Life insurance policy: Can it be customised?

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A life insurance policy is created to cater to various needs of the consumer such as protection, health, savings for various life goals like child education, wealth creation, retirement planning etc. The design of each of the life insurance products is made to take care of either one or multiple consumer needs. And depending upon the exact need, the policy can be customised.

The customisation can be done through two methods; firstly, within the policy, selecting specific options based on the need and secondly, through combination of solutions.

Most insurers today design an insurance policy with multiple benefit options that can be selected as per consumer needs. For example, in a term product, there are plan options to cater to the protection against not just premature death of the policyholder but also optional benefits of terminal illness, critical illness, waiver of premium or disability benefit, which can be opted for depending upon what the consumer thinks is most relevant for him/her.

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Similarly, in savings products, there are various options available — limited tenure policy, benefit pay-outs at milestone ages, whole life cover- all these are created keeping specific needs in mind.

Another method is through combination solutions — now this is essentially is a method through which two or more products of the same insurer can be combined to represent a single view to the customer and cater to their needs. Also, the combination solution is also possible by combining the products of life and general insurance.

What are insurers offering?

When multiple products from same insurer are combined, it is done to provide a holistic solution to the customer to cater to more than one need. For example: a combination of protection and savings products would cater to two needs of coverage due to early death and also provide for savings to the consumer for specific life goals.

Regulatory provisions are available to combine life and non-life (general insurance product) — a popular combination is combining a protection product and the health indemnity (of medical cost reimbursement) product from general insurance company. In this kind of combination, the two insurance companies come together to provide a single and superior solution to the consumer.

In the current digital era, all organisations are moving towards simplification, digitalisation and offering of holistic solutions to the end customer. Thus, not just combination of multiple products to cater to multiple needs but also option of customisation of products to cater to the needs will gain prominence and will be an imperative in the coming days.

(The writer is Chief Actuary and Chief Risk officer, Kotak Mahindra Life Insurance Company. Views expressed are personal)