NON-LIFE INSURANCE PRODUCTS

NON-LIFE INSURANCE PRODUCTS (Part 1)

• Definition: Non-life insurance provides risk cover from loss or destruction of assets, covering unexpected large expenses that can drain an individual's income.
• Elements: Key elements of non-life insurance products include:
  • Sum Insured: The maximum liability for claims during the policy period.
  • Term of Insurance: Typically 1 year, but can be 2-3 years for certain policies like health or two-wheeler insurance.
  • Premium Payable: A function of the sum insured and assessed risk, determined by factors like age, gender, and health history.
  • Deductible: The portion of the claim met by the insured.
  • Restore and Recharge: Benefits in health insurance policies that restore the sum insured to 100% in case of partial or full exhaustion.
  • No Claim Bonus: A benefit of lower premiums in subsequent years for each year of no claims made.

Types of Non-Life Insurance Products

• Property Insurance: Provides protection against risks to property, such as fire, theft, and natural disasters.
• Health Insurance: Reimburses medical expenses for the policyholder and covered family members, with provisions for hospitalization, domiciliary treatment, and day care treatment.
• Motor Insurance: Indemnifies the insured in case of accidents caused by or arising from the use of a motor vehicle, with compulsory third-party liability insurance.
• Personal Accident Insurance: Provides coverage for bodily injuries resulting from accidents, with types of disablement including permanent total, permanent partial, and temporary total disablement.
• Critical Illness Insurance: Offers a lump sum benefit for specified diseases like cancer, heart attack, or stroke, with a minimum survival period and reimbursement subject to certain conditions.
• Overseas Travel Insurance: Provides medical, financial, and other assistance during international travel, with coverage for medical help, baggage clearance, accidents, and additional requirements.
• Liability Insurance: Offers indemnity for damages payable under law for personal injury to third parties or damage to their property, with examples including professional indemnity plans.
• Fidelity Insurance: Covers losses due to forgery, fraud, or dishonesty by employees, with the policy usually taken where large sums of cash or valuables are handled.
• Directors and Officers Liability Insurance: Insures members of the board of directors, management, and employees against personal liability and defense costs from claims alleging wrongful acts.
• Keyman Insurance: A life insurance policy purchased by a company to cover itself in case of the loss of life of a key executive, with the company as the beneficiary and paying premiums.

NON-LIFE INSURANCE PRODUCTS (Part 2)

• Contribution Clause: In cases where an insured person has multiple policies, they can choose which policy to claim from, and the chosen insurer cannot apply the contribution clause if the claim amount is less than the sum insured.
• Top-up and Super Top-up Policies: These policies provide additional coverage over a base policy, with the difference being how the threshold limit is applied.
  • Top-up Policy: The threshold limit is applied for every claim.
  • Super Top-up Policy: The threshold limit is applied to the total of all hospitalization claims for the year.
• Key Differences:
  • Top-up plans require the threshold to be met for each claim, while super top-up plans consider the aggregate claims for the year.
  • Super top-up plans are more beneficial when there are multiple claims in a year, as they provide more comprehensive coverage.
• Comparison between Insurance Policies:
  • Health Insurance Policy vs. Critical Illness Policy:
    • Type of Policy: Health insurance is an indemnity policy, while critical illness is a defined benefit policy.
    • Coverage: Health insurance reimburses actual hospitalization expenses, while critical illness provides a lump sum for specified diseases/illnesses.
  • Offline Insurance versus Online Insurance Policies:
    • Many insurance companies offer online policies with lower premiums.
    • Web aggregators and online insurance brokers provide convenient comparisons for informed choices.
• Global Coverage for General Insurance Products:
  • Health insurance policies may or may not cover hospitalization expenses incurred outside India, depending on the policy terms.

NON-LIFE INSURANCE PRODUCTS (Part 3)

• Geographical Coverage: Death policies provide coverage worldwide, whereas indemnity policies, such as health insurance, typically cover expenses incurred in India only.
• Overseas Travel Policies: These are indemnity policies designed for specific countries, allowing insurers to ascertain expenses in foreign locations.
• Foreign Insurance Policies: Indian residents can buy insurance policies from foreign companies using the Liberalised Remittance Scheme, but these policies are governed by the regulations of the country where they are issued.
• Health Insurance for Students Abroad: It is beneficial for students to buy health insurance policies from Indian insurance companies, as they are often cheaper and can provide similar coverage to foreign policies.

Key Considerations for Buying Insurance Policies Abroad

• University Requirements: Some universities require students to buy health insurance policies from designated insurers or have specific coverage requirements.
• Cost and Coverage: Indian insurance policies can be cheaper than similar foreign policies, but it's essential to consider the specific requirements of the university and the country.
• Add-on Policies: Many Indian insurance companies offer add-on policies to suit the requirements of major countries and universities.

Insurance Planning and Risk Management

• Insurable Risks: Risks must have certain characteristics to be insurable, including being definite, quantifiable, accidental, and uncertain.
• Indemnity Insurance: This type of insurance plan involves ascertaining the exact losses incurred by the insured, which can be difficult in foreign locations.
• Unit-Linked Insurance Policies: These policies have a lock-in period to reflect their long-term, protection function.
• Bancassurance Arrangements: When a bank becomes the corporate agent of an insurance company, it is referred to as a bancassurance arrangement.
• Investment Cum Insurance Policies: These policies provide both death cover and survival benefits to the insured.
• Pure Insurance Products: Term insurance policies are an example of pure insurance products, which provide only death cover.
• Non-Life Insurance Terms: The term of insurance in non-life insurance is typically one year.
• Fidelity Insurance: This type of policy covers losses sustained by an employer due to an act of forgery, fraud, or dishonesty by an employee.