processed to be complicated with non-cooperating staff in the insurance company's office. Seek answers from people who have had previous experience with the company for questions like how customer friendly and responsive the company is when it comes to handling claims.

3. Evaluate and Upgrade in Time

As you walk from one life stage to another or when the asset insured changes your policies must be reviewed. Perhaps your cover will need to be increased (or decreased) or you'll need to top it up with a rider. Some instances when you need to review your cover are when you getting married, when you have children, when your income increases your decreases substantially, when you're buying a house/car and when you're responsible for your ageing parents.

Insurance Can Be Handy at Old Age

2012-09-30T23:20:00.001-07:00

Whenever someone says the word 'protection', another word comes to my mind. It is nothing but insurance. Insurance is an extremely crucial part of anybody's life. It can really come to your rescue at times of financial distress. When you become old, there is definite possibility of financial constraints coming your way. You would have retired from your job and it would get difficult to generate an income stream after retirement. You would not have any physical strength left in you to take up any part-time or freelancing job once you have crossed the age of 60. Depending on others to lend you money on a regular basis can really dent your relationship with them. This is true even in case of close relatives.

Even when you are old, there can be lots of commitments that can make you financially tight. Since people don't tend to be heavy eaters when they get old, food expenditure would not be a problem. But, old age can bring in various kinds of health issues along with it. Health issues can not only be frustrating for you and your relatives, they can also take away a lot of your money. A single visit to a nearby clinic itself can cost you a lot in the form of consultation fees. If you have some complicated issues, then the doctor might charge even more.

Blood pressure and diabetes are two of the most common diseases that are known to plague people at old age. Paralysis is also something that can occur at old age. You may have to frequently visit your doctor to check your blood pressure and blood sugar level and buy medicines regularly. The medicines can be quite expensive. Hence, having a health insurance cover is of paramount important. You can ignore health insurance at your own peril.

While health insurance is mandatory, life insurance can also be extremely useful after retirement. Even though I hate to say it, one needs to realize that life cannot go on forever. When you cross 60, this fact will definitely loom large on your mind. More than you care for yourself, you would care for your loved ones. You would want to keep your life partner financially secure even after your demise. You never know how settled your kids are going to be. So, having a life insurance cover can take care of the financial requirements of your life partner and children if you have any.

A Very Cheap Car Insurance

2012-09-30T23:13:00.000-07:00

There are a lot of easy tricks that can save you hundreds of dollars on car insurance and get you even more coverage. There are thousands of different quotes, and it can be difficult to find the best but also most inexpensive one for you. First, if you are looking to save money, you should know what affects the price of car insurance the most and how to use that information to your advantage. The three biggest factors which affect everyone's premiums are the driver's age, history, and state they live in. Two other factors include the insurance deductible and amount of coverage the person wants. This article is going to explain every one of these factors and how to use them save money on car insurance.

First is the driver's age if the person is young which for most auto insurance companies is under 25 than their premiums are going to be high. If the driver is "inexperienced," they should consider trying to get signed up under their parent's insurance plan and get a discount by getting a family plan. Another thing that can make car insurance very expensive is if the driver has had an accident within the last five years. Auto insurance rates vary by states like Florida have higher premiums than other states because it is hot all year long, and more divers are on the road more often which results in more accidents.

The best way for you to control the price of your car insurance is through the "deductible." A deductible is a lump sum which you pay the Auto insurance company. The sum of money is the property of your insurance provider and if you get into an accident, they will use that money all the initial payments. The more you pay upfront in the "deductible" the less you will pay for car insurance (Monthly). Deductibles range from $100-2,000. You will have to pay more upfront, but this is a great way to get cheap auto insurance.

Coverage is a major concern with most drivers. However, some are just looking for the cheapest rate. The more coverage you want the more you will have to pay, there is a very important distinction that has to be made many drivers don't. Sure if you get a great deal on Auto insurance and your saving money, and you get into an accident, and you're not covered for that type of accident you're going to pay for it. Sometimes it can be a lot less expensive to protect yourself well with a higher priced auto insurance, because even the safest drivers get into car accidents.

Another thing is the type of car you drive the insurance companies know which brands are more likely to break down or get robbed. There are some car insurance companies that will provide a list of the cheapest cars to insure. Another thing many auto insurance companies take seriously is the education of a person someone who has a college degree will pay less for auto insurance than someone who does not. The first thing you should do is fill out several quotes and compare them to decide which one is best for you. Many Individuals stay with the company they start with so it is worth the time investment to actually get a great company from the start.

The Basics Way of Getting Life Insurance Over 50

2012-09-30T23:11:00.000-07:00

If you are over the age of 50, then you ought to know that it has become increasingly easy to invest in life insurance over 50. Life expectancy has increased and this has led to a decrease in the cost of these policies for the elderly. Though this is the case, there are a couple of things that every senior needs to keep in mind for the purpose of ensuring that the policy they settle down with is the best. Some of these factors are as highlighted below.

Compare Policies
There are different types of policies that are specially designed for seniors within this age group. For this reason, it is advisable to take time and compare different types of polices. The most basic and important thing about carrying this out is the existence of different types of rates for polices that have varying features. If you don't understand the some of the aspects that make one policy ideal over another, it is advisable to seek professional help in order to end up with the best possible policy.

Determining the Right Term
When buying this type of policy, it is also advisable to consider the duration within which the policy is going to be in effect. For instance, seniors with mortgage that lasts ten years and with children who will be out of their homes and living alone should consider getting a policy that lasts ten years. However, if you are dealing with some other financial obligations, it is advisable to settle for longer policies.

Payment Options
There are different types of payment options for individuals over the age of 50. There are companies that provide per monthly payments, yearly or quarterly payments. Yearly payment options require you pay a large amount of money at once and while this is the case, there are companies that offer significant discounts making it easy to save.

Financial Rating of the Company
The financial rating of the company you intend to get the coverage from is also important and should not be overlooked. This is because it is important to ensure that they are in a position to the benefits in the event of your death. For this reason, make sure that the company has an 'A' Rating before committing yourself to use the services they have on offer.

Life insurance over 50 is important and yet, it is one of the most elusive packages. If the insurance company suspects that you pose a higher risk, the charges will also go up. For this reason, the process of applying for this type of coverage should be approached with care.

Life insurance over 50 offers seniors the opportunity to live a carefree life in the confidence that loved ones are well taken care of incase of any eventuality. What is more, it is possible to get an affordable life insurance for people over 60.