1. First of all you are dependent on your employer. That does not sound too great, does it?

2. Your employer could just do away with medical insurance completely. Period.

3. Suddenly your parents could be excluded – and if they are above 65 you will struggle getting them medical insurance AT ALL.

4. Your employer could exclude your spouse and children (do not look horrified, it happens far more regularly than you wish to accept).

5. What happens if you have quit a job on Friday, decided to join on the coming Wednesday, but your heart decides to attack you on Monday? Remember between jobs you will have no insurance.

6. If you lose your job – and you are perhaps most vulnerable, you lose your insurance too. When you have just lost your job, the chances are insurance premium is NOT likely to be your topmost priority.

7. The waiting period for your spouse and children could be different from the waiting period for you. This means your wife may be without cover for say 3 years because you have changed your job.

8. If you move from a large company (say 15000 employees) to a small company (say 700 employees) – which could suddenly see a reduction in coverage amount.

9. Rarely, if at all, do companies increase the sum assured to cover INFLATION.

10. Many companies take medical insurance without realising the impact of non payment of claim.

…10 points per post!!

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• He helps with filling up the form
• He knows what is happening in the industry and will be able to give some useful advice
• He will co-ordinate with the fund house or the insurance company – and most clients find that pretty painful.
• He will handle the claim if it comes to such a situation
• He is authorised and qualified so he must be adding some value in the transaction
• His services are FREE!! HA HA
• He might actually share his commission, will he not?
• He chases, comes home, does all the paper work, reminds…what more can I want? LOL

All this is perhaps true, but let us look at the risks:

• He might give a sub optimal product based on his limited understanding
• Most agents do not understand insurance – medical, life or even simple risks
• The agent may go out of business soon – and you will again be looking for a new guy/gal
• The agent may die before you do…:-)
• If the agent switches loyalty, he may not service the older products he has sold…
• He may fight with the main company – and put your product in a jeopardy!

so be careful in buying a financial product…

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Buying any financial product is not easy. Let us look at a product like life or even general insurance. Fact is, you are buying a ‘security’ – you want to be reasonably sure you are dealing with a good company, right.

What do people look for:

1. Can I buy it online: Ease of buying.

2. Is it cheap? : Price

3. Is the documentation simple? – ease of operation

etc…..etc.

However when you are buying insurance what you should be looking for is:

Will this company pay the claim at all?

Will this company make it easy to claim the amount, and in case of medical insurance is there a cash less option available?

Will I have the patience to deal with the company in case of a claim?

Of course there are some people who :

Do not care about web based execution, they are not comfortable dealing on the net. Yes they are a small minority, but yes sure they exist even in big cities like Mumbai, Delhi and Bengaluru….

These people look for an agent – who (they hope) will help them with their claim….we will look at that in another post…

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Most general insurance (medical) decisions in corporate India is a finance and HR decisions. Rarely, if at all are they equipped to handle this decision. Let me give you an example.

One company was paying Rs. 40 lakhs as an annual premium to one of the government companies for a ‘group medical cover’. One year there were claims for Rs. 17 lakhs…and the insurance company decided to raise the premium by Rs. 10 lakhs – and the premium went up to Rs. 50 L

The CFO baulked..and asked for a reduced premium…then they agreed to Rs. 40L.

They had just changed one clause…the new people joining would not be covered for existing illness, and their spouses would not be covered. Simple stroke of the pen. Appearing in the exclusion statement…and the company continued to exist.

One small issue though…when the husband of one of the new employees had a problem….there were red faces!

Sadly life and medical insurance cannot be BOUGHT after the event is over…..so do not tell me I did not warn you.

Why people do not understand that there many things that are beyond their understanding….?

Ego or sheer foolishness or overconfidence?

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If this were to happen to somebody dependant on you, who will pay the bill?

You?

Your employer?

Your children?

Your children’s inheritance?

Your spouse? In case you do not know ‘Who’ is going to pay such a bill if you are the earning member, look at ‘medical insurance’. When we think of insurance, we think of tax breaks. Or a favor to some relative who is not so well off or a colleague’s wife who is pushing you to do her a ‘favor’ to cover the minimum number of lives. If you are in that category, wake up.

You need ‘medical insurance’ today. Considering the increasing costs of medical care in India, it is becoming necessary to have a safety net, for individuals to fall back on, in case they face an event of hospitalization following a medical emergency.

In case, you are wondering how this bill went as high as Rs 14 lakh, join me. I also wondered, then had a peek at the bill – hospital bed charges, nursing, nursing at home, medicines, assisted living, the works. Lack of good quality financial data, collection and analysis is not available in Indian conditions. Take a look at the statistics in the US and you will be scared.

More than 40% of the people who needed assisted living were working people.

Long-term care insurers have so far paid USD 6 billion in claims. The cost of medical treatment is a definite burden on the resources of an individual, whether salaried or self-employed. They may deplete or in major cases, wipe out the entire savings of a household. In India, the insurance industry as well as the medical fraternity would love to have details on the average age of the cardiac patients, the average age at which cholesterol becomes a cause for worry etc. However, we have no reliable statistics.

