What this means? An insurance repository is a means of holding your insurance policies in the demat form, just like how you hold stocks and mutual funds. You will need to open an e-insurance account with an insurance repository to enable you to do this.
How do I open an account? IRDA has approved five entities in the country with which you can open an e-insurance account. These companies are Central Insurance Repository, SHCIL Projects, NSDL Database Management, CAMS Repository Services and Karvy Insurance Repository. One individual can have only one e-insurance account. To open an account, you can either approach any of the five repositories directly or route it through the insurance company where you hold a policy. You can also avail the services of an ‘Approved Person’ appointed by the repositories. You should fill an account opening form and give the completed form along with your photograph, cancelled cheque and KYC documents (for proof of address and proof of identification). The Aadhaar card is also accepted as a valid document for this purpose. When the process is completed, you will be sent a welcome kit with the login ID and the 13 digit account number along with the account operating instructions. The PIN will be sent subsequently. After this, you can start digitising your policies.
What are the policies which are applicable? At present, IRDA has extended this facility only to life insurance policies. It is expected that this will be available for car, health, home and other forms of life and non-life policies as well in a few months time.
What are the charges for this? At present, the policyholder can open an e-insurance account free of charge. There is no charge to be paid even for converting existing policies to demat form. Experts opine that even if this facility is made chargeable in future, policyholders should go ahead and opt for this as it is advantageous.
What is the treatment in case of a new policy? When you purchase a new insurance cover, you can opt for an e-policy. For this, you must have an existing e-insurance account. If you do not have one, you should first open an e-insurance account and then purchase the new policy. When you purchase the policy, you can quote the e-insurance account number in the form and opt for the electronic policy. You will not need to submit fresh KYC documents, as this was already done when you open the e-insurance account. When the new policy is issued, it will be reflected in your demat account.
What is the procedure for existing policies? The doubt arises as to what should be done when you already have several policies across different insurance companies. The procedure is quite simple. You will first need to convert your existing policies to demat form if you want to store them in the e-insurance account. You should approach your insurance company and fill in the conversion form. Submit the filled in form along with the policy documents. The insurance company will co-ordinate with the repository, post which the data transmission will take place. You will then receive the confirmation of the same.
How can I make changes in the policy? As all your insurance data is in one place, you should make the changes in the insurance repository. That is, the repository will be the single point of contact. Changes can be either at the account level (change of address or other contact details) or at the policy level (change in nomination or account details). If the change is at the account level, the repository does the changes and forwards it to the insurance company. If the change is to be made at the policy level, then the request is first forwarded to the insurance company. After the changes are made at the company’s end, it will be reflected in your account.
Is this a compulsory process? No, the policyholder can choose not to convert his existing policies to demat form. Re-matting is also possible; that is, the policy holder can also change the electronic version back to the physical form at any point in future.
What are the advantages of an online policy?
- When your policy is online, the risk of losing the physical policy documents is eliminated. You can simply download a copy from the account, when you need it.
- You don’t have to repeat KYC requirements every time you buy a new policy, as all your details are already verified in the e-insurance account.
- You can also easily track your policies online, without any difficulty. As all policies are in one place, it gives you and your nominee a better idea of how things stand.
- It also becomes easier for you to manage the policies, as you won’t have to run to different offices. It is being discussed that when the facility is introduced for ULIP policies, you can also put in a request to switch funds through the account. This means there is a reduction in paperwork, and also your time and efforts are reduced.
- Claim settlement is hoped to become easier because of this facility. The policy benefits will be paid to the beneficiary in an electronic form to the registered bank account.
- Another important advantage is that instances of mis-selling will reduce as the agent will not hold the policy till the expiry of the 15 day free look period.
Should I opt for digitising my policies? Yes, definitely! We, at GettingYouRich recommend you to opt for digitisation as there are several advantages associated with this, as mentioned above.
Are there any drawbacks? The scheme is an easy and convenient way of maintaining insurance policies. However, there seems to be a problem in the designing of the system. This is because, a policyholder is allowed to have an account with only one insurance repository. Whereas, the insurance companies are free to have a tie up with one or more repositories. So if a policy holder has an account with a particular repository, but his insurance company does not tie up with this repository, then the whole concept fails. So the key to the success of the e-insurance concept is for every insurance company to have a tie up with each of the five repositories.*
* Source Link: MoneyLife.in #gettingyourich