Buying life insurance as an investment tool may lead to poor returns and a lot of grief. Often savers don’t do the correct analysis and fall for the pitch of insurers. This includes senior citizens. Then there are other cases where fraudulent selling is involved with inducements such as offers of “interest-free loans”, gold coins, mobile tower rent or sharing the rewards of a contest. In such cases, the victims’ downfall is precipitated due to greed. These are some of the real-life cases we go to know from Moneylife Foundation’s Insurance Helpline. The Helpline has received a huge response and offered us insights into the most common problems that people face with their life and health insurance. In a unique event, Moneylife Foundation’s Raj Pradhan shared the insights from the Helpline with the Foundation members.
Mr Pradhan pointed out that it is not always easy to prove mis-selling and hence making the insurance company refund your premium is not easy. But, Moneylife Foundation Insurance Helpline has successfully done it for 17 policyholders for amounts ranging from Rs20,000 to Rs4 lakh.
The Helpline came across several cases of senior citizens falling victim while buying life insurance? Why do they buy life insurance at an advanced age? You do not need any life insurance after retirement and hence please stay away from all life insurance products. In one case we are pursuing, the senior had bought a child plan! Many people used the Helpline cases to ask about surrendering a policy. Moneylife does not recommend blindly surrendering one’s insurance policy. It may be a second blunder after buying a wrong policy. Read Moneylife cover story for more information – Life Insurance: Surrendering policy? Think again
After discussing life insurance, Mr Pradhan went on to discussing health insurance or Mediclaim. These pose more complex problems. Policies differ in their wordings on room rent limit. Some will prorate the hospital bill if you entail higher room rent service. But others may prorate even though the policy requires that the charges be limited to the charges applicable to the entitled room category. If you are aware of it, you can fight for your rights.
Another problem for policyholders, explained Mr Pradhan is that Third-Party Administrators/insurers make a mockery of preferred provider network (PPN) rates. For standard procedures, the network hospital and TPA/insurer should have agreed rates and there is no reason for the insured to pay from pocket. Yet, there are numerous cases of hospital bill much higher than TPA/insurer approved rates. Mr Pradhan advised that it is in your interest to find the hospital rates in advance and know the TPA/insurer rates in case of pre-planned surgeries. That way you will be protected from the farce of PPN rates as hospitals on network do not necessarily mean that rates are sacrosanct. The event ended with a lively discussion question answer session by the audience.