Details of Past Policies
Of the policyholders who are not first time life insurance investors (9%), around half had invested in traditional savings plan in the past, while around 28% had invested in ULIPs. Greater proportion of policyholders in the Metro cities have invested in pure protection plans in the
past, while in the Tier I cities preference has been for traditional savings plans. Interestingly more policyholders have invested in ULIPs in Tier II cities.
Around 7 out of 10 respondents (69%) held policies for a duration equal to or less than 10 years and the remaining had their policies for more than 10 years [refer to the Exhibit 8.2].
25% 35% 19% 35% 41% 67% 25% 13% 12% 16% 10% 2% Metro Cities Tier I Cities Tier II Cities
Exhibit 8.1: Type of Past Policy Held
Don’t Know Pure Protection Plan Traditional Savings Plans ULIP
Exhibit 8.2: Duration for which Premium was Paid
Discontinuation of Past Policies
In majority of the cases the past policies of the respondents were discontinued as they reached maturity (58%). However, policies of around one
fifth (18%) of the policyholders were also lapsed, while 13% reported to have voluntarily
surrendered their policies. One out of ten respondents redeemed their policies as well.
Exhibit 8.3: Reason for Discontinuation
Reasons for Surrender or Lapse
of Policy
Respondents surrendered their policies for various reasons, such as did not like with product
features (19%), low returns offered by the plan (13%), lack of enough money to pay the premium (12%), to name a few.
Exhibit 8.4: Top 5 Reasons for Surrender or Lapse* N (PH) = 404
69%
28%
3%
1-10 years 11-20 years 21-30 years
N (PH) = 404
58%
18%
13% 11%
Matured Lapsed Voluntarily
Surrendered Redeem N (PH) = 404 19% 13% 12% 7% 7%
Did not like product features
My policy was giving low returns
I didn’t have money
Poor servicing experience
Missed premium due date
N (PH) = 125
he study tried to understand why
T
policyholders close or surrender policiesand how has been their experience with the claims settlement process. Most of the policyholders (98%) expressed no intention of surrendering their active insurance plans, indicating their seriousness towards life insurance. The policies which majority of the policyholders hold presently are their first investment in this category of assets with nine out of ten respondents (91%) reported having no policies in the past.
of the policyholders
have no plans to
surrender policy
98%
8. Policy Surrender & Claims
Details of Past Policies
Of the policyholders who are not first time life insurance investors (9%), around half had invested in traditional savings plan in the past, while around 28% had invested in ULIPs. Greater proportion of policyholders in the Metro cities have invested in pure protection plans in the
past, while in the Tier I cities preference has been for traditional savings plans. Interestingly more policyholders have invested in ULIPs in Tier II cities.
Around 7 out of 10 respondents (69%) held policies for a duration equal to or less than 10 years and the remaining had their policies for more than 10 years [refer to the Exhibit 8.2].
25% 35% 19% 35% 41% 67% 25% 13% 12% 16% 10% 2% Metro Cities Tier I Cities Tier II Cities
Exhibit 8.1: Type of Past Policy Held
Don’t Know Pure Protection Plan Traditional Savings Plans ULIP
Exhibit 8.2: Duration for which Premium was Paid
Discontinuation of Past Policies
In majority of the cases the past policies of the respondents were discontinued as they reached maturity (58%). However, policies of around one
fifth (18%) of the policyholders were also lapsed, while 13% reported to have voluntarily
surrendered their policies. One out of ten respondents redeemed their policies as well.
Exhibit 8.3: Reason for Discontinuation
Reasons for Surrender or Lapse
of Policy
Respondents surrendered their policies for various reasons, such as did not like with product
features (19%), low returns offered by the plan (13%), lack of enough money to pay the premium (12%), to name a few.
Exhibit 8.4: Top 5 Reasons for Surrender or Lapse* N (PH) = 404
69%
28%
3%
1-10 years 11-20 years 21-30 years
N (PH) = 404
58%
18%
13% 11%
Matured Lapsed Voluntarily
Surrendered Redeem N (PH) = 404 19% 13% 12% 7% 7%
Did not like product features
My policy was giving low returns
I didn’t have money
Poor servicing experience
Missed premium due date
N (PH) = 125
Claim Settlement Experience
Claim settlement is an important service provided by an insurance company to the policyholders. About 7% of the respondents reported to have had a previous exposure to the claims process,
wherein they helped their relatives (30%),
immediate family members (29%) and friends (27%) in the settlement of the claim.
To register the claim, policyholders largely rely on agents/sales persons through whom they
purchase the policies (43%), while around one fourth of the respondents in this category also contacted the insurance company office directly.
Claim Servicing & Processing
Experience suggests that getting a claim processed was not as smooth as receiving the policy documents, as in many cases the respondents reportedly had to visit the sales channel or insurers office several times.
Policyholders in the metros had to make relatively
fewer visits to the channel as compared to Tier 1 and Tier 2 cities. Almost half of the policyholders (48%) made upto 3 visits to the channel, with the proportion going upto 66% in the Metros. It was found that about one out of every five person (22%) had to make as many as 7 to10 visits to the channel to get their claims processed [refer to the Exhibit 8.6].
