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Insurance for Professional Indemnity

Insurance for Professional Indemnity

As a business professional, you strive to provide your clients with the best services. But if any kind of errors, omissions, or professional neglect occurs from your end, then you are liable for the losses incurred by the clients. This might result in the client filing a case against you. Whether you are an architect, engineer, doctor, lawyer, chartered accountant, etc. you need to protect your business against such legal claims. This is where professional indemnity insurance helps you.

Insurance for Professional Indemnity saves you and your business from the financial claims made by your dissatisfied customers regarding faulty products, bad service, etc. It also offers valuable assistance and helps to save money as all legal charges are taken care of by the insurance company.

Key benefits of professional indemnity insurance

  • This insurance policy can be specially designed for the requirements of different professionals and professional services.
  • Provides exhaustive coverage against different risks for several businesses.
  • Covers all the legal expenses and costs incurred with the prior consent of the insured.

Factors affecting the cost of professional indemnity insurance

Depending on the type of sector or industry the business belongs to, the cost of the indemnity cover is decided. Some of the factors that are kept in view are listed below:

  • The risk factor involved in the business
  • Location of the business
  • How old is the business
  • Yearly turnover
  • Number of employees in the company
  • Number of clients of the company
  • Credit score
  • Previous history of claims

What does this policy cover?

Professional indemnity insurance protects you and your business against claims of error, omission, or negligence in a professional service where a client has incurred losses. Loss can be monetary or in the form of death or bodily injury to a person in the case of a medical professional. This type of policy covers all claims related to the incidents which occur within the policy period. An owner is responsible for not only his negligence but also for his employees. Such incidences may or may not occur under the direct supervision of the owner. Hence the policy has a provision to insure the professional and his associates or employees too.

What does the policy not cover?

  • Criminal activity, violation of law, or fraud by the company or the owner are not covered.
  • Damage caused under Influence of intoxicants or narcotics.
  • Weight reduction treatments like liposuction, mesotherapy, etc.
  • Cosmetic surgeries like botox surgeries, hair transplants, facelifts, etc.
  • Treatments of HIV and AIDS.
  • The policy does not cover non-compliance with statutory provisions.
  • Businesses involving radioactive materials.
  • Damage caused by wars.
  • Trademark infringement, design patents, copyright issues.

Insurance for professional indemnity helps you pay the clients and protect your professional image. The policy also protects you from the hefty legal fees in a long-drawn-out legal battle. It also provides you with a second opportunity to correct your mistake and make improvements while continuing your business in the market. It is thus wise to get professional indemnity insurance today to protect your business and its image from the trouble that accidental damage to your client might cause.

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Understanding Insurance for Gold

Understanding Insurance for Gold

Gold is one of the most valuable pieces of jewelry you can own. Whether it may be a necklace or a wedding ring, these coveted ornaments have a high sentimental value. But gold is more than just jewelry, it is a great investment. Along with real estate and stocks, gold is one of the most popular choices of investment for many people. Also, gold ornaments have a high resale value and can be used to procure money in emergency situations.

Given its monetary worth, this jewelry should be protected from any unwanted risks. gold insurance is always a good idea to protect your jewelry from theft, loss, or damage.

Let’s dive a little deeper and know more about the Insurance for Gold!

Inclusions under Gold Insurance

The gold insurance offers protection to your jewelry in the following scenarios:

1. Fire

A fire at your house or any other place of storage is one of the main causes of damages to jewelry. But there is a provision in the insurance to protect your jewelry from this damage.

2. Burglary & Theft

The insurance covers your jewelry from theft or burglary and protects you from emotional and financial stress.

3. Natural calamities

The insurance protects your jewelry from any damage caused by natural calamities like earthquakes, floods, storms, hurricanes, etc.

4. Location

You can opt to store your jewelry at home, in shops, in lockers, or in exhibitions. If any kind of damage mentioned above occurs at the place of storage, it gets covered under the insurance.

Exclusions under Gold Insurance

Here are some exclusions under which the jewelry is not covered.

1. Wear and tear

Damage caused to the jewelry by normal wear and tear or during cleaning, servicing, and repairing is not covered under the insurance.

