Tag: IRDA

Telangana HC directs IRDA to promote overlooked senior official

Banking & Finance

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Can the chairman of the Insurance Regulatory Development Authority of India (IRDA), which oversees the country’s multibillion-dollar insurance sector, change the qualification terms of appointment of senior officials? On September 1, the Telangana High Court (HC) passed an order against the decision of former IRDA chairman TS Vijayan to relax the minimum qualification for the appointment of a senior official. Vijayan relaxed the requirement from chartered accountant (CA) to chartered financial analyst (CFA) in 2014. A CA degree is more rigorous compared to CFA.

IRDA under Vijayan promoted Mamta Suri as the Chief General Manager (CGM) instead of Jayasimhan Sathyamangalam, who then approached the court. Calling the appointment as one without jurisdiction, arbitrary and contrary to law, the HC directed the promotion of the ignored candidate retrospectively. Sathyamangalam is currently a general manager.

Revitalising insurance

The court ruled that the power of relaxing the required qualification — namely, fellow chartered accountant (FCA) — is not vested with the Chairman since no resolution to that effect has been passed. “Hence the action of the Chairman in relaxing FCA as CFA / ICWAI providing appointment to the unofficial respondent is one without jurisdiction and is arbitrary action and it is also contrary to law,” said Justice T Amarnath Goud in his order.

Insuring the insurers

Apart from terming Suri’s promotion as illegal with effect from 2014, the court asked IRDA to inter-alia delete ICWAI and CFA as eligible qualifications. The order stated that CFA means chartered financial analyst and FCA means fellow chartered accountant. CFA is an investment and financial management course offered by the Institute of Chartered Financial Analysts of India (ICFAI), whereas an FCA is a qualification attained by an associate chartered accountant after five years of practice as an accountant after qualifying as an associated chartered accountant (ACA).

The method of recruitment for the post of Senior Joint Director (CGM) is by promotion from among Joint Directors (GM) after four years, subject to merit, suitability and seniority. The appointment of Suri is illegal as her qualification is CFA, and also for the reason that, as on the date of the notification (October 23, 2013) the un-amended Executive Rules 2009 were in force, which stipulate only FCA as the eligible qualification, the court pointed out, thus allowing the writ petitions and setting aside the impugned orders.

As Jayasimhan is the only person qualified for the vacancy, the respondents can consider him for the vacancy with all consequential benefits, the court added.

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Resources for developing financial literacy at a young age to ensure entrepreneurship-led growth, BFSI News, ET BFSI

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Financial literacy, like every other life skill, is crucial. The earlier you expose it to your children, the better their money management abilities will be later in life. This money management practice lays a solid foundation for concepts like saving, spending, and investing in children.

Learning how to invest and manage money wisely will eventually become an important life skill for teenagers to master to achieve their goals. This becomes all the more important as India’s growth and development is going to be entrepreneurship-led in the future and learning the ropes of money management skills is very crucial at a young age.

Unfortunately, financial literacy is often left out of the traditional educational system’s curriculum. Children and teens enter adulthood without knowing how to manage their resources properly. As a result, parents are the primary educators when it comes to teaching teenagers money management skills.

Following are some ways parents can teach their kids about financial literacy:

  • To start, parents can give kids money to buy food in the school canteen to be able to keep a check on their expenses.
  • You can also help them understand the cost of things so that they will understand the value of money.
  • Piggy banks can be a great start for kids to learn about savings. They will cut out on expenses to start saving a little every day, thus beginning their journey towards financial education.
  • If kids list a few things, try not to buy them everything. Let them instead choose a few things to buy from that list. This will help them to spend wisely.
  • Monopoly and other business games will also make them proactive about money matters.
  • Take your kids to the supermarket, let them know your budget, and sit with them while preparing a rough list of things you want to buy in the supermarket.
  • Let them know if you’re facing any financial crisis, they might cut down their expenses and learn to spend wisely on things that matter.
  • Gradually introduce them to the world of investments, starting with an FD; open a bank account for them as well.
  • Once they learn about the benefits of investing in FDs, they gradually introduce them to other investment instruments.
  • Technology has also made investing simple with just one click, allowing consumers to invest with simplicity. Introduce your child to the concept of digital finance and help them make informed financial decisions.

