Insurance is a method of spreading the risk. It is based on the legal maxim ‘Uberima Fidae’ which means utmost good faith. In simple terms, it can be called as a method of collecting premium from a large section of the society and pay the claim of a comparatively smaller section of the society, which suffers loss of damage due to certain sudden and unforeseen event.
Insurance is a contract of indemnity to the person who suffers a loss due to any unforeseen sudden event. In India, the ‘Life’ and ‘Non-Life’ insurances are managed by two different authorities. The non-life insurance is also known as general insurance in common parlance. While life insurance coverage is exclusively handled by the LIC of India and other life insurance companies, the non-life insurance portfolio like health insurance, agricultural insurance, motor insurance, marine insurance, fire insurance, miscellaneous insurance etc. are managed by the general insurance companies.
Overview of Life Insurance
Life insurance can be defined as a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual’s death or other events, such as terminal illness or critical illness. In return, the policy owner has to pay a predefined amount or ‘premium’ at regular intervals or as a one-time payment. Claims under the life insurance policies are settled by the respective insurer/insurance companies.
Life insurance policies cover the life of the assured and the amount payable in the event of the death of the assured are predetermined. Although the premium is paid at regular intervals, the contract subsists on the same terms and conditions till the validity of the policy. It may not be an exaggeration to say that LIC has become a house-hold name in India.
Which is a Good Insurance Policy?
Different people have different requirements. Since there are many plans under the life insurance policies, it is difficult to specify which one is a good policy. However, the covers granted by the companies cater to requirement of almost all people. The insured has to choose the type of policy best suited to his/her needs.
- Since the insurance contract is based on the principle ‘Uberima Fidae’, (utmost good faith), it is the duty of the person buying the insurance policy to furnish all the details correctly.
- One should, first of all, assess one’s requirement. He/she should then discuss with the agent who is selling him the policy and choose the right policy.
- He/she should estimate the outgo towards premium and ensure his/her capability to pay the same without break. Otherwise, the policy would lapse.
- It is necessary that the terms and conditions of the policy that he/she taking is properly understood.
- Before finalizing the policy, he should understand clearly what are the risks covered under the policy and what are the exclusions.
- He should also understand the claims procedure in the event of one arising, and maintain all the documents required or are helpful in processing the claim.
- In the event of the claim occurring, he should immediately inform the insurer concerned and furnish all the details called for by the insurer in order to facilitate them to settle the claim as early as possible.
Since the insurance is a method of spreading the risk, the needy person would be able to avail greater benefits for a small premium. It helps one to manage an unforeseen and sudden emergent situation.
Covering one’s life relieves one of his/her worries about his/her family in any unfortunate situation happening.
In short, insurance relieves the insured of the worries about ‘what after me or what next’.
Drawbacks
The common man is still not properly educated about the importance/necessity of the insurance. The companies do not sufficiently advise the insuring public about the coverage and the exclusions under the policy. The general impression is that once the policy is taken, all under the sun is covered. This leads to a shocking situation to the insured when the claim becomes not payable.
The conditions under the policy are printed in very small letters and are not in vernacular. Many an insured would not be in a position to understand the same. Claim dealing involves heavy documentation. Delay in settlement, if any, would put the insured into avoidable problems.
Conclusion
Insurance is a ‘must’ for the society as a whole and it shall be the prime concern/duty of the Government to popularize and provide insurance cover to all especially to the rural sector who are still not aware of what an insurance is. The consumers are concerned, confused, and unprepared and rely heavily on personal recommendations and brand recognition. The over all industry is shifting towards a retail model from the current wholesale model. The providers should take care of the needs, desires and habits of the consumers to provide better health insurance policy.
Written by: Healthplus24 team
Date: Dec 27th,08