5 Key Factors to Consider Before Buying an Insurance Plan

Key Factors to Consider Before Buying an InsuranceThere are many occasions in life when you wonder if you have taken the right decision. Some of the decisions may concern your financial life. Investing your hard-earned money in any financial product of a company or a bank – recommended by your friends, family or agent – without understanding how it works, is a common issue. Your mind is filled with doubts and uncertainty on whether you have made the right investment, especially if it is in a long-term product like insurance.

An insurance policy is a must in any financial portfolio as it covers the risk associated with the loss of life or property. Since it’s a long-term contract for 10 years or more, it is difficult to make changes or amend these contracts during the policy term. Hence, you must spend a little time to research these products to ensure you don’t have regrets later. It may not be possible for you to understand all the intricacies of a life insurance policy. But, you could consider the following factors while choosing a plan:

( A )   Need-based investment:
The standard thumb rule is that your life cover should be 10 times your annual income so that your family is not impacted financially in case something were to happen to you.

You should also take into account any preexisting medical complication or property loans while selecting the life cover. Your financial portfolio should be well balanced and need-based. For example, in case you need to build a corpus for your child’s education, you can select from a range of products from insurance companies that ensure the funds that you had planned for your child’s education are available whether you are around or not.

You need to remember that insurance is a protection-cum-long-term investment and savings tool. You need to define your need – like your child’s education or retirement – and accordingly buy a policy that will help you meet your requirement in future.

( B )    Background check and due diligence:

Once you have decided on the policy, you could do the necessary background check on the company concerned. All life insurance companies have comprehensive disclosures on their websites that give all required information. Policy structure, customer service capabilities, scope of network, online platform (in case someone wants to buy online term policy), are some of the key things you should look for.

Secondly, there are many sites that help you compare various policies as well as the premiums. However, the one thing you need not worry is the financial health of an insurance company. The insurance sector is highly regulated and all companies need to maintain a solvency ratio to ensure that the customer does not suffer.

( C )     Fund performance:

When buying a Unit linked policy, which also acts as an investment vehicle, you could look at the past performance of the company. All life insurance companies provide details of their funds’ performance online. An important thing to consider here would be stability. A company with a good fund performance will have a consistent track record with the fund performance neither being erratic nor extremely risky.

( D )     Claim settlement ratio:

Many experts advise that the claim settlement ratio of an insurance company should also be considered when buying a product. However, this should not be of concern as long as you have provided correct information in your policy form. As I mentioned earlier, the insurance sector is highly regulated. Hence, the chances of a rightful claim not being settled is rare. In fact, the average claim settlement ratio of the insurance sector is above 80%, and most companies have healthy ratios.

(E )      Understanding the policy:

Once you have zeroed in on the product based on your need and track record of a company, you should understand the features of the policy, specifically those related to the policy term, premium-paying term, maturity date and charges. You must also understand the benefit structure of the policy. Every Unit linked policy comes with a benefit illustration at 10% and 6%, which discloses the charges and what the status of your investment would be on a yearly basis.

Consumer is Truly the King

Consumer is Truly the KingToday, we feel pride in sharing with our valued readers that at Power to Consumer we have achieved our first victory in bringing power to a consumer. Although, our legal adviser is already at work helping many harassed consumers fight for justice and seek compensation, but this particular case saw its fruitful end.

The Case

Ms. Rosalin Dash and Ms. Swetalin Dash, two consumers residing in the city of Bangalore purchased a HP laptop from a renowned online store. [su_highlight]But they were in for a shock when just a day after delivery, the laptop turned out to be defective, and was not functioning as intended[/su_highlight]. The processor was extremely slow, the accessories were not functioning properly, the system became unresponsive at times, and other issues started cropping up with the brand new laptop.

Ms. Swetalin decided to take up the issue, and started making regular calls to the customer care of the online store, while also sharing the complaint on the store’s Facebook channel. [su_highlight]This went on for almost a month, but replacement or refund of the defective product was still not on the horizon[/su_highlight]. All she was getting were repetitive and false assurances.

