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Sowmya Sundar

TAKE a drive along the main roads and flyovers of your city and you cannot miss those huge hoardings that set you thinking: `Am I adequately insured?' Three years of privatisation has given a whole new face to the insurance industry in terms of awareness, education, innovation and transparency.

Welcome to the world of choices. You no longer have to opt for an insurance product that puts you in a straitjacket of protection. There is an array of fusion products, which meet more than one need.

You can also customise your product to your specific needs, giving you ample flexibility in planning your financial goals.

ING Vysya's Conquering Life — a term plan with an in-built critical illness benefit; Max New York Life's flexible bonus payment options, where you can choose to receive bonuses in cash; LIC's Jeevan Bharti, for women; and Jeevan Sukanya, a plan for the girl child, are a few examples.

Bancassurance — the new mantra: Do not be surprised if you get a free insurance product with a mutual fund scheme or a home loan policy. Insurance companies are now tying up with the wide network of banks, corporate agents and brokers to sell their policies.

As a few players have their own banking outfits, it makes it even easier to sell their own products with an insurance product. These distributors can either just act as intermediaries (agents) for the insurance company or cross-sell insurance with their products.

For instance, SBI MF gives a free Rs 2-lakh insurance cover along with its SBI Magnum Mutual Fund.

The results are evident in the growth registered by various insurance companies. For instance, SBI insurance received 17 per cent of its business through bancassurance, which has been a major factor in the company's penetration efforts in the rural market.

Kotak Mahindra also expects 30 per cent of the business to come from bancassurance this year.

New distribution channels would be a critical force in the expansion of the insurance market.

As for the individual players, their reach and market share will depend on the number and the geographical reach of the banks they have tied up with for bancassurance.

Higher transparency: If you are looking for an insurance product and want to know how much you have to shell out for it, you just have to log in to the Net and check the company's Web site.

You get the benefit of comparing premiums offered by various players for similar products and can then choose the best offer.

Daily net asset values (NAVs) of market-linked plans are also available on the respective company Web sites to facilitate regular monitoring by policy-holders.

Insurance companies now have to submit details regarding their investments, how much returns they have generated, the quantum of bad investments and outstanding interest due on investments on a quarterly basis to the Insurance Regulatory Development Authority (IRDA).

Statistics regarding premiums underwritten, number of policies sold and the sum assured is given to the IRDA. This is a big move forward. Policy-holders can now monitor how their funds are being managed.

One can also get an indication of the return one will get on the policy by looking at the investment style. Though disclosures are not as extensive as for mutual funds, it is definitely the beginning of a more transparent industry.

Prominence and awareness: The main outcome of privatisation is the projection of insurance as an essential part of your life. Be it television or print media, insurance advertisements take up a lot of space nowadays.

People are aware of insurance and why they need cover. Customer service is now as important as selling an insurance product. Payment of premiums through credit cards is one of the facilities policy-holders now enjoy.

The fine-print: The larger the number of products and variants, the more confused is the customer. Though the entry of private players has exposed customers to a number of innovative products, there is also a lot of fine-print, which most customers usually do not read.

For instance, a critical illness rider is very complicated. Details on each disease covered should be understood carefully before opting for it. Any misunderstanding can result in the disappointment of a rejected claim.

You have to grill your agent and understand the implications before going in for a policy.

At times, you may find a small note at the end of the policy document or the product brochure stating that the company has the right to revise the premiums after three or five years. This might change the entire yield on your plan.

Look at the fine-print and understand its implications before buying a policy.

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