Miscellaneous Insurance:

Personal Accident Insurance: Personal Accident is an insurance cover wherein, in the event of the person sustaining bodily injuries resulting solely and directly from an accident caused by EXTERNAL, VIOLENT & VISIBLE means , resulting into death or disablement. An accident may include events like: Rail / Road / Air Accident, Injury due to any collision/fall, Injury due to Bursting of gas cylinder, Snake-bite, Frost bite/Dog bite , Burn Injury, Drowning, Poisoning etc.

Personal Accidental policy covers accidental death, loss of limbs, permanent total and partial disablement as selected and granted by the insurance companies based on the underwriting norms. On payment of additional premium, medical expenses reimbursement can be covered. These expenses are payable, in case, if the claim is admitted under the basic policy cover. In addition to the Personal Accident Insurance cover the policies available are : Nagrik Suraksha Poicy, Janta Personal Accident Policy, Gramin Personal Accidental Policy , Student Package Policies for students, Bhagashree for Girl-children, Raj Rajeshwari for Women etc. Further as an ad-on cover Motor Vehicle Package Policy & Overseas Mediclaim Policy too offer personal accidental injuries cover.

Sum insured is based on various factors namely:

 (1) Income from gainful employment,

 (2) Type of occupation,

 (3) Age as on date of proposal,

 (4) Period of insurance

 (5) Conditions prevailing at the place from where the proposal is made etc.

 (6) As regards the non-earning spouse of the insured the sum insured in respect of  such spouse shall not exceed 50% of the eligibility of the insured, subject to a limit of Rs. One Lakh under benefits available under Table III of the policy.

(7) Dependent children can be offered a sum insured not exceeding Rs.50000/- to cover death and disablement only. No temporary disablement cover shall be offered.

Generally Personal Accident policies are maximum for one year only. However, depending upon the requirement of the proposer it can be offered for a period which could even be lesser than 12 months.

Fidelity Insurance: Fidelity insurance protects organizations from loss of money, securities, or inventory resulting from crime. Common Fidelity claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire transfer fraud, counterfeiting, and other criminal acts. These schemes involve every possible angle, taking advantage of any potential weakness in your company’s financial controls. From fictitious employees, dummy accounts payable, non-existent suppliers to outright theft of money, securities and property. Fraud and embezzlement in the workplace is on the rise, occurring in even the best work environments. Liabilities covered by crime insurance usually fall into two categories, although many polices combine both types of coverage:

• Money and security coverage pays for money and securities taken by burglary, robbery, theft, disappearance and destruction.
• Employee dishonesty coverage pays for losses caused by most dishonest acts of your employees, such as embezzlement and theft.

Fidelity insurance includes comprehensive coverage of:

• Employee theft
• Money and securities while on premises or in transit
• Forgery
• Funds transfer fraud
• Computer fraud
• Money order and counterfeit currency fraud
• Credit card fraud
• Optional client coverage
• Coverage for investigative costs for covered losses
• Responds to Employee Retirement Income Security Act of 1974 (ERISA) plan bonding requirement.
• Broad definition of employee, including directors and officers; employees, including part-time, leased, temporary, and seasonal employees; and volunteers.
• Worldwide coverage.

Burglary Insurance: Such a policy provides protection against loss or damage caused by housebreaking, robbery or theft. It is also known as ‘robbery, theft or larceny insurance’. For this purpose a comprehensive policy may be taken or each risk may be separately insured. Full details of the article insured are given in the policy. Insured items include gold and gold ornaments and other assets including household items such as TV, fridge, air conditioner etc. A burglary policy for business premises would provide cover against loss to damage by house breaking and burglary of stock-in -trade, goods in- transit, cash-in-safe, fixture and fittings etc.

Credit Insurance: Credit insurance policy is taken to cover the loss which may arise due to bad debts or non-payment of dues by the debtors. This insurance is very useful to businessmen who sell goods on credit. It protects them from loss arising out of insolvency of their debtors. In India, Export Credit and Guarantee Corporation (ECGC) provide credit insurance to exporters.