Several organizations have taken the following actions to ensure that the teens are financially literate as part of the government’s financial literacy strategy.
1. Project Financial Literacy
The Reserve Bank of India (RBI) has undertaken a project, “Project Financial Literacy.” The project’s objective is to impart information regarding the central bank and banking concepts to various target groups, including school- and college-going children, defence personnel, senior citizens, women, and the rural and urban poor.The project is implemented in two modules. One module lets users get acquainted with the role and functions of the Reserve Bank of India. In the other module, users are introduced to banking concepts.
2. NCERT – Personal Finance Supplementary Reading Material
There are a total of 9 modules covered in this sequentially: Financial Plan, Budgeting, Managing your Money, Financing Assets, Protecting your Assets, Investing Money, Retirement Planning, Taxes & you, and Career Planning.
3. Pocket Money – the student’s Guide to Money
It is a financial literacy initiative by the Securities and Exchange Board of India (SEBI) and the National Institute of Securities Markets (NISM). The objective of this is to help school-going children to understand the importance of financial management and the value of money.
4. Financial Education for School Children
This material was developed under the guidance of the Advisory Committee for the Investor Protection and Education Fund (IPEF) of the Securities Exchange Board of India (SEBI) and by the National Stock Exchange (NSE). It covers modules on the following: Money Matters, Planning, Budgeting, Investment, and Stock Market.
5. Introduction to Retirement Planning for School Students
This material is developed by the Pension Fund Regulatory & Development Authority. It aims to explain retirement and how to plan for retirement with various pension schemes effectively.
6. Commodity Futures Market for Students
This resource helps students understand the basics of commodity markets.
7. Material on Insurance for Children
The resource is available as comics and videos and is developed by the Insurance Regulatory and Development Authority (IRDA). It aims to explain the basics of insurance, several types of insurance, insurance ombudsman, ULIP (Unit Linked Insurance Plan), etc.

Allow your children to learn about money, regardless of their age. They can grow into financially responsible individuals and entrepreneurs who make sensible financial decisions with the proper guidance and healthy money management habits. Adults who are skilled at budgeting build family relationships while also contributing to economic progress.

(The writer is Co-founder & CEO, Pencilton)



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With no chief, decisions hang fire at IRDAI

Banking & Finance

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The delay in the appointment of a new chief has affected key policy decisions at the Insurance Regulatory and Development Authority of India.

The post of IRDAI chairman has been vacant since May first week after Subhash C Khuntia demitted office on completion of his term.

Though the Centre had issued a notification inviting applications for the new chairman on April 30, no one has been named to the post so far.

“It has been nearly two- and-half months since the regulator’s office fell vacant. This is first time that the top post of the insurance sector regulator has been kept vacant for such a long time,” said the MD & CEO of a private life insurance company.

As of now, out of the five Members of IRDAI, only four have incumbents — Distribution (SN Rajeshwari), Actuary (Pramod Kumar Arora), Life (K Ganesh) and Non-Life (TL Alamelu). The post of Member, Finance and Investment, is also vacant.

The absence of a chairman is a matter of “concern” in the present situation due to the Covid-19 pandemic and the churn the life and general insurance industry has been witnessing.

”There are key developments and decisions to be taken which will need a chairman,’’ said the Head of Underwriting of a private general insurer.

important decisions such as on the continuation of Covid-specific standard policies, and revision of premium and pricing of general and health insurance as being sought by the industry and management of Covid claims, need to ne taken, he said.

