Page 46 - Insurance Times August New 2023
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FEATURE




                                  3 Pitfalls in Insurance






                   olicybazaar.com recently released an insurance  triggers. Even within financial prudence, tax savings via
         P         consumer insights report based on a survey of  health and life insurance is a leading trigger.
                   3,300 respondents across 27 cities. The report
                                                              However, the attitude seems to be changing. The survey
                   covers various aspects, including the reasons for
                                                              indicates that 33 per cent of 1830yearolds now show
          buying or not  buying insurance and  parameters that
                                                              increasing preference  for  term  insurance  —  a  pure
          influence purchase decisions. Here are three key survey
                                                              protection product — against 18 per cent in 2019.
          findings and takeaways for policyholders:
                                                              With the new tax regime investments will  no longer be
          FINDING #1                                          necessary for those choosing the new regime. Often, at the
          The survey indicates that while 96 per cent of respondents  eleventh hour, illfitting insurance  policies  with hefty
          were aware of health insurance, a lower 69 per cent have  premiums are bought to save on taxes. ‘Push’ from sellers
          considered it, an even lower 52 per cent owned it and only a  who, in turn, earn
          mere 43 per cent are current owners. The awareness to
                                                              good commissions on them plays a major role in this. These
          ownership ‘funnel’ is even more discouraging for life insurance
                                                              customers can now exercise more prudence and choose a
          where 85 per cent are aware but only 28 per cent own it.
                                                              suitable product.
          Of the nonusers/nonowners in health or life insurance, cost
                                                              FINDING #3
          and lack of funds was the leading reason, according to the
          survey.                                             Cost or lower cost for higher coverage in both health
                                                              (disease cover) and life (covered amount) is a leading
          Another set of reasons for lack of policy ownership is related
                                                              parameter for filtering policies by customers, according to
          to product confusion, paperwork involved  and lack of
                                                              the survey. The survey points to cost as being a leading
          understanding. According to the survey, an offline network
                                                              impediment. But on an overall basis, costing cannot improve
          of family/friends and agents through that netwok, leads the
                                                              unless mass adoption of insurance is achieved. The report
          information sources for research and channel of purchase
                                                              mentions mortality protection gap of 91 per cent and the
          (agents). Google search, YouTube and comparison websites
                                                              health protection gap at 35 per cent.
          also influence information, according to the survey.
                                                              Network of hospitals and nearby hospitals is also a parameter
          Agents can do the ‘handholding’ to clear product confusion,
                                                              in choosing health insurance. However, with availability of
          but the best way to shake off lack of understanding is to
                                                              cash reimbursement, ideally this should not be a barrier.
          visit each insurer’s website and gain firsthand knowledge.
                                                              High claim settlement ratio, time taken for settlement and
          An early start to insurance clears the cost hurdle as well
                                                              dedicated support rightly figure in life insurance parameters.
          along with supertop ups and family floaters.
                                                              But  the  same  reason,  when  used  for  buying  health
          FINDING #2
                                                              insurance, can produce mixed results. Claim settlement in
          The survey shows that customers still treat insurance as a
                                                              health is undifferentiated at 9598 per cent claim settlement
          financial product — which is why they cited investment in
                                                              rates for all leading insurers. The number also misses the
          other assets with higher returns as a reason for letting their
                                                              extent of the actual claim serviced by the insurer which
          life insurance policy lapse.
                                                              sometimes can be a lot. Interestingly, addons linked to OPD
          The survey also points out that ‘Push’ is the largest trigger  and shorter waiting times (for PED) also figure in parameters
          for purchase of insurance, led by family and friends, agents  for health insurance. However, customers should note that
          and banks. Financial prudence, led by starting a family, job  nondisclosure of PED is among the leading causes for claim
          change or inadequacy of corporate cover, which should drive  rejection and hence, they should be upfront and not cover
          insurance purchase, ranks lower than push and fearbased  it up because of higher wait times. (Source: Business Line)
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