2. Negligence

Sometimes the jewelry is damaged due to reckless handling by the owner. In such cases, no financial compensation is provided.

3. Replacement

If you wish to replace the old insured jewelry with a new one, then the insurance policy does not get transferred to the new item. Only those items that were listed at the time of taking the insurance are covered.

4. Non-disclosure

You are bound to provide accurate information about the jewelry while purchasing the insurance policy. If you fail to provide correct information about your jewelry and any kind of damage that happens to it, it will not be covered by the insurance.

5. Confiscation

If you choose to take a loan for the purchase of jewelry, you are required to pay regular EMI’s. If you default the EMI payment and the jewelry gets confiscated, the insurance company is not bound to pay for your loss.

If you are someone who prefers investing in gold, it is necessary for you to add a layer of protection around your investment. Gold along with being a safe investment also helps you to get emergency money, which makes Insurance for Gold all the more necessary. Always make sure to compare various insurance covers and their benefits before buying one.

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Insurance as an Investment

Insurance as an Investment

While planning your personal finances, insurance is a must thing to be considered. This is because it helps you to be prepared for the uncertainties that might come your way. But in addition to acting as a reliable financial assistance tool, it is also considered to be an optimal source of investment. How do you ask? Here’s how Insurance as an investment aids you in a plethora of ways:

Top 5 benefits

1. Safety shield for your family’s future

We invest to receive returns that will be beneficial for us and our loved ones in the future. Insurance serves the same purpose but in a better way. Money invested in insurance policies is at extremely low risk and is sure to offer returns. In your absence, your family can utilize this money to make up for the financial loss and maintain a stable, healthy lifestyle.

2. A financially independent retired life

A few insurance policies provide for a fixed monthly, quarterly or yearly income after the premium payment period is over. Investing in such policies can help you to have a happy, secured, and financially independent life after retirement.

3. Tax benefits

Under section 80C of the income tax act, insurance policies are subjected to provide tax benefits. Tax benefits up to Rs. 1.5 lakhs can be availed by an individual. This clears the picture of insurance as an investment as it helps in saving money on taxes.

4. Disciplined and regular investments

A policyholder needs to compulsorily pay the premiums at fixed intervals, as per the frequency opted by him. This helps in maintaining and inculcating a habit of regular investment for a long period of time. Insurance doesn’t just instill discipline but
also makes you plan your expenses in a better way and relieves you of the burden for future savings to some extent.

5. Dealing with financial liabilities

During mishaps, the situations already are too exhausting and stressful. In such times, insurance can relieve you from worrying about financial issues. It can help you cover up for your losses and pay back loans. It helps in preventing any disturbances in your financial plans, avoids draining you of your savings, and assists you in maintaining a healthy lifestyle.

When it comes to choosing the right insurance plan, keeping in mind the investment aspect, ULIPs can be a great choice. This is because they are flexible enough and allow you to smartly invest your money in the right places such as equity shares, debt instruments, and bonds.

ULIPs prove to be an extremely advantageous financial tool as they help the investor in tax saving, ensure regular saving and investments with good returns. Along with investments you can also enjoy the benefits and security of an insurance plan. The investor also does not have to put in much effort in monitoring the market conditions.

This work is done by the investment managers at the company. All the investor has to do is select the kind of investment he wants to make, the rest is taken care of.

As an individual, it is our responsibility to invest and arrange for our family’s well being and safe future. Insurance serves the function of a smart investment, helps us save, and ensures financial security. This makes it an essential part of our monetary and stability planning.

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Insurance Act 1938

Insurance Act 1938

There are several acts introduced to guide and govern the functioning of Insurance institutions. From the abundance of acts present, one of the prominent ones is the Insurance Act, 1938. This article will discuss the Act highlighting some important points such as its history and features it holds.

What is The Insurance Act 1938 and its history?

The insurance act was introduced to regulate the activities of insurance companies. This act prevents companies from being speculative and forces them to act on sound actuarial principles. Before the original insurance act 1938, a life insurance company’s act was passed in 1912. The drawback of this act was that there was discrimination between Indian and foreign companies.