Further, the Initial Public Offer of Life Insurance Corporation of India, expected to be the largest ever IPO in India, will involve coordination with SEBI and the absence of a chairman at IRDAI can cause hiccups, feel industry experts.

Why the delay

A senior official said the notification for the new regulator got delayed this time. “On previous occasions, the process began about two months before the superannuation of the incumbent chairman. But, this year, the notification was issued only a couple of weeks before the retirement of the chairman,’’ said an IRDAI official.

About 30 candidates, including a dozen bureaucrats, two serving Members of the Authority and a couple of CEOs of private insurance companies, had apparently applied for the IRDAI chief’s post.

The short-listing of applicants has been completed, but the interviews are yet to be scheduled, it is learnt.

Interestingly, many economy watchers point out that no delay or laxity when it came to the appointment of heads of other regulators such as the RBI or SEBI and the selection process went like clock work.

Even for IBBI, the youngest regulatory body, the process of selection of a new chairman has started well before the incumbent is to demit office.

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What is insurance bonus – The Hindu BusinessLine

Personal Finance

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Two neighbours’ daily routine of watering plants leads to an interesting conversation.

Sindu: This mint family plant took only about three weeks to grow and it smells good.

Bindu: That is a sage plant. Not only is it aromatic, but it has medicinal qualities too.

Sindu: Great. That’s a bonus! Just what we need during these tough times.

Bindu: Speaking of bonus, my life insurance policy matured and I got extra cash as bonus.

Sindu: That explains your extra plants on the walls. But what is a bonus in life insurance?

Bindu: Well, ‘bonus’ in insurance is a benefit given by the insurer to a policyholder over and above the maturity amount of the policy. So when a life insurer makes profit, it is distributed in the form of bonus.

Sindu: Does every life insurance product offer bonus?

Bindu: No. Bonuses are usually offered with traditional products, that is, ‘with profit’ policies.

Sindu: How many types of bonuses are there?

Bindu: There are broadly three types – terminal, interim and reversionary bonus. Terminal bonus is a one-time benefit offered by an insurer when the policy matures, though it is left to the discretion of the insurer to pay this. Interim bonus is declared in cases where an insurance policy matures before the end of the financial year or in case of the insured person’s demise during the term of the policy. In case of reversionary bonus, a certain bonus value is added regularly to the policy. These bonus amounts continue to accrue until the policy term and are paid out at maturity. After declaring reversionary bonuses, if there are still residual profits available with the insurer, they normally are declared as terminal bonus.

Sindu: Do we know how much will be the bonus at the time of taking the policy?

Bindu: Not always, though there are products that do mention the bonus at the inception itself. Bonus is declared either as a certain amount (say ₹20 or ₹50) per ₹1,000 sum assured or as a percentage of the sum assured. As bonus is declared only when an insurer make a profit, it may not be known at the inception of the policy.

Sindu: Can I purchase a policy based on the bonus payment?

Bindu: You can. While you can check the historical bonus paid by an insurer on their websites, that shouldn’t be the only criteria for selection.

Sindu: Bonuses are a reward for staying invested for long-term.

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Recovered from Covid? It may be difficult to get insurance cover now

Personal Finance

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As India grapples with the second wave of Covid-19, many have understood the importance of insurance, both life and health, and are actively signing up for new policies in recent times. However, if you are among those who were unfortunately infected with Covid , and have subsequently recovered, you may find it difficult to sign up for a new policy, particularly a term life policy. This is because insurers are cautious and have tightened underwriting norms, as the after-effects of Covid remain to be seen.

Cooling-off period

In life insurance, while policyholders who had not been infected with Covid and are otherwise found to meet all conditions for coverage are accepted in the usual manner, those who had recovered from the same are evaluated based on factors such as nature of infection, treatment offered and current status.Accordingly, insurers make room for a recovery period. Life insurers including SBI Life and Kotak Life, for instance, have a cooling-off period of 30 to 90 days post which the policy is issued.

