Insurance Alert: This is why you can no longer hide multiple insurance policies

You can no longer hide your multiple insurance policies, if any, from the insurance-providing companies.

Multiple insurance policies

There is a limit to the financial coverage one can get when one gets insurance coverage. For instance, you take insurance coverage to cover the loss arising out of the early demise of the sole breadwinner of your family. Hence, the maximum insurance coverage will depend on the breadwinner's income and remaining work life. You take general insurance to cover finances when you need to replace or repair an insured property that might have been damaged due to an unforeseen and unexpected event. In short, the motive of insurance is not to profit from it but to cover any losses. 

Read: How to evaluate and compare insurance policies?

An insurance company asks the applicant to reveal all the insurance covers they might have. Insurers ask it to ensure that no person takes excess insurance coverage. Insurers ask for all types of insurance covers that you might have, like general insurance, health insurance, or life insurance. Many people do not fill in this information and ignore these columns because they think it will save effort and time. Many people intentionally conceal this information for unlawful gains as well. 

Account Aggregator System 

The account aggregator system has all insurance-related information and can provide it in one place at all times. Once the information is fed into the account aggregator system, it becomes impossible to suppress this information. The IRDAI (Insurance Regulatory and Development Authority of India) shared a circular with insurance companies in mid-November that gives guidelines on adding the data and sharing it with account aggregators (AA). 

The result will be that NBFCs (Non-Banking Financial Companies) that collect financial data from several different entities to provide all investment and savings data will be able to collect insurance-related data with investment and savings data at one place. 

Read: Here's how you can make claims for multiple health insurance policies.

Data Protection

Entities will use the Application Programming Interface (API) to share and receive information, which will integrate with the Account Aggregators' system. It is because there will be prior consent by the customers to share the financial information. Only regulated entities can store and share this information. IRDAI has asked insurers to be mindful of data protection when they share this information with Account Aggregators. It will ensure that the customers' interest is protected. 

Data Collection

Insurers' participation in this process enables insurance companies to obtain information to share and underwrite. This information will be shared and collected electronically, reducing unnecessary paperwork. 

Conclusion

The RBI (Reserve Bank of India) already has a framework for RBI-registered Account Aggregators. These aggregators are authorized and allowed to retrieve the financial information of customers. The financial information includes Pension Funds, Insurance Policies, Mutual Funds, Bank Deposits, Savings Bank Accounts, etc., and sharing it with end users. End users can be NBFCs, Banks, customers, or insurance companies (for insurance work). 

Understanding Life Insurance

There is a limit to the financial coverage one can get when one gets insurance coverage. For instance, you take insurance coverage to cover the loss arising out of the early demise of the sole breadwinner of your family. Hence, the maximum insurance coverage will depend on the breadwinner's income and remaining work life. You take general insurance to cover finances when you need to replace or repair an insured property that might have been damaged due to an unforeseen and unexpected event. In short, the motive of insurance is not to profit from it but to cover any losses. 

Read: How to evaluate and compare insurance policies?

An insurance company asks the applicant to reveal all the insurance covers they might have. Insurers ask it to ensure that no person takes excess insurance coverage. Insurers ask for all types of insurance covers that you might have, like general insurance, health insurance, or life insurance. Many people do not fill in this information and ignore these columns because they think it will save effort and time. Many people intentionally conceal this information for unlawful gains as well. 

Account Aggregator System 

The account aggregator system has all insurance-related information and can provide it in one place at all times. Once the information is fed into the account aggregator system, it becomes impossible to suppress this information. The IRDAI (Insurance Regulatory and Development Authority of India) shared a circular with insurance companies in mid-November that gives guidelines on adding the data and sharing it with account aggregators (AA). 

The result will be that NBFCs (Non-Banking Financial Companies) that collect financial data from several different entities to provide all investment and savings data will be able to collect insurance-related data with investment and savings data at one place. 

Read: Here's how you can make claims for multiple health insurance policies.

Data Protection

Entities will use the Application Programming Interface (API) to share and receive information, which will integrate with the Account Aggregators' system. It is because there will be prior consent by the customers to share the financial information. Only regulated entities can store and share this information. IRDAI has asked insurers to be mindful of data protection when they share this information with Account Aggregators. It will ensure that the customers' interest is protected. 

Data Collection

Insurers' participation in this process enables insurance companies to obtain information to share and underwrite. This information will be shared and collected electronically, reducing unnecessary paperwork. 

Conclusion

The RBI (Reserve Bank of India) already has a framework for RBI-registered Account Aggregators. These aggregators are authorized and allowed to retrieve the financial information of customers. The financial information includes Pension Funds, Insurance Policies, Mutual Funds, Bank Deposits, Savings Bank Accounts, etc., and sharing it with end users. End users can be NBFCs, Banks, customers, or insurance companies (for insurance work). 

Understanding Life Insurance

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