The Approach

Having had enough with trained customer representatives repeating a written statement, but providing no appropriate solution, Ms. Rosalin and Ms. Swetalin decided to approach Power to Consumer  and seek justice. Our legal adviser heard the entire case study, advised the two to draft a written complaint, and specifically mention seeking [su_highlight]support of Power to Consumer to approach the consumer court [/su_highlight]if the complaint wasn’t resolved immediately.

Justice Granted

Being empowered now with legal support from Power to Consumer and its legal adviser, Ms. Rosalin and Ms. Swetalin sent a notice to the online store. And the problem that initially [su_highlight]wasn’t getting addressed even with a month of continuous follow-up, finally got resolved within just two days of sending the notice[/su_highlight]. The Sr. Customer Care Manager of the online store reverted back with an apology letter stating that “they apologized for the trouble and are ready to refund the value of the purchased laptop”.

Here’s what Ms. Rosalin had to share about the whole incident:

“Despite several attempts to reach the customer care center and lodge a complaint, we couldn’t get the replacement, and all our efforts and time went futile.  This is when Power to Consumer intervened and offered  a legal approach to get things sorted. A simple email complaint and phew! The store responded immediately to our request and offered to replace our defective product with a new one. Now, this is called the ‘Right of Consumers’and the ‘Power of Judiciary System'”.

Our View

We’ve heard the phrase ‘Consumer is King’ brandished about so many times that we really don’t know what its true essence is. We think of it as just some mission statement that all companies or enterprise talk about, but never follow in principle. But the statement truly showcases its power, when a consumer who has been cheated of the true value a good, or was provided deficient service, gets compensated by the defaulter, either monetarily or non-monetarily.

The Consumer Protection Act, 1986 is truly a powerful Act, but only if you take the first step in exercising the powers granted by the Act. Power to Consumer is at your service. Our mission is simple: to help consumers get justice and legal support against powerful enterprises and companies.

Support us in our mission by spreading awareness about our initiative far and wide within your social circles. [su_highlight]Remember, consumer is truly the king, but only when it exercises its rights and powers.[/su_highlight]

The name of the company in this post has been hidden for privacy purposes. But the names of the consumers are authentic, and permission has been acknowledged from them to use their name. 

Photo Copyright: Max Stanworth via Flickr CC

Dialing the Right Connection

Dialing the Right ConnectionMobile service providers like Airtel, Aircel, Tata Indicom etc. and government telephone companies like BSNL till now were enjoying a protective status when it came to being a party to telecom disputes. This meant that if you had any issue with your telecom service provider, you couldn’t approach any consumer court for resolving your problems.  Also, there was no clarity in terms of an arbitrator who could step in to help consumers get legal support. As a result, service providers and telephone companies were showing a lackadaisical attitude when it came to resolving disputes and issues with their services.

This situation was primarily due to the fact that the Hon’ble Supreme Court of India in 2009 had passed a judgement while [su_highlight]deciding a BSNL appeal that consumer forum can’t rule over telecom disputes[/su_highlight]. All issues were to be resolve by the Department of Telecom. Innocent consumers were facing the brunt of this judgement and as a result they were miffed with the government. It was left to the government to appoint an arbitrator or resolve the deadlock.

Finally a Resolution

Premium Legal SupportThe DOT (Department of Telecommunications) {Policy-I Section} under the Ministry of Communication & IT of the Government of India  has finally addressed the issue through its Office Memorandum dated 4th February’2014 vide its No. 2-17/2013-Policy-I. The memorandum states that:

  • The SC judgement relates to a time when the Department of Telecom (DOT) and BSNL were in one entity. Since then, DOT has turned regulator a BSNL is a separate entity as are all mobile companies. The only “telegraph authority” that gets protection from consumer courts is the DOT
  • Therefore while the SC judgement is all right, it does not apply to private service providers or to BSNL as it is today
  • The Consumer Courts are competent to deal with disputes between individual telecom consumers and telecom service providers

This simply means that consumer courts, with effect to aforesaid DOT Memo, [su_highlight]are now empowered to exercise their jurisdiction to pass judgement on consumer disputes related to telecom or mobile service providers, such as Airtel, Idea, Vodafone and Reliance Communications etc. including BSNL[/su_highlight]. So if you as a consumer have been randomly exorbitantly charged by your telecom service provider, or were slapped a bill in spite of having disconnected the telecom service, or have any grievance against the service provider, you can approach the consumer court for justice and speedy legal help.