According to Sunil Sharma, Appointed Actuary and Chief Risk Officer (CRO), Kotak Mahindra Life, “If the life to be assured has a Covid history, the insurance cover can usually be considered three months post complete recovery, subject to underwriting. Additionally, specific medical tests may be requested on a case-by-case basis based on the information provided, to evaluate the risk”.

At present, post the said recovery period, policyholders are accepted without any need for restrictive clause or increase in premium. Sajja Praveen Chowdary, Head, Term Insurance, policybazaar.com, says, “There is no differential premium as of now between an individual who has recovered from Covid and a healthy person.”

Further, according to industry sources, in the future, if it is proven that there is a lasting health impact due to Covid, then the underwriter may charge additional premium for those who have recovered. This is similar to differential premium charged for a smoker and a non-smoker.

Additional scrutiny

In life insurance, post recovery from Covid infection, policyholders may be asked to submit a Covid negative report in addition to other medical records. Similarly, policyholders may be subject to additional scrutiny if one of the family members tested positive and later recovered or passed away (if they had been living under the same roof).

Also, given that life insurance is a long-term contract with policyholders, there could be a stringent on-boarding process of new policyholders irrespective of whether he/she contracted Covid. For one, almost all the life insurers including LIC and SBI Life have introduced Covid questionnaires where the prospective policyholders have to provide details such as whether they have travelled abroad in the past six months to one year, whether they plan to travel abroad, date of discharge in case of a Covid-19 diagnosis and whether full recovery has been achieved. This questionnaire is to be submitted along with the proposal form while buying the policy.

Delay in health policies too

In health insurance, while there is no cooling-off period or postponement of policy issuance to new policyholders in many cases, the health/general insurers are cautious when on-boarding customers, particularly those who had recovered from Covid. A few insurers including ICICI Lombard, Max Bupa and Manipal Cigna do have a cooling-off period (in the range of 15-90 days) when on-boarding a customer.

Priya Deshmukh Gilbile, Chief Operating Officer, Manipal Cigna Health, says “While the vaccine is a preventive measure, members who have had a Covid infection may have a possibility of future complications. From that perspective, a person who has been Covid-positive but who is getting vaccinated will still undergo the cooling-off period, and it does not have a bearing on premiums.”

Those who have recovered from Covid, in addition to providing details regarding current health condition, may be required to submit medical records, details of treatment undertaken, the severity of infections and past medical conditions and corresponding records, to the insurer. Some insurers require additional medical tests but it differs on a case-to-case basis. “A medical check-up requirement for those recovered from Covid will depend on the extent of the hospital treatment or the level of damage to the lungs and other vital organs,” says Gurdeep Singh Batra, Head – Retail Underwriting, Bajaj Allianz General Insurance.

Many insurers require that if an individual with pre-existing condition such as diabetes, asthma or hypertension has recovered from Covid, he/she may have to undergo further medical tests in addition to submitting a Covid-negative report. However, this is not a universal requirement.

Do note that health policies generally come with an initial waiting period of 30 days..

If you have any pre-existing conditions, there is a waiting period of 2-4 years and there are disease-specific waiting periods as well that vary with insurers. Even if you consider Covid-specific insurance policies like Corona Kavach or Corona Rakshak, there is a waiting period of 15 days.

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How to get back your entire term insurance premium

Personal Finance

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Two neighbours’ daily routine of watering plants leads to an interesting conversation

Bindu: These plants give back much more than the time and care we invest in them.

Sindu: Yes. Speaking of giving back, have you heard of the concept of return of premium or ROP in life insurance plans?

Bindu: No. What is it?

Sindu: It is literally what the name means. ROP is where the term plan returns the entire premium paid (excluding tax) during the policy term . A few insurers even return 110-150 per cent of premium paid.

Bindu: Wait. Did you say term plan? Terms plans don’t given any kind of returns to the policyholders. It is a pure risk cover. The policy terminates after the policy term.

