Buy insurance over Phone

Insurance Regulatory and Development Authority (Irda) has revolutionized the way insurance is bought and sold! As now it is possible to purchase a life insurance policy over the phone; so no need to fill any application form. The new Insurance Regulatory and Development Authority (Irda) guidelines on telemarketing has provided this facility which allow one to purchase life insurance policies without filling any form or signing any document provided the telemarketer furnish the transcript of your conversation with the insurance agent to the insurance company!

The guidelines state (which will be effective from 1^st October 2011):

"In all instances where a policy is issued without obtaining a proposal in physical form, insurers shall forward a verbal transcript of the voice/electronic record of the queries raised and answers thereto on the basis of which the policy has been underwritten, along with the policy bond." However, all know-your-customer (KYC) norms would have to be followed in the process of selling a policy through distance marketing.

In the general insurance sector purchasing a travel and health insurance is fairly simple already as they is no need to fill forms or sign any documents. For now, the new guidelines on telemarketing ask insurers and brokers

· To follow "standardized scripts for presentation of benefits, features and disclosures under each of the products proposed to be sold over the distance modes."

· The records of every call made and SMS sent by a telemarketer/insurance broker that materializes into a policy should be transferred to the insurer within 30 days of conclusion of the sale.

· The insurer is then required to preserve the record of the entire process beginning with lead generation/solicitation and concluding in sale of insurance, for a period of six months beyond the term of the policy or until satisfactory settlement of claim.

The new guidelines also put a cap on sale of unit-linked insurance plans, or Ulips – which accounts for over 55% of total life insurance premium collection - in its recent guidelines on distance marketing of insurance products.

· Insurers have been barred from selling Ulips with annual premium over Rs 50,000 in case of non-single policies and Rs 1,00,000 in case of single premium policies through telephonic mode (both voice and SMS).

The regulator also prohibited sale of universal life plans through telemarketers. In a universal life plan, the premium over the insurance (or mortality) charges, commission and expenses goes into a cash or savings account on which the insurer pays a guaranteed rate of interest. In case a person stops paying premium, this cash balance is used to meet the expenses associated with providing death cover and hence the policy continues as long as the cash balance lasts.