Indian companies were required to make deposits with the government. But the foreign companies were exempted from this rule. This led to resentment amongst the Indian companies against the British government. The success of the independence and non-cooperation movement helped the Indian insurance companies. The Indian insurance companies then became the face of the swadeshi movement. The total insurance business grew from 22.44 crores in 1914 to 298 crores in 1938. India also saw an increase in the number of insurance companies from 44 to 176 in the same period.

A committee was appointed by the government of India to study this problem and find solutions. The result of this investigation was the Insurance Act 1938. It was the first comprehensive legislation passed by the government. This act governed both life and non-life companies providing strict control over the insurance business.

Features 

The salient features of the Insurance Act 1938

  • Forming a department of insurance to overlook all the insurance business.
  • Mandatory registration of insurance companies.
  • Compulsory submission of annual financial returns of insurance companies.
  • A provision for initial deposits was made to allow only genuine companies in the insurance sector.
  • Other important provisions such as the prohibition on rebate, restriction on licensing, and commission payment were introduced in order to instill professionalism into the business.
  • Insurance companies had to go through a periodical evaluation to assess their financial stability.
  • Policies with a standardized format were introduced.
  • Certification of the premium tables through an actuary was made compulsory.

After the implementation of the legislation-

  • Promotions were given to those who were worthy.
  • Speculative insurance was eliminated and
  • Reductions in bankruptcies of insurance companies were notices.

In due course of time, various shortcomings were found in the insurance act. Changes regarding deposits, rebates, and investments were made. But this boom of the insurance industry was hampered by the partition in 1947. Many insurance companies were affected due to the widespread bloodshed. Amongst this situation, the foreign companies found it difficult to function. By 1955 the share of foreign companies in new business was a mere 7 percent. Out of 105 foreign companies, only 15 remained.

In 1950, further amendments were made to the insurance act. The superintendent of insurance was re-designated as the controller of insurance. The controller of insurance even had the authority to check the books of the insurer. Amends were made in provisions relating to investments in life funds. Investments in government and approved securities were brought down to 50%. Restrictions on the nature of investments in balanced funds were imposed. Only 15% of total funds were allowed to be invested in the open market. The Insurance act 1938 played a major role in making insurance a public utility service.

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Importance of Insurance

Importance of Insurance

The world we live in is extremely uncertain. A risk at any step we take is unknown. All of us, our families, and our businesses are exposed to different types of risks at different levels. Although these risks cannot be predicted or controlled, insurance acts as a precaution and protection for us against the unexpected.

Therefore, the importance of insurance is non-negligible and unsurpassed. It has evolved as a tool for safeguarding the financial interest of people and their well-being.

6 Top Importance of Insurance 

Let’s have a deeper look at the importance of Insurance and know why is it necessary to have one:

1. Provides financial safety and security

It gives financial support to businesses and individuals against the losses or damages that might occur in the future. It acts as a shield against events that might disrupt the financial planning of an individual or organization.

2. Acts as a financial resource

Insurance generates long-term financial resources from the premiums it collects. Since these policies are payable in the future, the funds generated through premiums are invested and utilized in the economic development of the country. Roads and other infrastructures that help in nation-building are constructed out of these funds. These investments result in the growth of employment opportunities in turn helping the capital formation in the country.

3. Encourages savings

Life insurance policies can be looked upon as a channel of investment and saving too. These policies ensure regular savings, that are invested in the form of a premium. A lump sum of these premiums altogether is paid to the insured on the maturity of the contract. This is a way in which one can collect a good amount of funds that can be in the future, utilized by the insured or his/her family members.

4. Builds confidence in individuals to take up risks

Insurance provides an aid for the losses that might occur if one starts or expands his business. This develops a sense of security in an individual and gives him a motivation for undertaking the risk. It also gives a push to invest more funds and ensure proper working of the business, overcoming any financial constraints that the business might suffer otherwise.

5. Provides support during Medical Emergency

Health issues are a very big concern for most people today. Medical expenses and costs of treatments are rising day by day and are high enough to drain a person of his savings. Medical insurance provides coverage for various illnesses. Nevertheless, nothing can compensate for the immense mental pressure in such situations. Financial support can ease things to some extent.