Sindu: Yes, exactly. Many policyholders who survive the policy term feel they don’t get anything in return. So for them, term plan with ROP (TROP) variant was introduced.

Bindu: How does it work?

Sindu: Most insurers offer TROP as a rider or optional cover. Upon payment of additional premium, you can buy this cover. Here, you get life cover during the policy term and if you survive the policy term, 100 per cent total premium paid including underwriting extra premium (if any) under the base policy will be paid at the end of the policy term and the policy will terminate.

Bindu: Great! Do we get tax breaks on this as well?

Sindu: Tax benefits available on regular life insurance policies under Section 80C can be availed on ROP term plans too. Maturity benefit, i.e., the premium that is returned, is eligible for tax exemption under Section 10 (10 D). And, unlike the regular term covers, under TROP, the policy becomes paid-up. That is, if you stop paying the premium, the policy will continue to cover you till end of the policy term for a reduced sum assured (SA).

Bindu: Well, this is good!

Sindu: Yes. It appears to be. But hold your horses. There are a few things to keep in mind. One, the premium for this return of premium variant is higher than the plain- vanilla cover. Two, you get only the premium paid for the base cover. That is, if you had opted for any optional or rider covers such as accidental death benefit, critical illness riders or joint life, you will not get back the amount paid. And three, ROP has to be selected at the inception of the policy.

Bindu: Basically, if I don’t mind spending the extra money, then I can go for this cover. It not only protects my family in my absence during the policy term but gives me a financial cushion at the end of the policy term. It is not so bad.

Sindu: True that. But it is still expensive for a term cover. Instead, you can always invest that extra money paid as premium in alternate platforms and consider a plain-vanilla term cover. After all, insurance is for protection.

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Max LifeSmart Secure Plus: Should you go for this multiple-frills policy?

Personal Finance

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Max Life Insurance recently launched Smart Secure Plus Plan, a non-linked, non-participating, term life policy. While the loss of a family member is hard to cope with, a term cover can offer financial support to the surviving members. Max Life’s new plan, in addition to providing a risk cover, comes with multiple frills and riders. Should you go for this plan?

Basics

The policy is available for those from 18 to 65 years of age, with minimum sum assured (SA) of ₹20 lakh (minimum SA for joint life is ₹10 lakh). It provides cover up to 85 years of age. The policy offers different premium payment term options — 5, 10, 12, 15 years, and one where you can pay premium till 60 years. Apart from this, regular pay option (where you can pay premium till the end of the policy term) and single premium payment option, too, are available.

Unlike most policies in the market where the policyholder chooses the pay-out (death benefit) for the nominee, Smart Secure Plus allows the nominee to select from three pay-out options — lump sum payment or monthly pay-out or part lump sum and part monthly pay-out. In addition to the death benefit, the policy provides coverage against diagnosis of terminal illness (pay-out subject to maximum of ₹1 crore), post which the policy terminates.

Similar to most term plans, this policy too offers two SA options, to be chosen by the policyholder at the inception of the policy. These are level SA (where the life cover remains constant for the duration of the policy) and increasing SA, where the cover increases 5 per cent every policy year, subject to a maximum of 200 per cent of the base SA.

The policy also offers enhanced features for additional premium, such as joint life cover, return of premium, premium break option, voluntary top-up of SA, accelerated critical illness, accident cover, waiver of premium and critical illness and disability rider.

What’s new

While Smart Secure Plus Plan is, by and large, similar to other term plans with respect to coverage and riders, it has two new features — special exit value option and premium break option.

Under the special exit value feature, a policyholder may choose to exit the policy and receive the premiums paid. That is, you can receive the entire premium paid for the base policy if you are 65 years or you have reached the 25th year (applicable for policy term from 40 years to 44 years) or the 30th policy year (applicable for policy terms greater than 44 years), whichever is earlier.

