The Reserve Bank of India (RBI) today cautioned people against frauds being conducted in the name of KYC updation.

In a statement, the RBI said it has been receiving complaints/reports about customers falling prey to frauds being perpetrated in the name of KYC updation.

Modus Operandi

The central bank said that the usual modus operandi in such cases include receipt of unsolicited communication, such as calls, SMSs, emails, etc., by customer urging him/her to share certain personal details, account/login details/card information, PIN, OTP, etc. or install some unauthorised/unverified application for KYC updation using a link provided in the communication.

Such communications are also reported to carry threats of account freeze/ block/closure. Once a customer shares information over call/message/unauthorised application, fraudsters get access to customer’s account and defraud him/her.

“Members of public are hereby cautioned not to share account login details,personal information, copies of KYC documents, card information, PIN, password, OTP, etc. with unidentified persons or agencies. Further, such details should not be shared through unverified/unauthorised websites or applications,” RBI said.

What to do?

RBI said that in case customers receive any request for sharing details account login, personal information, copies of KYC document etc, they should get in touch with their bank/branch.

The RBI further said it is also clarified that while the Regulated Entities (REs) are required to undertake periodic updation of KYC, the process of periodic updation of KYC has been simplified to a large extent vide circular dated May 10, 2021.

Further, through a circular dated May 5, 2021, the Regulated Entities were “advised that in respect of customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone, unless warranted under instructions of any regulator/ enforcement agency/court of law, etc,” RBI said.

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Such policies provide the child enough funds to continue education even if he loses his parents.

The sum assured is the amount payable to the family on death of a policyholder. But need analysis by policyholders at different stages of career is advisable as certain policies become inadequate to take care of the purpose for which policies are bought. Some additional policies need to be taken to match one’s progress into different life stages and higher financial status.

Periodic review of policies
A review may reveal that what was considered as an adequate sum 10 years ago is today grossly inadequate to protect a family’s financial needs. A life insurance policy with Rs 10 lakh sum assured was considered more than adequate protection 15 years ago for a person in the middle income group. But today, this amount won’t be sufficient even to meet outstanding loan liability if the policyholder dies.

The recent experience of those who lost their family members during the pandemic raises several questions on the very idea of life insurance. Most of the victims who lost bread earners are feeling disenchanted with insurance as what they received as claims money was not enough even to pay off credit card dues or the EMI for certain consumer goods. Repayment of house property loan or car loan just couldn’t be managed leaving the family in utter helplessness.

While taking the policy the sum assured was decided on the basis of perceived risk at that point of time but everything turned out to be highly deficient when insurance protection was needed most. The only folly was that there was no review of policy cover even after 10 to 15 years. A good advisor could have told such people to buy a few more protection oriented policies or the person himself could have bought a term plan online to cover liabilities for the next 15 years.

Financial liabilities
One must review and assess financial liabilities created by way of loans, specially housing and vehicle loan, and estimate financial needs of his or her spouse and their children till they become financially independent. Everyone must estimate the value of such financial needs and take such life insurance policies which can provide the family necessary funds for meeting such liabilities.

Since taking the first policy there may be new products in the market more suitable for your changed needs, hence the review may enable you to discard an outdated plan of insurance and adopt a product matching your altered needs. Even if you are comfortable with the first policy, you must consider enhancing coverage by buying another policy for a higher sum assured. Do explore children policies in the market. Such policies provide the child enough funds to continue education even if he loses his parents.

Many policyholders may on review find that their employers provide for adequate life cover through employer funded schemes. In such cases one may surrender the ongoing policy that may not be serving any protection purpose and rather buy an annuity plan with life cover to take care of his post retirement cash flow.
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We buy insurance expecting claims to be paid when some unfortunate and unexpected incident takes place. However, when a claim is rejected, it is frustrating, expensive and disappointing. Let us examine why some claims get rejected.

Insurance :

Life insurance aims to provide financial protection for the bereaved family in case of an insured person’s unfortunate demise during the term of the policy. Here are some of the key aspects to keep in mind in order to ensure that your claim doesn’t get rejected.

Fill the application form yourself: At the time of purchasing insurance, always fill in the proposal or application form yourself. You should ensure that your insurance provider know all the material facts about you. Disclose all the facts without hiding anything.

Avoid delay in filing claims: It may not be uppermost in your mind in a medical emergency, but it would be advisable to give a trusted friend or relative your insurance information to call and inform the insurance company if you are not able to send an intimation yourself. As per the insurance contract, the insurance company needs to be kept informed about the occurrences for which a claim may be reported to them.

Medical examinations:

Insurance companies may sponsor medical tests to get a better understanding of the medical condition of a prospective buyer. These tests may also help the insured detect diseases early and treat them accordingly.

Examine policy document carefully:

Always read your policy document to check whether it is in line with your needs. There may be a possibility that the insurance company has incorporated a wrong detail by mistake and hence it would be prudent to check the policy document thoroughly immediately on receipt.

Avoid wrong disclosure of facts:

You should fill in important details such as age, income, occupation, lifestyle (smoking/ drinking), details of previous/other existing policies, claims taken if any, and other information in the proposal form correctly. Any incorrect information is considered “material misrepresentation”. According to insurance contracts only material misrepresentations (those facts that influence underwriting decision) can result in a policy cancellation. However, many insurance companies have a tendency to deny a valid claim even if a misrepresentation/non-disclosure in the proposal form is not material.

Pay premium timely:

Insurance companies often use non-payment of premium as a reason to deny a claim. Insured or beneficiary has the right to know whether the insurance company sent ‘premium-due notices’ to the correct address and whether the notice clearly warned the insured of the impending lapse.

Ensure that beneficiary/nominee is mentioned:

On the death of the assured, the benefits are paid to the nominee or the beneficiary. It is, therefore, in the interest of the insured to keep the insurance provider updated about the details (address, contact number, etc.). When a beneficiary is not named, claims may result in inordinate delays or rejection.

Health insurance

The policy holder should take the following precautions to avoid rejection of health insurance claims.

Furnish correct information in proposal form:

Any wrong information like age, annual income, lifestyle, medical history, etc., may lead to rejection of the claim and also termination of the policy. Most insurers do not cover pre-existing diseases and hence asking for a claim in respect of PED will be a waste of time and effort.

Ensure timely renewal of policy:

It is important to renew the policy annually before the deadline. Even if an insured is admitted in the hospital only a day later (after the date of expiry), he/she is not entitled to claim.

Intimate insurer within stipulated time:

Most health insurance policies clearly mention that the insurer must be intimated within 24 (or in some cases 48) hours of hospitalisation, if a claim is to be registered. It is always prudent to take the policy from an insurer who is readily accessible 24×7 to the policy holders and so that insured can comply with this condition.

Be aware of exclusion list:

Exclusion list mentions all the cases and situation not covered under policy. Before making a claim under a health insurance policy, it is advisable to go through the list carefully.

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