An ideal questionnaire for insurers reads like this: Age: 35; Marital status: Married; Children: Yes, school-going; Monthly income: In five figures; Smoker: no. Add exercise to the list and they are mighty pleased. Adventure sports? That is pushing it, an insurance company would tell you. Put another way, an insurer's delight is a customer who is healthy as the chances of illness and death along with claims are reduced, has income to guarantee uninterrupted premiums, and nurses enough ambitions for the kids to obtain child plans and unit-linked insurance plans.
Insurance companies typically cover risks that are easily understood and can be quantified. For that reason, they are skittish about insuring adventure sports such as mountaineering, scuba diving, paragliding and bungee jumping, handicapped dependents or an expensive collection of jewels and paintings. Still, companies such as ICICI Prudential, Future Generali Life Insurance Bajaj Allianz and Cholamandalam General Insurance are waking up to these sections of coverage, lured by the business potential.
Here are things you will encounter when the need for coverage is unusual to an insurer.
Cover for adventure sports is still a fledgling segment. Companies such as Bajaj and Cholamandalam General Insurance cover adventure sport injuries only under their travel insurance policies. Bajaj's cover is limited to overseas travel. Insurers also throw riders at customers. "We cover injuries arising out of adventure sports if the customer specifically requests for it at the time of purchase," says Cholamandalam GS brand and product management head Neeraj Moorjani. ICICI Prudential covers injuries only if a customer participates not more than twice a year.
Bajaj's policies stipulate that a customer participates under the supervision of trained professionals. The company insists that policyholders can take part only in winter sports and mountaineering where ropes or guides are customarily used. In this backdrop, a tailor-made policy is a rarity. Future Generali Life Insurance chief actuary Gorakhnath Agarwal says the company does not offer a customised policy. Premium here is higher because the risk of accidental death or disability is on the upside.
Under Cholamandalam's silver plan, a 30-year-old individual on a 15-day tour to countries other than the US and Canada is charged Rs 711 for a $100,000 cover. If cover related to adventure sports is included, the premium swells to Rs 2,133. Future Generali offers a normal policy after charging additional premium. Extreme sport enthusiasts must declare their interest while they apply for life cover. An insurer can deny insurance or charge extra premium commensurate with the risks involved. If an insurer discovers your taste for adventure during investigation, a claim could be rejected.
The physically challenged
Life insurers have long been pushing child Ulips by working the anxiety of parents over the financial security of children. The concern is more pronounced for parents of the disabled. An individual can deduct up to Rs 1,00,000 a year from the taxable income if the amount is spent on a dependent's treatment, training and rehabilitation. An insurance policy in which a disabled dependent is the nominee secures the same benefit. India's biggest insurer LIC has designed two such policies: Jeevan Aadhar and Jeevan Vishwas. The tax benefit rises with the degree of disability that has to be certified in Form 10IA by a qualified doctor in a government hospital.
"The amount of deduction is Rs 1,00,000 if the severity of disability is 80% or more. Else, it is Rs 50,000," says Adroit Tax Services director Vaibhav Sankla. An insured individual's claims after a dependent dies will be taxed as income. For instance, a 35-year-old individual with a dependent aged 5 seeking a sum assured of Rs 1 lakh under Jeevan Aadhar over a term of 15 years has to pay Rs 4,095 a year as premium. The benefits are segregated into guaranteed and variable. Up to 20% of the amount is paid in lump sum and the balance in the form of annuities.
Insurers are beginning to share the affinity of bankers for high net worth individuals. Under wealth management, banks offer the rich many privileges. To tap the segment, Tata-AIG General Insurance has devised the insurance equivalent of wealth management. The company covers paintings, rare antiques, high-end jewellery and cars under an offering called Private Client Group.
"This product category caters to ultra high net worth individuals who want to insure their high-end assets like luxury cars, jewellery, paintings and so on," says Tata-AIG General CEO Gaurav Garg. A single policy covers all assets. It is an annual contract with no cap on the maximum cover. The sum assured is calculated after ascertaining the value of items. Tata AIG premiums rise up to 2% of the sum insured.
They are subject to client profile, usage pattern, value of per item, claim history, security on premise and size of the portfolio. In case an art collection is damaged, the company's network of conservators, appraisers, restoration and repair specialists will address the problem.
Professionals such as doctors, engineers, lawyers and chartered accountants who make mistakes at work cannot hide behind the adage 'It's human to err'. They have to make good or minimise losses to clients. Companies such as New India Assurance, National Insurance,and ICICI Lombard cover covers the compensation a policyholder is liable to pay under their 'Professional Indemnity Insurance' product category.
New India's product caters to several professionals while National Insurance covers only doctors and medical practitioners. Expenses incurred during defence in court are also covered if a policyholder has an insurer's consent. The insurance will not work if a liability arises out of a violation of law or is criminal. Off-the-shelf products in unconventional coverage may still be few and far between, but chasing an insurer may throw up solutions. Dive right in.
Source: Economic Times
Was this article useful? Subscribe to our newsletter to get daily updates in your email for free.