In spite of a long-term contract, the promised services as per the insurance contract are available to policyholders or to their nominees only if the policies are renewed by paying the contracted instalments of premium on or before the due date of renewal.
There is the provision of grace period of 15 or 30 days depending upon the mode of payment, within which the premium could be paid without affecting any of the terms and conditions under the policy. The payment of premium well on time or within the grace period (for life insurance policies) is therefore the most important responsibility of the policyholder.
Insurers refuse any benefit to the claimants if a policy is not in force on the date of an event against which the cover was provided under a particular life or non-life insurance policy.
However, under endowment policies there is a provision to provide the paid-up value, if any, accrued till the date of death, as a reduced life cover with bonus vested till the date policy was in force. Under ULIP policies, only the fund value on the date of death is payable under a lapsed policy. Under non-life insurance policies, nothing is payable beyond the midnight of the day till which the premium paid provides risk cover.
Insurers have initiated several steps to facilitate renewal of policies. Apart from tele-calling for reminders, they have introduced new channels for cashless payment of premium. A
policyholder can log on to the company’s payment portal. This is possible even without registration on the site which may sometimes seem to be cumbersome. On completion of such transactions, the customer can generate even a valid receipt.
Electronic Clearing Service (ECS) facility is also offered to those customers who have bank accounts but do not like to make online transactions or do not have internet connections. ECS is a facility provided to customers by banks for periodic transfer of funds from one account to another bank account. The policyholder can give mandate to her bank to transfer premium amount on each due date to the account of the insurer.
By adopting ECS mode, a policyholder can ensure premium payment without the risk of slipping on the due date. The non-life insurers normally send renewal quotation and the policyholder can make payment of the required amount in the same manner.
Though the insurance industry is known for its conservative outlook, it is observed that the industry has been quite smart in adopting technology to offer easy access to customers for meeting all the requirements.
By opening e-insurance account with any of the authorised insurance repositories, customers can make their life much simpler vis-à-vis their insurance portfolio. The repositories maintain records of all the policies of an individual in one account and even store the policy documents in electronic form. The repositories necessarily provide certain basic services such as number of all the policies with name of the insurer, premium payment record, loan status and repayment or interest record, assignment endorsements, etc. The policy bonds are maintained electronically with digital signature.
The policyholder can generate a printed record of his insurance policies by accessing his e-insurance account. This account takes care of all KYC requirements of the companies and also enables customers to get a glimpse of their entire insurance portfolio, life as well as non-life, by viewing the account on the repository’s website.
Anyone willing to pay an additional fee may enjoy more value-added services and thus maximise advantages of insurance in a speedy and accurate manner. The current cash crunch should motivate policyholders to adopt electronic payment mode for safe and convenient transactions with their insurers.
The writer is former MD & CEO,
Star Union Dai-ichi Life Insurance