Insurance Policy Management: Review, Upgrade and File Claims

You probably already have subscribed to insurance policies, and through one of our chapters, we hope that you now understand the basic terminologies of insurance and how insurance plans work. 

In this module, we will explore how you can manage your insurance policies for optimum benefit. There are several types of insurance that can form part of your insurance plan. These include health insurance, life insurance, motor insurance, mortgage insurance, etc. Buying an insurance policy is just one of the steps toward insurance planning and financial security. It is key to regularly review and manage your insurance portfolio, much like your other investments, to align them with your changing financial goals and ensure that the coverage is sufficient at all times. Here’s a quick step-by-step run-through of insurance planning.

Understanding Your Insurance Policy

Understanding your insurance policy's coverage, terms, and conditions is fundamental for you and your loved ones. It is crucial for your beneficiaries to know when and how they can claim the policy in your absence. Here are some do’s to understand and review your insurance policy even before you sign up for them: 

• Check Coverage

Verify that your chosen insurance covers the risk adequately. Understand the policy's terms to know when to make a claim. Check the pay-out benefits of the policy and be diligent in taking proactive steps toward insurance planning to ensure that your coverage remains relevant over time. 

• Check and Understand Policy Terms

The terms and conditions of the policy are stated in the policy document. You can read your policy document to understand what is covered and what is not. You may want to give special attention to the exclusions, as no benefit is paid in the event of such incidents. Review what is covered and what is not to understand your policy better. 

• Check Specific Coverage

Different individuals have different insurance requirements at different stages of life. Check if your insurance policy aligns with your unique needs and provides specific coverage such as maternity benefits if you are planning a family, or critical illness benefits if you have a family history of critical illness, etc. 

• Add-on Riders

Add-ons help you enhance your base plan's benefit and supplement its coverage. Think of it like the extra cheese you add to your burger for a minimal price to enhance the taste of the whole burger. If you have an option of add-ons with your plan, review its coverage to check if it meets your specific insurance requirements. 

• Check In-Built Riders

Some insurance policies have built-in riders in the base plan. For example, child protection plans generally have premium waiver riders in which the policy premium is waived off on the policyholder's unfortunate demise. Update/inform the details of the beneficiary. Be proactive in knowing and understanding the terms of in-built riders to ensure efficient use at the time of need. 

• Ensure Timely Payment

It is crucial to ensure timely payment of your insurance premium to keep it in force. Set reminders for the due date of your premium payments. Usually, there is a 15/30-day grace period for paying outstanding premiums; check the terms and ensure payment within the grace period if you happen to miss a due date. 

• Avail Assistance

Reach out to your agent if you require assistance in understanding any specific term in your policy. The agents will explain the coverage and benefits of your policy and assist in smooth claim settlement. However, if you do not have an agent and have bought a policy directly from the insurer, you can call the customer care helpline of the insurance company and take their guidance. 

• Be Informed

The Insurance Regulatory and Development Authority of India (IRDAI) regulates India’s insurance sector. It introduces changes and reforms consistently to enhance the framework for the benefit of the overall insurance sector. It is necessary to keep yourself updated on the reforms and changes brought by IRDAI in the regulations, tax benefits, coverage options, etc. 

• Avail Tax Benefits

Most insurance plans offer tax benefits. The premiums paid for the plan and the pay-out received are eligible for tax deductions/exemptions under the relevant section of the Income Tax Act, 1961. Understanding your insurance policy's tax benefits will help you save on income tax. 

Regular Policy Reviews

Once you’ve subscribed to insurance policies to cover your risks adequately, the next step in insurance planning is to establish timely review mechanisms. Insurance policies are never ‘subscribe and forget.’ While they don’t require continuous monitoring like equity investments, it is necessary to review and update your policy with changing life situations in order to remain financially protected throughout the policy term. Here’s a curated list of items you may want to look into: 

• Changing Needs

Your needs change as life evolves. A term insurance plan you’ve subscribed to as an individual might be sufficient for you now, but once you have a family of your own, you may feel it falling short. Regular reviews of plan adequacy and updating your insurance plan to match your changing and evolving requirements will keep you financially secure. 

• Impact of Inflation

The cost of living increases over time due to inflation. A fixed-return insurance plan that feels sufficient for you today but may not cover the same expenses 10 years later. One should consider the inflation factor for longer-term insurance plans while checking whether the coverage is relevant. Use the add-on feature or subscribe to additional policies if you feel you require more coverage. 

• Health Insurance Check

Check the sum assured and coverage of your health insurance policy to ensure that the amount meets your future medical expenses. With increasing medical costs, the sum assured in your health insurance policy might not be sufficient to meet your future medical expenses and may lead to out-of-pocket costs.

For instance, your health insurance policy has an assured sum of ₹20 lakh, which may be sufficient for you but might not adequately cover your spouse and children.. Assess your coverage at regular intervals to see if it meets the inflated medical costs in the future. Further, ensure that your health insurance accommodates potential changes in your health needs. 

• Family Dynamics

If you bought an insurance plan at a younger age or while you were unmarried, you may want to review your plan when you are getting married or having children or when your financial responsibilities increase. The sum that felt sufficient earlier may feel less once you have a family, outstanding loans, and generally growing needs. Regularly reviewing helps align your insurance coverage with your family's needs, too.

• Update Nominations

Reviewing and updating the nominations periodically with changing events in life is crucial. Life events such as marriage, childbirth, or any other change in family dynamics necessitate updating or adjustments in nomination. Failing to update the nomination, specifically after the death of initially nominated beneficiaries, might lead to difficulty in claim settlement and benefits distribution. 

Cost Optimisation

The next step in our course on insurance planning is cost optimisation. Cost optimisation in insurance policy involves ways to reduce the premiums without compromising on coverage. You can consider the following. 

• Evaluate Your Premiums

Begin evaluating your current insurance plans to check and understand the premiums you are paying currently. Compare the available insurance plans in the market offered by different insurance providers to find one that offers competitive premiums without compromising essential coverage.

• Port Your Policy

Did you know that you can port your health and motor insurance from one insurance provider to another?  Explore this option if you find similar or better coverage at comparatively lower premium rates. 

• Claim Discounts

Most insurance providers offer discounts such as loyalty bonuses, no-claim bonuses, or other discounts for different types of plans. Look for discounts and ensure you claim them for cost optimisation. 

Claims Management

The final step is claims management. It is a systematic process of reporting claims to ensure smooth and favorable claim settlement. Effective claims management requires knowing the detailed process of making a claim, arranging and submitting relevant documents, and the steps involved for a seamless experience. These steps may vary from provider to provider. It is best to visit your insurance provider's website or call their customer care helpline for assistance.  

Utilising Technology

This may be considered a bonus step for easing insurance planning for you. Convert your existing insurance policies into an e-Insurance Account and create a soft copy of all your policies. This will help you keep track of, review, update, and make claims easily, apart from helping you avoid the hassle of losing physical documents. What’s an e-Insurance Account?

An e-Insurance Account, known in insurance circles as eIA, is a virtual insurance account with an insurance repository where all the insurance policies are held, just like an online banking account holding money or a Demat account holding securities. It provides a clear view of the portfolio and details of your policies, such as coverage, benefits, and renewal dates, all in one place.

This brings us to the end of this chapter on insurance planning. We hope that you found this module on Insurance insightful and that you will be using your new-found knowledge to ace your financial plans, too. Share it with your friends and family!