6. Distribution of risk

The basic role of insurance is to shift the risk from the insured to the insurer. The insurer collects funds, in the form of premiums from a huge number of people. Whenever there is a requirement of funds by an insured, it is compensated from the funds collected. This helps in the distribution of risk amongst a huge population.

In a country like ours where savings and security both need to be insured, insurance has proved to be of great help. It channelizes people’s savings and offers them security. The vast development of the insurance industry and proper utilization of its funds have also created a huge number of employment opportunities. Thus, insurance has proved to a blessing and support for the economy too.

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How are insurance premiums calculated?

How are insurance premiums calculated?

When you get an insurance policy, the company charges you a certain amount of money against the coverage. This money that you pay to the company is called the insurance premium. You might pay the premium every month or on a semi-annual basis, depending on your insurance policy.

While purchasing any policy, we do not have much control over the insurance premium amount as it is determined by the insurance firms. However, the question- how are insurance premiums calculated and what are its key deciding factors might have crossed your mind.

Well, we have an answer for that! Let’s understand the cost of the premium and how it is calculated.

How much does an insurance premium cost?

Insurance premiums have no set cost. Various insurance policies have different insured sum and coverage and hence can have varied premiums. For instance- a 5 lakh health insurance policy will have a lower premium as compared to a 50-lakh health insurance policy. But this doesn’t mean that you opt for insurance with the lowest premium. Assess your need and financial condition before opting for insurance.

How are insurance premiums calculated?

Insurance companies consider different factors while calculating premiums. Here are a few of them:

1. Age

Age is a major factor while deciding insurance premiums. People below the age of 40 generally have lesser health problems and generally get the best premiums. People above the age of 40 have more health issues like diabetes, arthritis, cancer, etc, and pose a higher risk to insurers. Hence these people are usually charged higher premiums by the insurer.

2. Type of coverage

You are offered several add-on coverages like zero depreciation, maternity cover, critical illness covers, etc. on specific insurance policies. The more comprehensive coverage you opt for, the more expensive the premium will be. For instance- if you have a car insurance policy that covers liability only, it will have a cheaper premium. If the same car policy accounts for comprehensive coverage, liability, and medical payments the premium will automatically be higher.

3. Amount of coverage

The sum insured under the insurance coverage is a key factor in deciding premiums. If your total insured amount is less, the premiums for that insurance will generally be lower and vice versa. For instance- if you purchase a home loan of Rs 60 lakh, it will have a high premium than a Rs 25 lakh home loan.

4. Actuarial tables

Actuaries are business professionals that assess the risk of financial loss using mathematics and statistics. Insurance companies hire these actuaries to predict the likelihood of an insurance claim. After the assessment of the possible losses, actuaries produce something called an actuarial table that is provided to an insurance company that uses it to set policy premiums.

5. Whole life vs Term life insurance

An insurance policy that provides coverage until the death of the insured is called a whole-of-life policy. A term insurance policy offers cover only for a fixed number of years. Whereas, a whole life policy offers coverage generally across the expected life span of the individual.

For whole life insurance, the premium is paid generally for the first 10-15 years while the coverage is offered for the entire life of the policyholder. The payment of premium is limited to a specific period and therefore the premium charged for whole life insurance is on the higher side. On the other hand, term life insurance provides coverage for a specified period like 5 years or 10 years wherein the premium amount to be paid is fixed. This results in the premium charges being lower.

6. Number of dependents on the insured

Children and parents are dependent on the earning member of the family who is also the policyholder. The number of family members dependent on the insured plays a role in calculating the premium amount. A higher number of dependents means more protection is needed which translates to a higher premium.

7. Occupation

Your occupation might play a role in calculating the premiums if you decide to purchase an insurance policy. Some occupations such as pilots, soldiers, offshore oil or gas industry workers are deemed riskier than others by the insurance companies. If you are a professional working in the above-mentioned fields, you can expect higher premiums compared to those working in a comparatively safer environment.

8. Income

One of the vital factors to determine the amount of premium is the sum an individual earns. Premiums are to be paid regularly to the insurer without any defaults. Insurers evaluate your income to determine if you will be able to afford regular premium payments.