Workmen’s Compensation Insurance: In India, Workmen’s Compensation Act was passed in 1934 and 1946. According to this act, an employer is required to pay compensation to his workers who receive injuries or contract occupational diseases during the course of their work. An employer may obtain an insurance policy to cover such liability. The premiums are payable usually on the basis of wages. It is also known as ‘Employers Liability Insurance’. This policy is essential to every employer who employs ‘workmen’ as defined under the Workmen’s Compensation Act in order to protect himself against the legal liabilities arising out of death or bodily injury to this workman. It also extends coverage through reimbursement of medical, surgical and hospitalization expenses including transportation costs on the payment of additional premium. The National Insurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, and the New India Assurance Company Ltd offer workmen’s compensation policies.

Travel Insurance: Travel insurance covers travel related accidents also. While traveling outside India, individuals face risks such as loss of baggage, accidents involving injuries, illnesses and medical emergencies requiring hospitalization treatment. All this can pose serious consequences to the overseas travellers. A rational person should therefore secure the required coverage before leaving his home country. In India travel insurance has become popular among International travellers. The coverage offered under travel insurance policies in India are as follows:

·         Medical assistance in case of an emergency

·         Covers Personal Accident, Medical Expenses & Medical Evacuation & Repatriation

·         Loss & delay of Checked Baggage

·         Covers pre-existing medical conditions

·         Convalescence after hospitalization

·         Takes care of sudden and unforeseen expenditure Convenient and hassle free trip for the family

Wedding Insurance: These days, weddings have become quite an expensive and elaborate affair. People do take care to make this once-in-a-lifetime event a memorable one. In case of any postponement or cancellation, there is a certain risk of monetary loss. The wedding insurance package can compensate for the monetary loss. This unique product covers the specific risks related to weddings. This Policy can protect you against certain types of financial losses you may incur in the event of unpredictable situations during the period leading up to and including your wedding day. The period of insurance will be 24 hours prior to the start of the customary functions or rituals or programmes of events mentioned in the printed invitations till the end of the function or five days from the beginning whichever occurs earlier. This policy provides cover for expenses actually and already incurred or advances paid in connection with marriage hall, catering, pandit, guests, music parties, photos and videography, loss on cancellation of travel tickets etc. Liability is restricted only when such cancellation arises out of cancellation or postponement of marriage. The policy does not cover any loss arises when marriage is cancelled or postponed because of dispute between marriage parties, willful negligence and criminal misconduct of the bride, bridegroom or their parents.

Employee State Insurance Scheme: The Employee State Insurance Scheme (ESIS) is an insurance system which provides both the cash and medical benefits. It is managed by the Employee State nsurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a compulsory social security benefit for workers in the formal sector. The original legislation creating the scheme allowed it to cover only factories which has been using power and employing 10 or more workers. However, since 1989 the scheme has been expanded, and it now includes all such factories which are not using power and employing 20 or more persons. Mines and plantations are explicitly excluded from coverage under the ESIS Act.

Unemployment Insurance: Unemployment insurance is designed to provide short term protection for regularly employed persons who lose their jobs and who are willing and able to work. Unemployment insurance has several basic objectives:

1) Provide cash income during involuntary unemployment.

2) Help unemployed workers find jobs.

3) Encourage employees to stabilize employment.

4) Help stabilize economy.

Unemployment insurance is a popular concept in developed countries like U.S. where they have well defined laws and regulations. However in India it will take a long time to come.

Personal Liability Insurance: Personal liability insurance provides protection against the legal liability, which arises due to insured’s personal acts. The insurance company will pay for legal defense to third party damages or injuries up to policy limit. Except legal liability, which arises due to automobile accidents and professional liability, most other personal acts are covered under personal liability insurance. The personal liability insurance covers damages caused to properties and injuries to other people due to the negligence of the insured. Under this policy, the insurance company is bound to defend the insured, should the matter go to court of law. It can also settle the matter out of court by negotiating with parties for a settlement within the policy limit. Personal liability policy offers very wide coverage. The following instances of loss, damages or injuries caused by an insured individual come under the purview of personal liability insurance in which coverage will be available up to the policy limit.

·         Accidental fire to neighbor’s house as a result of insured’s negligence

·         Accidental injury to a third party while playing

·         Damaging costly antique accidentally belonging to neighbor

·         Injuring another person while riding a bicycle

Self Assessment Questions

1) Define fire insurance. What are the essential features of a fire insurance contract?