Though special exit value is offered in-built in the policy (without payment of additional premium), there are certain points to keep in mind. It is not available if the policyholder has opted for return of premium rider. It is also not available if the policy term is less than 40 years. Lastly, when a policyholder opts for special exit value, then only the premium applicable on the base cover has to be paid and not the premium additionally paid on riders or optional covers.

The second feature is premium break, where the policyholder can take a break from premium payment and still stay covered. The policyholder will be allowed to take this break twice during the policy term. If the premium break option is not exercised, the insurer will waive the last two policy year premiums. But the option is available only for policies with a policy term greater than 30 years and premium payment term greater than 21 years. The feature is available only under the regular pay and premium payment term till 60 years options.

Do keep in mind that this feature is available only on the payment of additional premium. Further, the first break is available only after the completion of 10 policy years and the premium waived includes base cover premium, accelerated critical illness benefit premium and accident cover premium. The second premium break can be exercised after a minimum gap of 10 years from the first premium break.

Both features have to be opted for at the inception of the policy.

Our take

When it comes to life insurance, it is best to go for a basic term plan, which is the cheapest life cover available in the market today. You can consider adding accidental death benefit and critical illness riders to your base plan and go for the ones available at a suitable premium.

When other riders like return of premium and waiver of premium are added to the policy, including Smart Secure Plus, the premium becomes steep. So for a 30-year old for SA of ₹1 crore (40-year term), with return of premium, the premium works out to ₹18,658 per year (including tax). But, a pure term life cover for the same person will cost about ₹7,300-12,000 a year.

The premium break option may not be useful for many as the income of an individual is likely to increase as he/she ages. Further, if there is any financial strain, he/she might as well go the special exit or early exit option instead of selecting premium break (for extra cost).

While it is advisable to stay covered for maximum number of years, the policy’s special exit options come in handy, particularly if you are in need of money. But you may not be able to avail this exit if you miss the said timeline (25th or 30th year). However, if you still want to exit the policy earlier, the insurer provides an option for early exit as well, but you may not receive the entire premium paid.

To sum up, you could go for this policy for its pure vanilla cover and special exit option. But if you want to go for online term plans, there’s a wider basket of policies to choose from.

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How you can insure yourself from Covid

Personal Finance

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With the second wave of Covid raging across the country, many are looking to buy a health cover or enhance the same. According to data from Policybazaar.com, 90 per cent of their customers who have an existing health cover of about ₹5 lakh are porting to a higher sum insured of ₹10-15 lakh. While you must make it a point to follow all Covid protocols to avoid getting infected, here’s how you can financially shield yourself against Covid if you unfortunately fall sick.

 

Date extended for Covid-plans

In addition to taking toll on your health, Covid-19 infection can dent your savings as well.

Keeping this in mind, the insurance regulator, IRDAI has recently extended the validity for sale and renewal of short-term Covid specific health insurance policies – Corona Kavach and Corona Rakshak – till September 30, 2021. This was previously available up to March 31, 2021.

The insurance regulator in July 2020 had mandated that all general and standalone health insurers offer Corona Kavach health policy.

This (Corona Kavach) is an indemnity policy which pays for the hospitalisation of the insured affected due to Covid-19, provided he/she is hospitalised for a minimum period of 24 hours. It also offers cashless facility to its policyholders, provided hospitalisation is from the insurer’s list of network hospitals.

Hospitalisation cover includes expenses such as room rent, boarding, nursing, ICU, ambulance service up to ₹2,000, medical practitioner and consultant fees, operation theatres, PPE kit, gloves, etc.

It covers for home care treatment expenses as well, up to the sum insured (SI) for a maximum period of 14 days. All general and standalone health insurers offer this policy.