9. Debts

If you have ongoing loans, mortgages, or have unpaid credit card bills, the insurance institutions consider these things as debts against the insured. These debts might have a direct impact on the premium you pay for the policy. There might be situations, where you might even be denied to avail a policy because of these debts. It’s therefore suggested to clear them in order to get a policy as per your requirement.

10. Operating cost of the firm

Insurance companies spend a huge amount of money to maintain an online presence through ads on various websites and social media. The insurance companies promote their product i.e. the policies through these channels. The money spent on this comes under marketing expenses. The insurance company also bears non-marketing expenses like maintenance, rent, salaries, legal fees, agent’s commission, etc. These marketing and non-marketing expenses make up the total operational costs of the insurance firm. This operational cost affects the insurance premiums the company charges to the policyholders.

11. Interest on investments

As an added investment, insurance firms invest the policyholders’ premiums in bonds, stocks, real estate, etc. The insurance company earns a specific rate of interest on the invested funds. This interest earned on these investments may vary as per the fluctuations in the market. It is yet another important factor that is considered while deciding the insurance premium.

These factors affecting the insurance premiums vary from policy to policy. Understanding how insurance premiums are calculated will help you immensely when you are looking for your next insurance policy. To get the best coverage for you and your family at affordable prices, you must take the time and effort to do online as well as offline research.

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Group Personal Accident Insurance

What is Group Personal Accident Insurance? (Explained)

The employees are the greatest asset of a company. However, they’re exposed to several risks. It’s one of the organizations’ responsibilities to look after the employee’s well-being. Group personal accident insurance offers the company a policy to protect its employees from any accident that occurs at the workplace. Under this policy, the employees are absolved of all the medical expenses incurred due to injury or death in case of any mishappenings.

Group personal accident insurance is a win-win for both the company and the employees. While the employees are protected under the policy, the company gets a group discount based on the number of employees in the company.

Benefits of Group Personal Accident Insurance

Here are some of the benefits of the Group Personal Accident Insurance policy-

  • The policy fulfils the basic responsibility of any organization is to protect the employees against any unfortunate events.
  • It assures quick claim settlement for the employee.
  • It also provides hassle-free documentation.
  • It is great for the reputation of an organization as it gives satisfaction to the workers that the company ensures their protection.
  • All the expenses related to hospitalization and medicines due to the injury get reimbursed.

Coverage offered by Group Personal Accident Insurance

A group personal accident insurance coverage varies according to the terms of the plan.
Here’s what the coverage includes-

  • The family receives the insured compensation in case of the death of the insured.
  • In case of permanent or total disability caused to the employee which continues for over 12 months, the entire compensation is paid to the person insured.
  • If the employee gets disabled partially, a certain percentage of the sum insured is paid.
  • Weekly benefits are provided to the employee who is fully disabled. It is offered to compensate for the loss of salary as the employee would be unable to work.
  • If hospitalization is necessary for the employee, ambulance charges are covered under this policy.
  • The policy will reimburse all the expenses that arise during the transportation of the insured person’s mortal remains to the ground or home.
  • In case of broken bones, the insured gets compensated a certain amount of money.
  • The policy covers the educational costs of the children if the insured dies or has a permanent disability.
  • In case of permanent disability, the insured may need some changes in lifestyle such as modifications to his car and home which is compensated by the policy.

Group Personal Accident Insurance Exclusions

Group personal accident insurance protects all employees against most accident scenarios. But there are some exclusions that the policy does not cover. Some of the notable exclusions are:

  • When the injury is self-inflicted.
  • Injuries caused due to illegal or criminal acts.
  • Injuries/damages sustained under the influence of alcohol, drugs, or other intoxicating substances.
  • Death or injury due to illness or disease during childbirth or pregnancy.
  • Accident cases involving nuclear weapons or armed forces.
  • Accidents involving a violation of the law.
  • Suicides or attempted suicides.

Accidents not only cause financial trouble for the employee’s family, but they may also affect the company in a way. It’s thus advisable to insure your employees with Group Personal Accident Insurance and provide them with the financial security they deserve.

