Don't go blindly after pricing when buying a term insurance, says V Viswanand of Max Life Insurance

Digitisation has improvised the entire policy lifecycle from acquisition, on-boarding customers, servicing them, renewing policies as well as settling claims, said V. Viswanand, Deputy Managing Director, Max Life Insurance in conversation with Money Today. He also talked about recent regulatory changes brought in by the Insurance Regulatory and Development Authority of India (IRDAI). Edited excerpts:

Money Today: IRDAI has brought in many regulatory changes in the life insurance space. What are your views on the same?

Viswanand: The regulator has removed existing friction points. That is a positive development. On the basic sum assured regulations, the cover multiple currently is 10 times the premium paid. For instance, if you pay Rs 10,000 of annual premium, the minimum sum assured of guaranteed death benefit has to be 10 times of that annual premium up to age 45 and beyond 45 it will be seven times due to higher mortality rates. This is applicable on both, participating plan or a unit linked insurance plan (ULIP). As per new regulations, minimum sum assured is now seven times the annual premium for all age groups.

The second regulation is on flexibility in reviving the policies. The IRDAI has extended the limit for policy revival to five years for traditional plans and three years for ULIPs. This will improve the persistency across life insurers by estimated 1 per cent in absolute terms every year. There have also been forward-thinking changes in retirement products. Earlier, you could only take 33 per cent of your maturity amount. Now, 60 per cent amount can be withdrawn, which is on par with NPS. However, the income tax law still views the older amount. The law needs to be changed.

As per the earlier law, you had to purchase annuity compulsorily from the same life insurance provider from whom you had accumulated the policy. The new regulation says that 50 per cent of the corpus can go to some other life insurer in line with the IRDAI's objective to allow all life insurers to build a strong annuity portfolio.

On protection, there are two interesting changes to improve penetration. The new regulations allow rider to be purchased by the customer over and above the insurance premium of ULIP. So, non-participating rider can be attached to ULIP. Also, IRDA has now given the options of offering event-based insurance, which means that you can offer a protection plan for even a month.

Money Today: The IRDAI is working on sandbox regulation. What are your views on the same?

Viswanand: It's positive. There are about four to six countries where regulators allow sandbox in life insurance. There could be three kinds of sandbox options - product, distribution and services leveraging ecosystem. So, we don't know where this is heading, but as we walk in with some proposals (and we have some), we will get to know.

Money Today: How digitalisation has helped the growth in the life insurance sector?

Viswanand: It helped in two ways. One, it has created the new channel of B2C, which never existed. We have invested a lot in creating a digital centre of excellence. The second aspect is in terms of fulfilment journey. There was a lot of friction in the insurance space because you needed KYC. Medical and financial underwriting was also involved.

The whole process is cumbersome and puts off many customers. Now we have digitised it fully. It's completely paperless. You can sit in the comfort of your home. An agent will come but you don't need a pen and paper. Everything is done online and policies are issued within 24 hours. We have invested a lot on our website. Renewal premium itself has been made hassle free. So, we have tied up with all possible ecosystem players for payments and wallets to make sure that the customer can sit and pay instantly.

Digitisation has really helped in terms of renewal and servicing management as well as in claims settlement. Nearly 50 per cent of our death claims we pay within one day of receiving the death claim. We call it 'Insta Claim'. It's trademarked. We receive nearly 45 death claims a day. We closed last year with 98.74 per cent of death claims paid ratio. Digitisation has helped along the policy lifecycle from acquisition, onboarding, servicing and renewals as well as claims.

Money Today: Buying an insurance is generally a one-time activity. How do you engage customers so that they come back to you?

Viswanand: That is a very important point. We all know about it but hardly focus on it. In fact, the whole sector is in a blind spot on this front. Everybody is busy acquiring new customers. However, we did initiate a new facility three months ago called 'Max Life Your Partner for Life: Speed Dial'. So, customers will have one designated relationship manager, a single point of contact for each policyholder. The contact details will be provided to the policyholder and the relationship manager will have entire history of the insured. We have a team of around 100 such relationship managers. We plan to scale it to 500 people to cater to our 40-41 lakh policyholders.

Money Today: Are you planning any product or a different strategy for the millennial?

Viswanand: We don't see much difference in why millennial buys insurance. Requirements are same irrespective of age. Big triggers for insurance purchase, whether you're a millennial or not, are your first child's birth, purchasing a home and retirement. There are smaller things such as job change that means you got more disposable money on a promotion. These are broader triggers. Nothing much has changed. This is why for the last 150 years, insurance companies have been offering pretty much similar products around the globe.

Money Today: Which factors one should look at when buying a plain protection plan?

Viswanand: One, how much cover you need. If you were to put the sum assured that you have into an FD, the interest coming out of it should be adequate to take care of lifestyle needs. Two, look for the brand. Trust is most important because the average term insurance period is up to age 85. So, choose a brand that you believe in, look at the claims ratios or go to an aggregator site and do comparisons. Don't go blindly behind price. Look at the grievances rate available on IRDAI website to understand the after sales services.

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