At this juncture, it is imperative to let readers know that consumers do also have another legal tool to get resolution to their disputes beside the consumer courts. The Telecom Regulatory Authority of India (TRAI) was established in 1997 through an Act of Parliament, viz., the Telecom Regulatory Authority of India Act, 1997. Telecom Regulatory Authority of India’s mission is to ensure that the interests of consumers are protected and at the same time to nurture conditions for growth of telecommunications, broadcasting and cable services in a manner and at a pace which will enable India to play a leading role in the emerging global information society.

TRAI gives highest importance for consumer protection as it is embodied in the preamble to the Act, as below:-

An Act to provide for the establishment of the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal to regulate the telecommunication services, adjudicate disputes, dispose of appeals and to protect the interests of service providers and consumers of telecom sector and for matters connected therewith or incidental thereto.

Case Study

Premium Legal SupportA Consumer Complaint Case No. 249 of 2009 was lodged by one Bachan Singh Bhullar as against Idea Cellular Ltd. , Spice Communication Pvt. Ltd and  the Telecom Regulatory Authority of India as against their monopolistic and unfair trade practice in the learned District Consumer Disputes Redressal Forum (DCF), Ferozpur.

The learned DCF, Ferozpur, having examined the allegations framed through said Consumer Complaint and elaborately having discussed all related issues, penalized the telecom service providers [ Idea & Spice ] by directing them to pay a sum of Rs.1,00,000/- as payable compensation, beside a sum of Rs.5,000/- as against litigation cost.

For more information on the above case study, readers can read more by clicking this link.

Our View 

This judgement is a sign of great relief for innocent customers who are always taken for a ride by big telecom companies and government telecom bodies. We believe that this turn of legal affairs will be a signal for telecom companies to either mend their narcissistic ways or pay.

Power to Consumer stands by every single consumer who has been a sufferer of such unfair trade practices. If you know of anyone who has been a victim or are a victim yourself, please feel free to approach us on www.powertoconsumer.in for legal help and support. Meanwhile, help us spread awareness about this issue far and wide by sharing the link within your social circles.

 

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Builders to compensate financially for delay in property handover

Builders to Compensate for Handover DelayOwning a home that proudly carries our name on the name plate is the biggest dream of us Indians. We go to great lengths to buy our dream home. First we shuttle ourselves from one builder’s office to another to find a property suitable to our needs and wallet; we get into heavy mortgage agreements with banks for long periods of time; agree to pay huge sums of processing fees to the government; keep paying home rent as a tenant till our dream house is ready; run to the builder’s office, marketing office, construction site to keep a constant vigil on construction progress and do much much more.

All of it in the name of owning our dream home.

As if the above process wasn’t taxing enough, prospective house owners today have also to [su_highlight]grapple with the incorrect attitude of certain builders[/su_highlight] whose sole intentions are to make money at all costs,  even if it involves cheating or duping gullible and innocent customers. They adopt various tactics to achieve their purposes. Some builders run away overnight wrapping up their makeshift offices, some get into legal litigation with the land owners, some halt construction indefinitely citing labour reasons, while some delay the handover process beyond the stipulated agreed time. The reasons go on and on and the one person that gets seriously affected in all these cases are us, the consumers, the prospective home owner, the dreamer.

Premium Legal SupportConsumer courts across India are replete with cases filed by consumers against property builders. Many of the cases are still under process. But certain cases reach their final conclusion, and bring justice to hapless home owners who for no fault of theirs had to suffer mental agony, physical harassment and financial losses.

One such case that reached [su_highlight]its judgement stage was the case of Mr. Sanjay Goyal Vs. Unitech Limited, Delhi[/su_highlight]. Mr. Sanjay Goyal booked a flat in year 2007 at the agreed sum of Rs. 1.3 crores in one of Unitech Limited’s housing project by the name of Harmony at Nirvana Country, a residential township in Gurgaon. As per the agreement, he was to get the property possession by September 2010.