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Functions of Insurance

Learn about insurance

Functions of Insurance

During our lifetime, we’re exposed to several unexpected circumstances. These situations have a direct influence on our family and finances. All of this eventually piles up and becomes a prominent source of stress if not taken care of. Insurance comes to the rescue in such cases, the various functions of insurance revolve around taking care of the possible losses that might occur to an individual or business.

Buying insurance helps to attain security against emergencies and accidents. You have to pay small periodic amounts of money as a premium against coverage of a huge expected or unexpected loss.

These insurance premiums are also considered as the policyholder’s share in compensating the losses, although the most part is taken care of by the insurance company.

What are the Functions of Insurance?

  • Insurance helps to spread the loss over several policyholders who are exposed to the same risk.
  • The principle behind insurance is to share the loss of each member of the society based on the probability of loss to their risk.
  • It is a method to provide financial security against losses to the insured.

 

Functions of insurance are further classified into two categories-

  1. Primary Functions
  2. Secondary Functions

Primary Functions of Insurance

1.) Certainty

Better planning and administration can reduce the uncertainty of the loss you may suffer. But we can always be prepared for all the risks which we may encounter. There is always an uncertainty of when it will occur, how much loss will be incurred? This is where insurance provides you with the certainty of payment in case of a loss. The insurance company charges you a periodic premium in exchange for providing this certainty.

2.) Protection

Insurance protects you from the probable chances of loss. Nobody knows when or how much of a loss may occur. On the occurrence of it, there is a high possibility for an individual to fall into debt. The insurance guarantees payment in case of a loss. It protects you and your family from all the sufferings which may be caused. The insurance cannot prevent the risk but can provide financial aid when a mishap happens.

3.) Risk-Sharing

The loss arising from the risk is uncertain. Investing in insurance minimizes the financial pressure as all the insured individuals share the risk by paying the premium that acts a compensation for the insured individual who suffers a loss.

Secondary Functions of Insurance

Here are some secondary functions of insurance listed below-

1.) Prevention of Loss

The insurance company joins hands with other institutions which are engaged in preventing the losses of society. Reduction in loss will lead to lesser payments in premium. This means you can save more while purchasing a policy. Lesser premium invites more and more opportunities. So, the decreased premium ensures that people from various strata of society can avail of insurance easily. The insurance provides financial assistance to organizations like

  • Hospitals and testing centres
  • Fire brigade
  • Educational institutions
  • Any other organizations which are helping people recover from losses from death or damages

2.) Capital

Insurance provides capital essential for the growth of society. The funds collected from the policyholders are invested in a productive channel. With the help of investment in insurance, debts are minimized to a great extent. Industries, businesses, and individuals are benefited from the investment and loans of the insurers.

3.) Efficiency

Investing in insurance eliminates worries of losses incurred on the occurrence of death and destruction of property. This can make a person and his family worry less about the future. Such people can also devote their time and effort for better achievement for themselves and society. It enhances the efficiency within a person and also the society.

4.) Economic Progress

The insurance protects people from huge losses of damage, destruction, and death. It gives them the initiative to work hard for the betterment of society.

Insurance as a tool not just offers financial stability but contributes greatly towards the well-being of individuals. Considering the salient features mentioned above and the myriad of benefits insurance offers, it is the perfect arsenal you can choose to safeguard yourself from the uncertain risks of the future. So it would be wise to avail one today!

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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Digitization of Insurance

digitization of insurance

Digitization of Insurance (Advantages and Trends)

Like all other sectors and industries, the evolution of the online world has been a driving force for bringing advancements in the insurance industry too. The new technologies are changing the way customers and insurers interact with each other. The digitization of insurance has eased up things for the customers and also benefited the insurers in multiple ways. In the article, we’ll talk about the new trends that this digital revolution has brought into the world of insurance and how has it proven to be a boon for everyone.

Digital Trends in the Industry

The Digitization of insurance has revolutionized the entire insurance industry. The implementation of digital factors has brought about changes that have improved user experience for the insurance holders. Here are a few of the digital trends that the industry is witnessing:

1.) Online Purchase of Insurance

The facility to be able to buy insurance online has eased up things for several people. Now, people can get insured from the comfort of their homes or wherever they want. The need to meet the agents in person has been eliminated. They can read about the various policies available online and choose the one that suits their needs the best. People do not even need to take time out of their schedule to meet or talk to the insurance providers. Over the internet, they can buy insurance whenever they get time.