As a wealth consultant, I do come across many persons under 40 who have diabetes, cholesterol, stress, but still live in denial when it comes to having general insurance on their own.The average costs for cardiac ailments/ procedures are in the range of Rs. 15,000-20,000 for angiography and upward of Rs 2,00,000 for angioplasty, with CABG (coronary angio bypass graft) costing upward of Rs 3,50,000. For major orthopaedic procedures like replacement of joints cost upward of Rs 1,50,000 and even routine procedures like fistula, hernia do cost in the region of Rs 75,000. These costs are quantifiable, and transferable at a premium, why not avail it when you can? In case, you are already afflicted by some disease, the medical insurance will no longer be available. At that stage all you can do is repent.

If you are young, this is the time to take insurance. In case, you are supporting (or likely to support) some elder relative, it makes sense to take medical insurance now. Do not wait for the disease to strike.

Apart from these ‘insurable’ costs there could be other costs for which you need to create your own kitty – nursing, adult diapers, special equipment, assisted living etc. In India we still do not have ‘long-term care insurance’ and this means you have to find your own solutions to such problems.
The medical insurance market offers many of the shelf products to most people – and the premium is likely to go up in the near future. Once there is detariffing of the premium, you will see many innovative products, but nothing is likely to be cheap. However, when you think you might end up staring at a bill of Rs. 20 lakh, start early.

What triggered me to put this article? well, this email did it:
“I have got Reliance ADAG Heathwise Gold Policy for Family since last 3 years. The last premium I paid in March 2010 was around 5k Rs.

Recently I have received a communication from them, notifying me that the premium for me in the coming year would be 4 times more than what I paid last year.

This is when I have a history of absolutely no claims.

Do you know of any such arbitrary premium increases. I would be
obliged if you can advise about the mediums what can be used to fight
out such out of the ordinary premium increases.”

email from Mr. SK – not naming him..serves no purpose, does it?

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However when somebody tells me this (no I am not an agent for New India Assurance, but I keep pushing this company) I laugh.

Last week in a financial planning meet I asked two questions:

If your company decides to withdraw medical cover for your parents above the age of 70, what will you do?

If your company decides to withdraw medical cover for your parents, what will you do?

If at age 45 you change jobs and go to a company which does not have medical cover what will you do?

If you decide to quit your job on 31st March and take up another job on 22nd April, will your heart know ‘I should not fail, till the new cover kicks in?’ well, my heart does not know.

So go and get yourself a medical insurance plan by yourself without worrying about or relaxing with the company given policy!

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Vow! So the investors save Rs. 15,000 crores.

A quick calculation showed that the insurance companies paid Rs. 22,000 crores as rent, Rs. 4,000 crores on food and beverages, Rs. 10,000 crores on electricity….etc.

So it has been decided that insurance companies cannot use agents (no commissions), no electricity (electricity will be saved), and there will be no tea or coffee provided in life insurance companies. All landlords will have to give the premises free to the insurance companies (out of love for the industry!).

One CXO of a big life insurance company said “the way I know, LI cannot work!” Of course they are being very considerate in 2010 you can be paid 15% commission…then 7.5% and nil in 2011!

Do they even realise that out of Rs. 15,000 crores – a huge part would have been paid as salaries (by banks), as rebates (by many of the agents and some banks – oops it is illegal), some paid as rent, for petrol, for clerical salaries, telephone charges, advertising…etc. The way Mr. Swaroop said Rs. 15,000 crores (btw there are about 30 lakh agents atleast, so on an equitable basis the per capita income is Rs. 5o,000 per year!) he felt like he has unearthed the next Scam!

As a typical government agency is somebody trying to force people to sell NPS? Another lousy government program…Er You thought i said NPS is good, correct? Will write about horribly priced annuity in a later post.

Swaroop committee, swarup ‘no comission’ ‘zero load’ ‘no commission on life insurance sales’

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1. A simple term life insurance: whoever called this product a “life” insurance is wrong. It is actually a cash flow insurance. If you have a motor car insurance your motor car gets replaced. If you have a factory insurance, and if your factory were to be burnt down, your factory gets replaced. HOWEVER, if you have life insurance, LIFE does not get replaced. The cash flow gets replaced. So let us call this an insurance product which give your dependants cash to chase their dreams and live their normal life.

2. Medical insurance: If you were to fall ill, it is nice to know that there is somebody to take care of the bills – most of it. It is much better to get a cheque for Rs. 2,30. 435/- rather than just a get well soon card. It is a must if you are the main provider in your house. Also necessary if you do not have a big corpus into which you can dip. Typically a rich person may / may not have this insurance, but if you are middle class, you cannot afford the LUXURY of NOT having medical insurance.

3. Critical Illness / Dreaded disease insurance: Most people realise that they will live to the age of 72 or thereabouts. However most people do not realise that they could be hit by cancer, kidney failure, heart disease, stroke, etc. at age 43! If you are alive, but cannot earn who will pay the mortgage, school fees, car emi, etc? Well this policy will pay a lumpsum (immaterial of the amount spent – this is not an indemnification).

4. General Insurance: Nowadays the value of the household items is quite low. A person with a Rs. 30L salary may not have household goods worth more than Rs. 5L at home – washing machine, fridge, a/c, etc. so it may not be very relevant. However, if you have valuable stuff at home, please insure it!

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Do not mistake me. I am a product of the Capital Markets and still think that a Congress or BJP is being held back by the Left. However, the private medical (general) insurance companies are different.

When you are young (say 30 years) you take medical insurance (inspite of having company insurance) because YOU EXPECT the company to pay when you are 62 years. However, the fact that you have a 30 year claim free track record is no guarantee that your policy will be renewed!

So peacefully go to a public sector medical insurance company, take a policy and hope that by the time you are 93 they are still renewing it!

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