But sadly Mr. Sanjay Goyal was in for a rude and agonising shock. The builder incessantly delayed the handover much to the chagrin of Sanjay Goyal and his family. Till May 2013, which was a date almost one year post Sanjay filing the case against Unitech Limited, he was still waiting for the keys to his dream home. This means Sanjay, in the meantime was paying a huge sum of money as house rent and subjecting himself and his family to physical and mental agonies, all due to the callous attitude of Unitech Limited.

But this didn’t go well with the National Consumer Disputes Redressal Commission. [su_highlight]NCDRC directed Unitech to reimburse a sum of Rs. 14 lakh to Sanjay Goyal, which totals up the rent that is being paid by Mr. Sanjay Goyal staying as a tenant while waiting for possession from October 2010 to May 2013.[/su_highlight]

Premium Legal SupportThe National Consumer Disputes Redressal Commission (NCDRC) also pulled up the real estate major and its top officials, namely, Executive Chairman Ramesh Chandra and Managing Directors Sanjay Chandra and Ajay Chandra, saying “even after lapse of six years the flats are not ready”. The Commission directed Unitech to hand over the flat to Sanjay Goyal within six moths time, failing which Unitech will have to pay Rs 25,000 for every additional month of delay in handing over possession and awarded Rs. 50,000 as compensation too.

To read the detailed judgement please click here: Sanjay Goyal vs. Unitech Limited

Our View

The case is a striking example of victory for prospective and current house owners who have been or are suffering mental and financial losses in the possession of their dream home. And is a lesson for property builders who think that they can get away with their callous attitude and not be held accountable.

We wish to spread awareness about this case to more and more people across the country. And for that we need your support. Please share this article on your social networks and help us fight the cause. Don’t forget to leave a comment if you think that this article has made you an empowered consumer.

What needs to be done in a LPG blast incident?

gas cylinderWe recently covered two blog posts on the important topic of LPG safety and security. We got many encouraging comments on how the posts have made many of our readers aware of something so common yet unheard. To give our consumers an end-to-end perspective on this topic, we are covering in this post a last but important point of what needs to be done in the eventuality of a cylinder blast?

As you would have read, LPG Gas Cylinders are governed under the legal ambit, as laid by the Gas Cylinders Rules, 1981 being made under the provisions of Section 18 of the Indian Explosives Act, 1884. In such a case, if there is a LPG blast happening at one’s premise, the consumer can report the incident by logging on to the website:

http://peso.gov.in/Accident_Report.aspx

They can also lodge the report by sending an express telegram followed by a detailed letter stating the occurrence to: Chief Controller of Explosives, Block A, CGO Complex, Fifth Floor, Seminary Hills, Nagpur – 440 006; and the Officer-in-Charge at the nearest police station.Premium Legal Support

The above step will give a consumer a sound footing to sue the concerned insurer, the LPG company as well as distributor in the Consumer Court, and get an appropriate Award of Compensation in lieu of their sustained loss. Remember, Consumer Courts are fully empowered to grant compensation in LPG cylinder blast cases causing loss or casualty if it’s established that LPG cylinder blast is caused due to it being defective.

Case Studies

We state two cases where consumers sued the LPG companies on account of them circulating defective LPG cylinders, and how they were awarded justice by the Consumer Courts.

Case 1: Mrs. Madhuri Govilkar and others Vs M/S Hindustan Petroleum Corporation and others

On a fateful day in August 1995, a 47-year-old Mr. Suresh Kumar Govilkar got up make tea for himself and his wife. Since the in use cylinder was empty, he replaced it with a refilled cylinder he received through the dealer, Pelicon Gas Agency. No sooner did he lit the stove, a major fire engulfed Mr. Govilkar. As a result he was admitted to a hospital, where he breathed his last – (Mrs Madhuri Govilkar and others Vs M/S Hindustan Petroleum Corporation and others, Original Petition No 289 of 1996). Mrs. Govilkar sued the LPG company, Hindustan Petroleum and the dealer Pelicon Gas Agency for gross negligence and carelessness.