2.) Artificial Intelligence (A.I)

A personalized experience is what customers look forward to. The advent of Artificial intelligence has made customizing unique experiences for customers possible for insurers. Besides this, AI also takes care of the demand for high-speed and quick claim settlements along with improving the underwriting processes. AI also enables the generation of more accurate data within a less span of time.

3.) Role of social media

The insurance industry has seen tremendous growth in the past few years, and social media has played a vital role in that. Advertising over social media has made it possible for insurers to catch the attention of the youth and explain to them the importance of insurance. Social media has become one of the platforms through which customers can research on insurance companies, their offerings and also read reviews.

4.) Chatbots

AI Chatbots quickly generate the answers to the frequently asked questions. Most of the insurance companies on their websites or apps have activated Chatbots. This helps the customers to save time and get more information quickly. It also increases the scope for the customers to go through the various policies and products offered by the insurance company.

5.) IoT or Internet of things

IoT is an interconnected network of digital devices enabling insurers to take initiatives to improve their services. Through this technology, insurers can get access to a huge amount of data related to the policyholder’s and their target audience’s life. This can help them create new products and make changes as per their consumer’s requirements.

Advantages of Digitization of Insurance

Insurance companies know that utilizing the latest technologies and tools is the best to provide an exceptional experience to their customers. Let’s look at the few advantages that digitization has to offer:

1.) Cost Reduction

Digital processing has helped in cutting the brokerage cost. It also aids in cutting the cost of advertising, operating expenses, and infrastructural costs. This is because digital advertising is a lot less costly than traditional advertising and since everything is now digitally done, insurers can reduce their amount spent on infrastructure and other aspects and in turn lower the operating cost as a whole.

2.) Assures Safety

As the insurance industry is eventually going digital, the chances of loss of the policy papers or other documents are eliminated to a great extent. Also, the documents, policy papers, or forms that are submitted online can be accessed from anywhere and at any time. Digital transactions also reduce the chances of information leaks and miss-selling.

3.) Convenient Transaction

Modern customers require quick and easy settlements of their needs and responsibilities. Online transactions make settling various insurance-related processes convenient. Things like the renewal of policies, payment of premiums, filing claims, and all the other procedures are simplified which enriches the overall experience of the customer.

4.) Post-Sales Services

The general impression that the customers are neglected after the policy has been sold has changed because of digitization. Post-sales processes such as raising claims, etc. have become hassle-free and less time-consuming for the customers. Insurance companies are also actively using their social media handles and other digital channels for promoting customers to give their feedback.

They are using these digital means to bring into notice their customer’s grievances and resolve them effectively. All of these have helped the insurers to provide better post-sales services.

As compared to the traditional ways, digitization of insurance has improved the communication between the insurer and the insured. It has led the insurance companies to accept the consumer-first business approach which has resulted in the growth of the insurance sector as a whole.

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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Health Insurance

Difference between Health Insurance and Mediclaim

Difference between health insurance and mediclaim

The systematic way to plan things is to first thoroughly know about the subject, research, and then finalize. Now, try applying this logic to buying health insurance. It is always better to know what your plan is and what it has to offer rather than buy the first plan that pops on the screen.

If you don’t know what exactly your health insurance has to offer, it may be of little use to you. It is easy to make mistakes while buying health insurance. One of the most common mistakes people make is assuming that mediclaim and health insurance is one and the same. But both mediclaim and health insurance plans have their own features. Before discussing the difference between health insurance and Mediclaim, let’s look at what mediclaim and health insurance are.

What is mediclaim?

