Bharti AXA Life Insurance – 48 hours claim settlement promise

You would have seen a television advertisement running nowadays by Bharti AXA Life Insurance promising settlement of claim within 48 hours.  In case you have not seen it, you can view it below.

Since this concept is new and use as a tool to attract customers, further to my analysis of claim settlements by various insurance companies which was carried out few days back, I thought it will be interesting to know how this promise of 48 hours claim settlement works and what are the terms and conditions to this promise.

A recent article in Mint tried to de-code the promise earlier this week.  Lets see how it works.

First thing to note here is that this settlement promise is only applicable for unit linked insurance plans (ULIPs) and not for any other insurance plan including the term insurance.

Second, the promise is to settle only the fund value of the plan and not the sum assured.  In case the sum assured is more than or additional to the fund value, then only the fund value will be settled and the differential amount will be release at a later date after detailed processing.  There is no time limit for settlement of this differential amount.  As per FY 2009-10 numbers disclosed by Bharti AXA, all the claims which were not repudiated were settled by the company within one month of receipt of all documents.

Important to note here is that the fund value is basically the premium which you have paid and which has been invested by the insurance company on your behalf increased by the returns which your fund has generated over the years.  Thus the insurance company is only returning back your investment amount and is paying nothing out of its pocket.

To clarify, at the time of the death of the insurer, if the sum assured is Rs 10 lacs whereas the fund value is Rs 5 lacs, payment of Rs. 5 lacs within 48 hours is promised.  Additional benefit on account of increased sum assured will be paid later after processing the death claim.

In case they are not able to pay the claim amount they will pay 1% of the fund value as interest for delay in each day of settlement.  Other terms and conditions are:

1. Fund value means the market value of the units (excluding sum assured and any other death benefit) as on the date of receipt of intimation of death after deducting applicable charges as per 'policy contract'.
2. The 48 hour period shall be reckoned from the time acknowledgement slip has been duly stamped at the branch to the time the cheque towards the fund value is released in the beneficiary name.
3. Saturdays, Sundays, Holidays declared by the company and Public Holidays are excluded from 48 hour period.
4. For any claim intimation received after 3.00 p.m., on any working day, the 48 hour period would be reckoned from 9.00 a.m. from the next working day.
5. Cases where policy is in "lapse" status (i.e. premium not paid) as on the date of death or for cases were the claimant is other than beneficiary as per the company records are excluded.
6. 'Guaranteed 48 hours Fund Value release' does not in any way indicate acceptance of any liability or admissibility of the payment of the sum assured or other death benefits under the said Policy by the Company.

Thus the customers should evaluate the pros and cons of such promise before opting for ULIP policies of Bharti AXA.  Bachhat's suggestion remains the same.  Go for term insurance and grow your wealth through other investment products such as mutual funds.

Your comments are appreciated.