Before writing this review I read all the other reviews on HDFC SL and therefore I thought it would be a good idea to write how practises at HDFC SL is best suited for its clients and what makes it India’s one of the most respected Life insurers ..these come in light from a small informal project done by me on insurance comapanies - their practises and their profitability models, the views here are personal but researched.
On why HDFC SL (or any other insurance company) has a number of forms and they have conditions attached to them...read on
Any insurance company deals with ’peoples’ money’, i.e. it forms a pool of the clients’ money it has and the claims, maturity value etc are paid from that pool (of crs its not as simple but lets assume it happens this way). If they have one wrong client who has taken up insurance with fraudalent intentions which can be like
He wants his money to be legalised and therfore pays up a hefty premium when his legal incomes from all the sources are not as high and gets his money back by surrendering the policy. (The money laundering act takes care of that now)
He knows that he already suffers from an illness that will cost him his life and therefore takes up an insurance policy by hiding this fact (so that the underwirters dont catch him) just to hedge against the financial risks after his death.
3 He hides certain vital facts which can be purposefully done to mislead the underwriters (Financial and medical both)
Lets see what happens if the intentions are fraudalent :
At the time of claims if the claimant gets the amount due , the Pool of money which was formed by the insurance comany of the other people’s money (who are paying approximately the same amount of premium as the one who had other intentions) gets affected adversely and decreases also now the claim paying capacity of the company decreases as well.. which is absolutely not a good thing for the Clients who have given their hard earned money to the company for insurance..
now what can a company do here to prevent this ..
either the company can refuse to pay the client if it is discovered that the policy was taken with fraudalent intentions .. well that is done in extreme cases..but here the person loses the premium he has paid till now and ofcrs the claim amount - This ’refusing to pay’ is called repudiation..
or the company can simply have a stricter underwriting process so that the fraudalent intentions are discovered at the proposal stage only so that the insurance cover can be denied instantly. Here the company refuses to give insurance cover to the client and therefore collects no premium from him.
now for having stricter underwriting process the company needs the client to give as much information he can give and therefore the number of forms are more and have clauses with them..after all it is to give assurance and peace of mind to the client.. and his family..in future; coz in the long term it is the maturity value which will be beneficial.. the choice is client’s whther he wants a tension free future or extremely small forms ...
HDFC SL has the least repudiation rate up till now compared to any of its competitors.. and this holds true for every year it has been in inception... which means that those who have policies with the company have a much better chance of getting their sum assured / maturity value etc..when they need it most ;-]
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