There are complaints that some hospitals are not granting cashless facility for treatment of Covid-19 despite policyholders being entitled for the same. The insurance regulator has recently clarified that wherever insurers have an arrangement with the hospitals for providing cashless facility, such hospitals are obligated to provide cashless service for all treatments including treatment for Covid-19. In the event of denial, policyholders can file a complaint with the insurer concerned.

Another plan introduced by IRDAI, but not mandatory to be offered by all insurers, is Corona Rakshak. It is a benefit policy, where the insurer will pay 100 per cent SI upon positive diagnosis and the policy shall terminate thereafter.

As both are standard policies, the coverages and exclusions across insurers will be the same, including the policy name. Both policies can be availed for a period of 105 days (3.5 months), 195 days (6.5 months) and 285 days (9.5 months) and can be renewed to ensure the benefit of the policy continues.

The minimum SI under both policies is ₹50,000; the maximum SI offered under Corona Kavach is ₹5 lakh and for Corona Rakshak ₹2.5 lakh. The minimum and maximum age of entry is 18 and 65 years respectively, and only single premium payment mode is allowed under both policies.

Regular health policies cover hospitalisation due to Corona virus among other diseases/accidents. At the beginning of the outbreak of the pandemic, there were problems over providing cover for associated costs such as personal protection equipment (PPE) kits.

These expenses formed part of consumables which were not usually covered by most insurers. Those who did cover, applied ‘proportionate deduction’ clause based on the type of hospital room availed.

In June last year, to reduce the burden of the policyholders and to standardise the claim settlement, IRDAI, ordered that medical expenses including cost of pharmacy, consumables, implants, medical devices and diagnostics to be covered as part of health policies without being subject to the ‘proportionate deduction’ clause. Covid-related expenses in the above-mentioned heads such as PPE kits will reap the benefit of this move.

Further, if you have a health policy which covers for out-patient (OPD) medical expenses – known as comprehensive cover – you can reimburse your Covid-19 related home treatment medical expenses too, if you are under home quarantine.

Making the choice

Your financial burden is likely to be reduced whether you have Covid-19 specific health covers or a comprehensive health cover. However, if you plan to sign up for one now, do note that all new health insurance policies come with a waiting period of 15 days, only after which your cover will kick in.

Covid specific plans as well as regular health cover have certain exclusions. Any unproven treatment will not be covered.

Coverage under both policies cease if the insured travels (outside the country) to a destination where India restricts travel to or the foreign country restricts entry of travellers from India.

So, if you are looking to buy a plan to protect against Covid, you can skip Corona Kavach if you have a regular health plan covering OPD expenses. Corona Rakshak can be useful if your regular plan does not cover OPD or if you are looking for additional cover. Since Rakshak is a benefit policy, this can come in handy to cover expenses for tests, scans, medicines, etc. for those who are home quarantined.

(This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)

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Product Review: Aditya Birla Activ Health policy is value for money

Personal Finance

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Aditya Birla Health recently introduced Activ Health policy, an enhanced version of its existing policy with the same name. While the coverage in the policy almost similar to its older version, there are a few new features.

New features

The newly launched Activ Health (an improved version of the same policy) is a comprehensive indemnity health plan offering sum insured (SI) of ₹2 lakh to ₹2 crore. While the same SI range was offered in the earlier version as well, there are a few notable new features.

In this new Activ Health, room rent for all kinds of hospital rooms is covered up to the SI, similar to other indemnity health plans in the market. But in the previous version, co-pay was applicable. Another key feature that is unique to this new product is that the premium is waived, at the renewal, if the policyholder is diagnosed with a critical illness (once).

Also, in its earlier version of Activ Health, the policy offered about 30 per cent discount on premium for staying fit. Now, in the new version, 100 per cent premium can be adjusted with the health returns. But you as a policyholder should earn points (health returns) through accumulation of Active dayz. For instance, one Active dayz can be earned by 10,000 steps or more in a day or burning 300 calories or more in a day. So if you earn, say, 325 Active Dayz in a year by walking, then the entire health returns can be adjusted with premium payment. It also covers inpatient treatment under AYUSH that allows you to opt for Ayurveda, Unani, Siddha, and Homeopathy treatments which was not available in the previous version.