2) What is the claim settlement procedure followed for a fire insurance policy?

3) What is a floating policy?

4) What is marine insurance? How it is different from fire insurance?

5) What is meant by “perils of the sea”?

6) Briefly describe the different types of losses under marine insurance.

7) Is third party insurance a must under motor vehicle Act?

8) How is subrogation helpful to the insurer?

9) What would be the status of the claim if the vehicle were covered under liability policy?

10) Explain Travel insurance.

11) Explain the scope of Fidelity insurance.

12) Discuss the main clauses of marine policies.

13) Enumerate the various types of marine insurance policies.

14) What do you mean by ‘assignment of policy’? Indicate the manner in which a marine policy can be assigned.

15) Distinguish between express warranties and implied warranties in relation to marine insurance policy.

16) Write a short note on the following:

i) Unemployment insurance

ii) Wedding insurance

Read more

UNIVERSAL HEALTH INSURANCE

Heath Insurance

Health insurance, like other forms of insurance, is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses. The collective is usually publicly owned or else is organized on a non-profit basis for the members of the pool, though in some countries health insurance pools may also be managed by for-profit companies. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided universally through government as a feature of social solidarity, as is typical in many industrial countries, or as form of government charity such as the United States Medicaid program. It may be purchased privately on a group basis (e.g., by a firm to cover its employees) or purchased by an individual for himself or his family. In each case, the covered groups or individuals pay a fee, premium, or tax, to help protect themselves from health care expenses.

            “Health insurance is an insurance, which covers the financial loss arising out of poor health condition or due to permanent disability, which results in loss of income.” A health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium). It usually provides either direct payment or reimbursement for expenses associated with illness and injuries. The cost and range of protection provided by health insurance depends on the insurance provider and the policy purchased.

Health Insurance Policies and Main Features:

Types of Health Insurance Policies:

Health Insurance policies are broadly classified into types-Individual Health Insurance and Group Health Insurance. The following Health Insurance policies are available in India:

1. Individual Mediclaim Insurance

2.    Group Mediclaim Insurance

3.    Overseas Mediclaim Insurance

4.    UHI

5.   Health Plus Medical Expenses Policy

6.    Group Health Plus Medical Expenses Policy

Major Characteristics of Individual Health Insurance Policy

Coverage: Individual coverage are generally classified into the following broad heads:

1. Hospital Surgical Insurance

2.   Major Medical Insurance

3.   Long-term Care Insurance

4.   Disability Income Insurance

Hospital Surgical Insurance: It covers the following expenses:

·         Hospital expenses: A typical Individual Health Insurance policy covers impatient hospital expenses subject to a specified limit and subject to certain amount of deductible or co-insurance

·         Surgical expenses

·         Cost of medicines and nursing

·         Domiciliary expenses up to certain limits

Major characteristics of Medical Insurance :It covers major or broader coverage than basic coverage with the following characteristics:

1.   Broad coverage for hospital charges, drugs, nursing, medical equipments, etc.

2.   High maximum limit, say Rs. 5,00,000 or Rs. 10,0000, etc.

3.   Benefit period: maximum amount paid under a major benefit policy depending on the length of the policy

4.   Deductible that must be satisfied before the benefit is granted, which may be

yearly deductible, family deductible, etc.

5.   Co-insura'lce is provided in most of the policies to avoid moral hazards

6.   Taxation benefits subject to compliance of certain requirements

7.   Pre-exiting conditions clause to avoid adverse selection

Common exclusions

1. Expenses caused by war or military conflict

2.   Cosmetic surgery

3.   Dental care except as a result of an accident

4.   Eye and examination aids unless there is an accident

5.   Pregnancy or childbirth unless specifically provided

6.   Expenses covered under W.C. laws or similar laws

7.   Services furnished by governmental agencies unless the patient has the obliga­tion to pay

8.   Experimental surgery

Standard Individual Mediclaim Insurance- Underwriting Guidelines

Coverage: This policy covers reimbursement of hospital is at ion or domiciliary hospitalization expenses for illness or diseases or injury sustained. In the event of any claim becoming admissible under this scheme, the insurer will pay to the insured person the amount of such expenses as would fall under different heads of medical expenses mentioned below and as are reasonable and necessarily incurred by or on behalf of such insured persons but not exceeding the sum insured in anyone period of insurance:

1.      Room and boarding expenses provided by hospital or nursing home

2.      Nursing expenses

3.      Fees of surgeon, anesthetist, consultant etc.

4.      Anesthesia, blood oxygen, OT, X-ray, surgical appliances, medicines etc.

The sum insured in this policy varies from ` 15,000 to 5,00,000 per person. This policy provides for family discount on total premium for the members of the family. In case of no claim, cumulative discount is also available as per the company's underwriting policy. In case of cost of health check, as per the policy conditions, generally once in four years is available.

Underwriting Guidelines: Individual Mediclaim Insurance has been showing very high incurred claim ratio since long. In the tariff market, this product has been sold by almost all underwriters with huge cross-subsidy from profitable products like fire and engineering. But in the de-tariff market, the prevalence of cross-subsidy is ruled out. Every product must stand on its own revenue. One product cannot subsidize other product. In view of our huge claim ratio of around 140 per cent of Individual Mediclaim Insurance, the underwriters have adopted the following underwriting measures to ensure prudent underwriting for this product today:

1.  Fresh proposal for a single person above 45 years of age is discouraged.

2.  Though mediclaim policy is available to persons between 5 years and 80 years of age, fresh acceptance of cover for a person beyond 60 years is discouraged, unless he is a member of a big family or group to be covered or otherwise potential.

3.  Policy already in force for insured exceeding 75 years of age may be renewed on the basis of claim experience and risk evaluation with or without restrictive condition as per the risk analysis findings.

4.  Cancellation of policy is done subject to the following underwriting policy:

a.   Policy to be renewed by mutual consent.

b.  Company is not bound to notify that policy is due for renewal.

c.   Policy may be cancelled by company after giving 30-days notice and pro rata premium to be refunded, provided no claim has been paid under this policy.

d.  Company remains liable for any claim arising prior to date of cancellation.

e.   The insured may cancel the policy any time; the company would refund premium subject to 'No-claim' during the policy period.

5.  Renewal of policy is done on the basis of the following norms:

a.   In case renewal is agreed, the illness for which the expenses have been paid in previous policy are not to be excluded. Renewal is done on earlier terms.

b.  If policy is renewed for enhanced sum insured, reimbursement of illness occurred in the previous policy shall be restricted to old sum insured.

6.  Cost of health check up is allowed up to I per cent of average sum insured of four claims-free underwriting years.

7.  Issuance of policies for period less than one year is prohibited.

8.  Policies for persons above 75 years to be decided on the claim experience merit.

9.  Extension for suspended mediclaim may be allowed only when overseas mediclaim policy has been taken by an individual or family as whole when one of the person goes abroad by taking overseas mediclaim policy.

10. Tax-benefit under Section 80D of the IT Act available when premium is paid by cheque.

11. General exclusions: provided under the policy:

a.    All diseases or injuries which are pre-existing when the cover incepts for the first time.

b.   Any diseases other than those mentioned below contracted by the insured person during the first thirty days from the commencement of the policy.

c.    During the first year of the operation of insurance cover, the expenses on treatment of diseases such as cataract, benign prostatic hypertrophy, hysterectomy for menorrhagia or fibromyoma, hernia, hydrocele, congenital internal diseases, fistula in anus, piles, sinusitis and related disorders.

d.   Injury or disease directly or indirectly caused by or arising from or attributable to war, invasion, act of foreign enemy, war-like operations (whether war be declared or not).

e.    Circumcision unless necessary for treatment of a disease not excluded hereunder or as may be necessitated due to an accident, vaccination or inoculation or change of life or cosmetic or aesthetic treatment of any description, plastic surgery other than as may be necessitated due to an accident or as a part of any illness.

f.    Cost of spectacles, contact lenses, hearing aids.

g.   Any dental treatment or surgery which is a corrective, cosmetic or aesthetic procedure, including wear and tear, unless arising from disease injury and requires hospitalisation for treatment.

h.   Convalescene, general debility, 'run-down' condition or rest corrective, congenital external disease defects or anomalies, sterility, venereal disease, intentional self-injury and use of intoxicating drugs or a1chol.