The Honourable, Justice M.B.Shah, President and Mrs Rajyalakshmi Rao, Member, National Consumer Disputes Redressal Commission observed that [su_highlight background=”#e0ef6f”]once the defect is established, the manufacturer is liable and it does not require any further consideration[/su_highlight]. They therefore held that both the dealer and the oil company were jointly liable to pay a compensation of Rs. Ten Lakhs Eight Thousand, along with interest at the rate of 9 % per annum, and costs amounting to Rs 5000.

Premium Legal SupportThe insurer National Insurance Company also came under fire for its ‘negative attitude’. Referring to the advice sent to the dealer (when informed of the accident and the claim) not to make any admission of compensation without the insurance company’s prior consent, the Commission said this attitude [su_highlight background=”#e0ef6f”]displayed a typical negative approach on the part of the insurance company[/su_highlight]. “Such type of negative defense increases the litigation in this country. In any case, such defense on the part of National Insurance Company is totally unjustifiable,” the Commission said. You can read more about this case study here.

Case 2: Mr. K U Nachappa vs Shanthi Gas Agency

Another case study involving a LPG blast is of Mr. K.U.Nachappa, Bangalore. Mr. Nachappa  purchased an HP cylinder from Shanthi Gas Agency, at Bangalore in October 2010, but it was not working. On October 16, 2010, the company sent a technician to identify and rectify the problem.

While the technician was doing its diagnosis, Mr. Nachappa was standing next to him, and suddenly the cylinder burst inflicting burns on both. Mr. Nachappa suffered burns on his face, hands and legs, and had to be treated. His kitchen got badly damaged too.

Alleging that the accident was due to a manufacturing defect in the cylinder and the technician’s inefficiency, Mr. Nachappa sought Rs 1.18 lakh compensation by filling a Consumer Case in the Consumer Court, Bangalore. The Consumer Court, Bangalore while taking note of the photographs provided by Nachappa ruled that the explosion was [su_highlight background=”#e0ef6f”]because of a defective gas cylinder, and termed it deficiency in service on part of the company and the agency and further observed that an LPG manufacturing company is liable to compensate a cylinder blast victim, even if it has taken steps to fix the defect.[/su_highlight]

The Consumer Court, Bangalore passed its Order on 2nd February’ 2012 granting thereby a compensation of Rs 1.17 lakh with 10% per annum interest to Mr. Nachappa. The Bench also directed the company and the agency to pay Rs. 2000 for litigation cost, and 10% interest on the entire amount from the date of the incident. The Court also said that ‘the complainant not only suffered physical injury, but also mental shock and agony. He is definitely entitled to the compensation for all his sufferings.’ You can read more about the case here.

Our View

Premium Legal SupportIt pains us immensely to see that such a basic necessity of life is being handled so carelessly by LPG companies and dealers, who are absolutely ignorant about consumer safety. There is such minimum awareness about LPG safety being passed by either the company or dealer to consumers when they are taking the delivery of LPG cylinders. Whatever is, is mostly out of TV ads or posters inside dealer premises.

In such a scenario, it is up to us consumers to stay alert and cautious about our safety, and make our family members, friends, colleagues, coworkers aware of LPG hazards. At Power to Consumer, we have taken a small step to make you aware of all the aspects of LPG safety. It is up to you to make others aware. We are compiling all the three posts below. Share the links within your social circles. And help us in our objective of powering the consumer.

  1.  Are you Aware of Your LPG Insurance Policy?– http://www.powertoconsumer.in/blog/2014/03/13/lpg-insurance-policy/
  2. Have you Checked Your Cylinder for its Expiry Date?– http://www.powertoconsumer.in/blog/2014/02/27/have-you-checked-your-cylinder-for-its-expiry-date/
  3. What Needs to be Done in a LPG Blast Incident?– http://www.powertoconsumer.in/blog/2014/11/25/what-needs-to-be-done-in-a-lpg-blast-incident/

Photo Copyright: Satish Krishnamurthy via Flickr CC