Both the old and the new policy covers for a few chronic diseases including hypertension, blood pressure and diabetes from day one. Under its chronic management programme which forms a part of the plan – where an individual has undergone a pre-policy medical examination and is found to be suffering from covered chronic conditions, then day one coverage is offered. In the earlier policy, however the hospitalisation came with a waiting period of 90 days. But in the enhanced version hospitalisation expenses for such diseases will be covered without any waiting period (90 days).

Other features of Activ Health plan include coverage for in-patient hospitalisation, OPD, recovery benefit (where the insurer pays fixed benefit for 10 consecutive days of hospitalisation due to accident), day care treatment (covered up to SI) and sum insured reload benefit and cumulative bonus benefits. The plan also provides coverage for Covid-19 and personal protective equipment (PPE) kit, gloves and oxygen masks. There is no co-pay for zone wise premium (policyholder pays premium as per the treatment cost prevailing in the city he/she resides) too for SI over and above ₹4 lakh.

Points to note

Activ Health’s reload feature offers to reinstate your SI even if it is partially or fully exhausted. But it is available only once during the policy year up to SI. But on the other hand, if you go for Activ Health’s Premiere variant, then this feature is available for multiple claims. Also, the pre and post hospitalisation expenses are covered for 60 days and 180 days respectively for this new plan unlike Aditya Birla Health insurer’s other product like Assure Diamond where it is 30 and 60 days respectively.

Also, another point to note is that, if an individual has taken a policy without medical examination (pre-policy medical check-up), but later finds that he/she has one of the chronic conditions, then the waiting period of 24 months applies. One should be aware that the pre-existing disease waiting period is between 36 and 48 months. But there are policies in the market with shorter waiting period including Digit Health Insurance’s Health Care Plus and ICICI Lombard’s iHealth Plus.

Keep in mind, that, policyholders have to undergo initial waiting period of 30 days.

Premium comparison

The new Activ Health is better compared to its previous version as also the insurer’s other plans like Assure Diamond. However, there are other products too in the market with more or less similar features. Max Bupa’s ReAssure plan is one such. For a 30-year individual, for a SI of ₹ 10 lakh, the premium works out to be ₹7690 (excluding tax) per year, while in Max Bupa’s ReAssure plan, the premium works out to be ₹7755 (excluding GST) per year.

Those in the previous version of Activ Health can be upgraded to the new version at the time of renewal. The premium too works out to be lower in the new version. Sample this, for a 30-yr individual, for ₹10 lakh SI, the premium works out to ₹7690 (excluding GST) but the premium for the same policy in its previous version is around ₹8307 (excluding GST).

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IRDAI nods Axis Bank’s stake buy in Max Life Insurance

Banking & Finance

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Max Financial Services on Wednesday announced that the Insurance Regulatory and Development Authority of India (IRDAI) has given its formal approval for the acquisition of up to 12 per cent stake in Max Life Insurance company by Axis Bank and its subsidiaries, Axis Capital and Axis Securities (Axis entities).

“The IRDAI approval was an integral step in this long-awaited joint venture transaction which was first announced in April 2020,” it said in a statement.

Under the proposed transaction, Axis entities can acquire up to 19 per cent stake in Max Life, of which, Axis Bank proposes to acquire up to nine per cent, and Axis Capital and Axis Securities together propose to acquire up to three per cent of the share capital of Max Life in the first leg of the transaction.

“In addition, Axis entities have the right to acquire an additional stake of up to seven per cent in Max Life, in one or more tranches, which they intend to acquire over the course of the next few years,” the release said.

The two entities have been in a relationship for over a decade and the total premium generated through this relationship has aggregated to over ₹40,000 crore.

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