National Insurance Awareness Day: Lesser known facts about insurance and pitfalls to avoid

National Insurance Awareness Day 2023: Insurance serves as a vital safety net, providing individuals and businesses with financial protection against unexpected risks and uncertainties. While many are familiar with the basic concepts of insurance, there exist lesser-known facts and potential pitfalls that can significantly impact coverage and claims. On this National Insurance Awareness Day we delve into the lesser-known aspects of insurance, unveiling important facts and shedding light on common pitfalls that individuals should be aware of. By understanding these nuances, individuals can make well-informed decisions, maximize their insurance benefits, and steer clear of potential setbacks.

National Insurance Awareness Day: Lesser known facts

1. Insurance can be highly customizable

Many people assume that insurance policies are one-size-fits-all, but the truth is that insurance can be highly customizable. Whether it' vehicle, home, health, or life insurance, policyholders often have options to tailor the coverage based on their specific needs.

2. Insurance premiums are negotiable and tax saving

As insurance premiums are based on various factors such as age, location and lifestyle etc, it is possible to negotiate your insurance premiums by comparing quotes from different insurers and leveraging the competitive market. Maintaining a good credit score and demonstrating a history of responsible behaviour can also help you negotiate lower premiums. Also, by purchasing a policy that comes under section 80C of the Income Tax Act, individuals can save taxes as well.

3. Important to read and understand policy documents

Avinash Gaikwad, Chief Strategy Officer (CSO), Bimaplan, informs that many policyholders make the mistake of not thoroughly reading and understanding their insurance policy documents. "These documents outline the coverage, exclusions, deductibles, and claim procedures. Claim settlement rate of the insurance companies are present on insurer as well as IRDA website. Ignoring the terms and conditions now can later lead to unpleasant surprises when filing a claim. Individuals should take the time to read the policy thoroughly, ask questions, and seek clarification from their insurance provider to ensure they are well-informed. Most of the policies include a free look up period. If you are not satisfied with the terms then you can cancel the policy and demand a refund of the premium," he adds.

4. Unlimited teleconsultations for the entire family

Many insurance companies now offer unlimited tele-consultation services to their policyholders. This allows individuals to connect with doctors or medical professionals, virtually, without having to leave their home. This service has turned out beneficial for those who live in remote areas or have difficulty accessing medical care.

5. Bundling insurance policies can be cost-effective

Many insurance companies offer discounts and cost-saving options for customers who bundle multiple policies. 

"Combining your home and auto insurance, for example, with the same provider can often result in significant savings. However, it is essential to compare bundled prices with individual policy prices to ensure you are getting the best deal," says Gaikwad.

National Insurance Awareness Day: Pitfalls to avoid

6. Underinsurance can be risky

Underestimating the value of your assets or the potential risks can result in underinsurance. 

"Underinsurance occurs when the coverage you have is not sufficient to cover the expenses incurred. In the event of a claim, you may find yourself responsible for a significant portion of the expenses. To avoid this pitfall, conduct regular assessments of your assets, review your policy limits, and make sure you have adequate coverage for potential risks," Bimaplan CSO adds.

7. Don’t mix insurance to investment

It is not recommended to mix insurance with investment. Insurance should be used to protect against financial loss due to unforeseen events, while investment should be used to grow wealth. Combing the two can result in high fees and lower returns, and may not provide adequate coverage in the case of loss.

8. Make sure pre-existing and critical illness are as per requirement

Individuals should assess their health and medical conditions and get a customised policy only as per requirement, this prevents the consumers from paying extra premium for non-relevant conditions. It also helps insurance companies managing the risk of individuals with pre-existing conditions, by accessing the health risks of each individual and providing coverage accordingly.

9. Non-disclosure can invalidate your policy

Insurance companies follow a principle of utmost good faith. When applying for insurance, it is crucial to provide accurate and complete information to the insurer. Failing to disclose relevant information or providing false information can lead to the invalidation of your policy. This means that if you file a claim, the insurer may deny coverage, leaving you personally responsible for any losses. "Always be transparent and honest when providing information to your insurer," Gaikwad sums up saying.