Manage your insurance policy effectively to make it work better for you

Once the policy has been purchased, you must take necessary steps to manage you policy effectively. Neglecting this may result in claim rejection and render the policy meaningless.

March 21, 2013 9:17 IST | India Infoline News Service
Insurance buys you peace of mind against financial adversity. All types of insurance policies, whether related to life and health or those pertaining to property are meant to secure you against financial blows in the event of some unforeseen incident or emergency. However, this security does not come simply by purchasing an insurance policy. Your responsibility does not stop at selecting and buying a policy. Once the policy has been purchased, you must take necessary steps to manage you policy effectively. Neglecting this may result in claim rejection and render the policy meaningless.

Documentation: Firstly, give utmost importance to maintaining the policy documents properly. It is important to store the original policy documents in a safe yet accessible place as the original copies need to be submitted while filing a claim. This specifically applies to long term policies, as with every passing year, it is easy to misplace or damage the documents. If you purchase the policy online, you will get a hard copy as well as a soft copy version. Soft copies are more convenient in this regard. In case of life insurance policies, make sure the nominee is aware where the documents are stored. Also, the insurer’s contact details, emergency assistance number, details regarding network hospitals/garages are kept securely.

Premium payment / policy renewal: Keep track of premium payment dates and ensure you pay them diligently. Failure to make regular premium payments and timely renewal will result in the lapse of the policy. For policies bought online, there are tools which allow you to set reminders for premium payments. You can also opt for ECS (electronic clearing service) facility, whereby premiums are automatically debited from your bank account and sent to the insurer. If you are pressed for time, you can pay your premiums using the online platform, a facility offered by most insurers nowadays.

Update your insurer: Apart from the disclosures to be made at the time of policy purchase, there are certain facts which must be notified to the insurer in case of any change in circumstances post purchase. For instance, if you hold an annual frequent traveler’s policy, you may be required to intimate the insurer in case of any significant change in health condition or occupation as this can impact your risk profile.  Such a stipulation varies from company to company and from policy to policy. If you hold a personal accident cover, you may need to inform the insurer about any change in occupation. For motor policy holders, change in ownership or modifications to one’s vehicle like upgradation of engine capacity or addition of a CNG (compressed natural gas) kit need to be communicated. Make sure you are aware of the insurance firm’s stipulations regarding such disclosures.

Understand the terms: Ensure you have proper knowledge of all riders, benefits and policy exclusions as this will help make optimum use of your policy. For instance, many policyholders are unaware of the no-claim bonus (NCB) clause which comes with motor and health insurance. Insurers offer discounts on premium to policy holders who have a clean claims history. This ranges from 20% for the first claim free year and goes up to 50% if you do not make any claim for five consecutive years. If you make a claim, NCB benefit is wiped out. This means it may be best not to run to the insurer for every small thing. Letting go of small claims, where the cost of repair or treatment is lower than the benefit foregone on account of NCB may be a wiser option. A thorough understanding of such terms and clauses will facilitate more judicious management and use of the policy.

Keeping these few tips in mind, you can get more out of your insurance policy.

The writer is CEO, BerkshireInsurance.com

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