1.   All expenses arising out of any condition directly or indirectly caused to or associated with human T cell lymph tropic virus type III (HTD-III) or lymphadinopathy-associated virus (LAV) or the mutants derivative or variations deficiency syndrome or any HTTB-III syndrome or condition of a similar kind commonly referred to as AIDs.

J.    Charges incurred at hospital or nursing home primarily for diagnostic, X-ray or laboratory examinations not consistent with or incidental to the diagnosis and treatment of the positive existence or presence of any ailment, sickness or injury for which confinement is required at a hospital or nursing home.

k.   Expenses on vitamins and tonics unless forming part of treatment for injury or disease as certified by the attending physician.

1.   Injury or disease directly or indirectly caused by or contributed to by nuclear weapons or materials.        '

m. Treatment arising from or traceable to pregnancy, childbirth, miscarriage, abortion or complications of this kind, including caesrian section.

n.   Naturopathy treatment.

Guidelines for Group Medical Policy: The underwriters generally follow the underwriting procedures mentioned below to ensure prudent underwriting and high incurred claim ratio:

1.         Group policy will be issued for named persons only.

2.   Group shall be of any of seven specified categories, namely, (i) Employer­-employee relationship, (ii) Pre-defined segment where premium is paid by Government, (iii) Members of a registered club, (iv) Members of a registered co-society, (v) Holders of credit cards of banks, visa or master cards (vi) Holders of deposit certificates of banks /NBFC, and (vii) Shareholders of a company.

3.  Group discount generally varies from 2.5 per cent to 30 per cent available for various groups from 101 to 50,000 and above.

4.   Monthly endorsement for any addition or deletion of any number of members shall be without any change in discount.

5.   Group below 100 persons may be given group policy without discount.

6.  Maternity benefit up to Rs. 50,000 available with 10 per cent loading on basic premium.

7.    Cost of health check-up will not be available in group policy.

8.    5 per cent service charges on group policy.

Universal Health Insurance

This Health Insurance is a very important policy for people below the poverty line and is thus of great importance for social security and National Health Policy. Let us now discuss the important provisions of such Health Insurance as a matter of case study on underwriting of a Health Insurance product essential for National Health Policy.

Sum Insured:

1.   Section I: Hospitalisation benefit per family-Rs. 30,000

2.   Section II: Accidental death benefit for head of family-Rs. 25,000

3.   Section III: Disability compensation on hosptalisation for head of family for maximum period of 15 days- Rs. 50 per day

Premium:

1.   Individual person: Rs. 365 p.a.

2.   Family of five persons (insured + spouse + 3 children): Rs. 548 p.a.

3.   Family of seven persons (as above + parents): Rs. 730 p.a.

Benefits

Section I

1.   Reimbursement of total medical expenses for anyone accident: Rs. 15,000

2.   Reimbursement for a member of family-individually or collectively: Rs. 30,000, subject to following sub-limits of hospital expenses:

a.             Room or boarding expenses: up to Rs. 150 per day

b.            ICU reimbursement: up to Rs. 150 per day

c.             Fees of surgeon, anaesthesist, consultant, etc.: up to Rs. 4,500 per illness

d.            Anesthesia, blood, oxygen, QT, X-ray, surgical appliances, medicines, etc.: up to Rs. 4,500 per illness

The insurer's liability in respect of all claims admitted during period of insur­ance shall not exceed the SI ofRs. 30,000 per person or per family.

Section II

Death Compensation for earning head of the family solely and directly due to accident caused by outward, violent and visible means will be to SI, i.e. Rs. 25,000

Section III

Disable compensation for earning head the family solely and directly due to accident for which a valid claim under Section I is admitted will be up to Rs. 50 per day with excess of three days for a maximum period of 15 days.

General Exclusions:

1.            All pre-existing diseases are not admissible.

2.            Any disease other than those stated in the policy contracted by the insured person during the first 30 days of commencement of the policy, provided that in the opinion of panel doctors the insured could not have known the existence of the disease or any symptom and had not taken any consultation treatment or medication.