Mediclaim is a health policy that gives you specified financial protection at the time of a medical emergency. It is a cost-effective plan in case of a health emergency. It provides financial aid in the following cases-

  • Accidents
  • In case of sudden illness or surgery
  • Any surgeries during the policy tenure

Features of a mediclaim plan

  • You can get immediate coverage up to Rs 5 lakhs for medical expenses when you are hospitalized for an accident or a specific illness.
  • The sum insured is pre-decided at the time of purchase of the policy.
  • The premium for mediclaim is decided on various factors like the policyholder’s age, gender, and geographical location along with the sum insured.
  • The mediclaim cover can be purchased as an individual plan or as a family plan. The family plan including you covers your spouse, children, and parents.
  • If you opt for a Cashless Mediclaim policy, your insurance company directly pays the hospital for the expenses.
  • If you opt for the Reimbursement mediclaim policy, the money you paid for the expense will be reimbursed by the insurer.
  • You can also avail of tax benefits on mediclaim as per section 80D of the income tax act 1961.

What is health insurance?

Health insurance is a complete insurance cover that gives you coverage for medical and surgical expenses in case of emergencies. If you have health insurance, you can pay for the expenses out-of-pocket for which you are later reimbursed by your insurance company. The insurance company settles the bill directly with the hospital in case of cashless claims.

Features of health insurance

  • Health insurance plans give you comprehensive insurance coverage including a wide variety of illnesses.
  • Health insurance has provisions for numerous add-ons coverage over the original policy.
  • You can opt for a Family Floater Health Insurance plan to cover all family members under one comprehensive policy.
  • The wide coverage of the policy pays for all pre and post-hospitalization expenses which include expenses for an ambulance, testing, MRI, CT scans, etc.
  • You can opt for a Critical Illness cover and other covers as an add-on to the original policy.
  • Health insurance provides you benefits like Outpatient benefit, Maternity Benefit, Restoration benefit, etc.
  • You can opt for a customized senior citizen health plan for your parents.

Difference between health insurance and mediclaim

Both medical and health insurance might sound similar but have many different features. Let’s have a look at some of the differences between these two insurance policies.

Basis

Mediclaim

Health insurance

Coverage offered

 

 

A Mediclaim offers coverage only for hospitalization and other expenses related to accidents and pre-specified diseases.

Health insurance offers a comprehensive cover that not only covers hospitalization expenses but also additional expenses such as annual health checkups, daily hospital cash, OPD expenses, and alternative treatments among others.

Add-ons

There isn’t any provision to inculcate add-on covers with Mediclaim.

Health insurance offers numerous add-ons covers such as Critical Illness Cover, Maternity Benefit and Infertility Cover, etc.

Sum assured

The sum assured or hospitalization cover provided in mediclaim is limited to Rs 5 lakh.

The sum assured in the case of health insurance doesn’t exceed 6 crore rupees.

Flexibility of plans

Terms of mediclaim policy are rigid and cannot be customized.

Health Insurance plans are flexible and can be customized to your preference.

Claims

In a mediclaim policy, you can keep filing claims until the sum insured is exhausted

In case of claims related to critical illness accidental disability coverage, the assured sum is paid in a lump sum. Hence such claims can only be made only once during the policy tenure.

 

Other insurance claims can be filed as long as the sum insured isn’t exhausted.

Availing the benefits

To avail of the mediclaim benefits, the insurer must get hospitalized. 

 

In the case of claiming health insurance benefits, hospitalization is not necessary. Benefits like daycare procedure cover can also be availed by the insured without getting hospitalized.

So, which one should you choose, mediclaim or health insurance?

Now that we know the benefits and differences between health insurance and mediclaim it should be easier for you to make the choice. If you’re still confused here are some factors that you should consider before buying any of the two health policies.

  • Consider the current health issues that you and your family are dealing with such as blood pressure, diabetes, arthritis, cancer, any other serious illnesses, etc.
  • Consider the age and lifestyle of your family members before opting for any plan.
  • Buy health insurance if you prefer investing for long-term protection and mediclaim if you prefer short-term investing.
  • If you need flexibility in your health plan options, go for health insurance otherwise you can also choose to take up a mediclaim.
  • If you need extensive add-on covers and benefits for your current health conditions, prefer buying health insurance over a mediclaim.
  • Health insurances have a higher premium than mediclaim. Make the decision according to your budget.

Mediclaim and health insurance are both ways of mitigating health-related risks. Before you decide to buy any of the insurance plans, analyze your insurance expectations and compare various insurance policies available in the market. The best insurance plan is the one that fulfils your needs. Use the information to your advantage and choose the plan that suits you better.

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