Exhibit 8.5: Point of Contact for Claim
Exhibit 8.7: Duration of Claim Procedure
47% 50% 4% 18% 62% 20% 24% 62% 14% 30% 57% 12%
< 15 days 16 days to 1 month 1 to 3 months
Metro Cities Tier I Cities Tier II Cities Overall
Claims Deduction &
Awareness Levels
Of the policyholders who were involved in claim settlement, 13% mentioned they received assistance from the agent (channel) during the claim settlement process. The efforts of almost all claimants were fruitful as 98% of them got their claimed amount from the insurer.
It was observed that claims were settled relatively faster in the Metro cities. At an overall level, majority of the claims were settled within a month, with 30% being settled in less than 15 days and 57% between 16 days to a month.
Majority (56%) of the respondents who had filed for a claim, received the amount without any deductions. The proportion of instances of deductions during settlement was lower in Tier 2 cities, with 83% of them being aware of the reason for the deduction.
While understanding the level of awareness of the remaining 44% claimants who got their Claim settlement after deductions, it was observed that a large number of respondents (75%) were aware of the reason for the deductions and the
awareness levels were highest in Metro Cities (86%). 66% 35% 41% 48% 15% 33% 23% 23% 12% 27% 27% 22% 7% 6% 9% 7%
Metro Cities Tier I Cities Tier II Cities Overall
Exhibit 8.6: Number of Visits to the Channel
Upto 3 4 to 6 7 to 10 More than 10
7% 12% 13%
25%
43%
Company call center Any other person who is familiar with the pocess Bank Company office Person who had sold the policy
N (PH) = 300
N (PH) = 300
Claim Settlement Experience
Claim settlement is an important service provided by an insurance company to the policyholders. About 7% of the respondents reported to have had a previous exposure to the claims process,
wherein they helped their relatives (30%),
immediate family members (29%) and friends (27%) in the settlement of the claim.
To register the claim, policyholders largely rely on agents/sales persons through whom they
purchase the policies (43%), while around one fourth of the respondents in this category also contacted the insurance company office directly.
Claim Servicing & Processing
Experience suggests that getting a claim processed was not as smooth as receiving the policy documents, as in many cases the respondents reportedly had to visit the sales channel or insurers office several times.
Policyholders in the metros had to make relatively
fewer visits to the channel as compared to Tier 1 and Tier 2 cities. Almost half of the policyholders (48%) made upto 3 visits to the channel, with the proportion going upto 66% in the Metros. It was found that about one out of every five person (22%) had to make as many as 7 to10 visits to the channel to get their claims processed [refer to the Exhibit 8.6].
Exhibit 8.5: Point of Contact for Claim
Exhibit 8.7: Duration of Claim Procedure
47% 50% 4% 18% 62% 20% 24% 62% 14% 30% 57% 12%
< 15 days 16 days to 1 month 1 to 3 months
Metro Cities Tier I Cities Tier II Cities Overall
Claims Deduction &
Awareness Levels
Of the policyholders who were involved in claim settlement, 13% mentioned they received assistance from the agent (channel) during the claim settlement process. The efforts of almost all claimants were fruitful as 98% of them got their claimed amount from the insurer.
It was observed that claims were settled relatively faster in the Metro cities. At an overall level, majority of the claims were settled within a month, with 30% being settled in less than 15 days and 57% between 16 days to a month.
Majority (56%) of the respondents who had filed for a claim, received the amount without any deductions. The proportion of instances of deductions during settlement was lower in Tier 2 cities, with 83% of them being aware of the reason for the deduction.
While understanding the level of awareness of the remaining 44% claimants who got their Claim settlement after deductions, it was observed that a large number of respondents (75%) were aware of the reason for the deductions and the
awareness levels were highest in Metro Cities (86%). 66% 35% 41% 48% 15% 33% 23% 23% 12% 27% 27% 22% 7% 6% 9% 7%
Metro Cities Tier I Cities Tier II Cities Overall
Exhibit 8.6: Number of Visits to the Channel
Upto 3 4 to 6 7 to 10 More than 10
7% 12% 13%
25%
43%
Company call center Any other person who is familiar with the pocess Bank Company office Person who had sold the policy
N (PH) = 300
N (PH) = 300
Satisfaction with Claims
Process
Overall there is satisfaction with the present claims settlement process with most of the
respondents indicating the present claims process as relatively easy. However, respondents expect greater support from distribution
channels/insurance companies in this respect.
Exhibit 8.8: Rating of Claim Procedure
4 3 3 3 Ease of registering the claim Documenta on procedure Transparency in claim valua on Transparenecy in claim se lement 1 = Very Tough, 5 = Very Easy
Satisfaction with Claims
Process
Overall there is satisfaction with the present claims settlement process with most of the
respondents indicating the present claims process as relatively easy. However, respondents expect greater support from distribution
channels/insurance companies in this respect.
Exhibit 8.8: Rating of Claim Procedure
4 3 3 3 Ease of registering the claim Documenta on procedure Transparency in claim valua on Transparenecy in claim se lement 1 = Very Tough, 5 = Very Easy