3.            Some diseases like cataract, benign prostate hypertrophy, hysterectomy, hernia, menorrhagia or fibromyoma, hydrocele, congenital, internal disease, fistula, piles, sinusitis and related disorders are not payable.

4.            Disease arising from or attributable to war or war-like operations.

5.            Circumcision unless necessary for treatment or due to accident.

6.            Cost of spectacles, contact lenses and hearing aids.

7.            Dental treatment, which is cosmetic, corrective or aesthetic.

8.            Convalescence general debility, 'run down' condition or rest cure, congenital external disease or defects or anomalies, sterility, venereal disease, intentional self-injury and use of drugs.

9.            Any cosmetic treatment or surgery, sterility, venereal disease, HIV, AIDS 10.

10.         Diagnostic, X-ray or laboratory examination not consistent with diagnosis

11.        Vitamins and tonics not forming part of treatment.

12.        Disease or injuries attributable to nuclear weapons.

13.        Treatment arising from pregnancy, childbirth, miscarriage, etc.

14.        Naturopathy treatment.

Specific Exclusion for Section II

1.            Compensation in respect of death directly or indirectly contributed or traceable to any disability existing on the commencement of the policy.

2.            Death arising directly or indirectly from:

a.             Internal self-injury or suicide.

b.            Pregnancy or any complication thereof.

c.             Whilst engaging in aviation, ballooning, mounting or traveling in any aircraft other than as a passenger.

d.            Whilst under the influence of intoxication, liquor or drugs.

e.             Directly or indirectly caused by venereal diseases or insanity.

f.             Breach of law with criminal intent.

General Conditions:

1.         Only one policy will be issued to one family.

2.         The pre- and post-hospitalization expenses are excluded.

3.         Proposal form and prospectus to be signed by the proposer with all details.

Health Insurance Policies in India: The health insurance policies available in India are:

(a) Mediclaim policy (individuals and groups)

(b) Overseas mediclaim policy

(c) Raj Rajeshwari Mahila Kalyan Yojna

(d) Bhagyashree Child Welfare Policy

(e) Cancer Insurance Policy

(f) Jan Arogya Bima Policy

·         Mediclaim policy (individuals and groups): Mediclaim policy is offered to individuals and groups exceeding 50 members. It covers the hospitalization for diseases or sickness and for injuries. Under group mediclaim policy, group discount is allowed to groups exceeding 101 people. The medical expenses will be reimbursed only if the insured is admitted in the hospital for a minimum duration of 24 hours. Cost of treatment includes consultation fee of doctors, cost of medicines and hospitalization charges. Health insurance in India is available at very economical rates. It is very popular among professionals like Chartered accountants, Advocates, Engineers etc. It is very suitable for self-employed persons because it covers risks against several general and serious diseases.

·         Overseas Mediclaim Policy: In 1984, the Overseas Mediclaim Policy was developed. This policy will reimburse the medical expenses incurred by Indians upto 70 years of age while traveling abroad. The premium will be charged based on their age, purpose of travel, duration and plan selected by the insured under the policy. This policy is provided is provided to businessmen , people going on holiday tour, traveling for educational professional and official purposes.

·         Raj Rajeshwari Mahila Kalyan Yojna: It is a personal accident policy offered by an insurance company for the welfare of women. It is offered to women residing in rural and urban areas. Women between 10-75 years of age are eligible for this policy irrespective of their occupation and income level.

·         Bhagyashree Child Welfare Policy: It is offered to girls between 0-18 years. The age of the parents of the girls shouldn’t be more than 60 years. It provides coverage to one girl child in a family who loses her father or mother in an accident.

·         Cancer insurance policy: It is designed for cancer patients aid association members. The persons insured under this policy will pay premium to their association along with the membership fee. This policy will offer coverage to the insured in case he develops cancer. All the expenses incurred for treatment of cancer not exceeding the sum insured will be paid directly to the insured person.

·         Jan Arogya Bima Policy: This policy provides medical insurance to poorer section of the people. This policy covers illness like heart attack, jaundice, food poisoning, and accidents etc. that requires immediate hospitalization.

Read more