We have seen that the last seven years have been very vibrant for insurance industry. There has been an immense change in the way business is conducted. From monopolistic regime to cut-throat competition, the entire paradigm of business has not only shifted but actually been hurtled into a completely fresh orbit. Customer’s ecstasy has replaced customer’s delight.

Since life insurance is a marathon and not a hundred-meter race, with long term commitments, management of data is a Herculean task that every company struggles with, and tries to overcome. Hats off to LIC for their manual management system of the past; it is almost impossible to imagine today that countless people laboriously pored over manual books to maintain some sense of order and design, and pretty well managed design and order at that!

However, converting to IT systems is not merely about feeding data into a lifeless computer so that it can churn out the receipts and policies and sundry other things at the click of a button though the importance of that also cannot be ever ignored. With customer’s expectation risen manifolds (from proposal sourcing to underwriting to issuance to renewal collections to any alterations to maturity proceeds or death claims), it is imperative that these things are well taken care of. But at the end of the day, in today’s fierce scenario, it is merely a hygiene factor, and not something to really gloat over.

Where they fail and fail pretty miserably is to percolate the real usage of the entire spectrum of the convenience available in the IT system to the end-user. And here, I refer as end-user, the staff of the company. It is like giving a Swiss knife to someone who will probably only use to sharpen his pencil. (This is actually true of any industry and/or company which has only recently shifted to the IT-mode; and since I am into training, I realize how badly trained some of the staff can be!)

A second glaring gap is between the development and the execution. What looks great on the paper can turn out to be damp squib in practice. This could be due to faulty understanding of the insurance industry by the development team. It could also be due to a wrong brief given by the insurance company. Requirement gathering is a challenge. After all, insurance industry may seem a cakewalk, but its various nitty-gritties can flummox an ordinary person. A small error in the designing of logic can create both financial and legal havoc. For example, in my earlier assignment (not naming the company for obvious reason), the commission of the agents were disbursed even before the issuance of the policy which lead to over payment of commission to the tune of 8 crores. Half of that never got recovered.

I firmly feel that IT systems in India at least have not been fully utilized by the users and there is still a long way to go as far as IT is concerned to reap the maximum benefit of technology.

Powered by Zoundry

But in the last decade, things have changed. Families are more comfortable now with home loans, personal loans and credit cards. The ‘new Indian’ is willing to splurge, even if it is on credit. No wonder, the bank credit growth in the last two years have been to the tune of over 25 per cent.

However, in case of home loans/personal loans, one is normally clear about the rates of interest being charged. But spending through credit card is an all together different ball game. With interest rates as high as over 3 per cent month, one actually starts feeling the pinch when one overspends.

But the situation is not actually that scary. And it is all about right timing. Credit cards can be a useful tool at the hands of savvy consumers who can effectively use the benefits offered by cards.

One of the big advantages of using the card is ‘the float’ that is given to you the by the banks. The float basically means that you can make payment on the expenses being incurred once the bill is issued by the credit card company and within the stipulated grace period. This is generally 15 days. And during this period you are not charged any interest.

Let us see how this system works. Say you purchase a washing machine on April 15 worth Rs 28,000 and pay through credit card. If the billing date was 14th of every month, you would get nearly 45 days of credit. That is, 30 days since the next bill would be issued and another 15 days as grace period to make the payment for the same. So we can see that if you purchased washing machine on 15th of the month then you can enjoy free credit float for 44 days. However, if the purchase is made even two days before the 15th, that is, on the 13th of the month, then you can enjoy a free credit float for only 16 days. So by just purchasing the washing machine 2 days later, you can enjoy credit for an additional 28 days.

The situation gets more interesting when you have more than one credit card and with a 15 day difference in payment cycles. This will help you to take the advantage of two different cycles of the month. Of course, there are certain expenses, which we cannot hold over like an urgent air travel or medical expenses, here with the help of 2 credit cards with different billing cycles, you can get the maximum benefits.

Moreover, there are other ways you can enhance your benefits from credit cards. Today there is a wide variety of cards that are available in the market. But you need to benchmark them on key features such as wide acceptability, zero annual fees, no fuel surcharge, good 24-hour helpline, Internet access for account viewing, SMS updates and a truly rewarding loyalty programme.

Accordingly select the top two cards and make them your ‘first’ and ‘second’ preferred card for use. Further, besides enjoying the maximum possible credit period, try to get the billing cycles of preferred cards fixed in such a way that their due dates fall 15 days apart. There are certain banks that offer up to 21 days of grace period as well. In the recent years, the development of reward and discount programmes for credit card users has become a big thing as banks are in competitive mode. Therefore, the discounts and rewards have become more and more attractive. For example, office supplies, travel, software and phone services. You can take advantage of them as well by using the credit card to lower your expenses.

The float is of good convenience, but don’t use it greedily. The luring malls and credit cards make a very deadly combo. I have seen many people trapped into ‘impulsive’ buying practice. It is quite obvious as they do not have to pay there and then. If you have the discipline to pay of your balance at the end of each month and not spend more than you have (just like a checking account). You will basically get the credit card service for free – paid for by people who don’t have enough discipline to pay off their balance each month.

It is important to know that credit card is a financial tool that needs to be used responsibly. While it ensures cash flow, it is not advisable for customers to borrow for a longer period of time. Use it effectively and take good advantage of the time line and clear your debts, without any additional costs. I advocate use credit cards as ‘convenience cards’.

Powered by Zoundry

You would agree that death is one of the stark realities of life. It is the ultimate truth. Everything in life is uncertain after birth; death is an exception and is certain to happen in one’s life.

But there may be situations where the exact time and manner of death of a person cannot be ascertained or known. Say for example, a person suddenly disappears and his whereabouts are not known thereafter, despite reasonable efforts of his near and dear relatives or people who ought to have known about his existence in the normal course had he been alive.

In such a situation, the question arises as to when the nominees of the missing insured can lay a claim to the benefits of the policies and what their obligations are. Are they bound to continue to pay premium? If so how long are they bound to make payment, and when does the law presume the death of such an insured?

These were the points adjudicated and decided by Supreme Court in the recent case of LIC of India v/s Anuradha. In order to appreciate the facts it is necessary to analyze and understand section 108 of Indian Evidence Act, 1872, which reads as under:

BURDEN OF PROVING THAT THE PERSON IS ALIVE WHO HAS NOT BEEN HEARD FOR SEVEN YEARS. Provided that the question is whether a man is alive or dead and is proved that he is not been heard of for seven years, the burden of proving that he is alive is shifted to the person who affirms it.

Section 108 lays down a general rule as to presumption of existence of a person. This is regard to ONLY death of the person, that too after the lapse of seven years and if time lapsed is only six years and 364 days, the presumption cannot be applied. More importantly, this presumption is not available as to the time of death of the subject person. This fact has to be proved by direct or circumstantial evidence.

In another words only can the death be presumed. It cannot be “assumed that presumed death had synchronized with the date he was reported missing” or that the date and time of death can be correlated to the point of time coinciding the commencement of calculation of seven years backwards from the date of initiation of legal proceeding.

Having understood the presumption of death, let us now revert to the facts of the aforementioned case – One Mr. Sham Prakash Sharma, the late husband of Mrs. Anuradha (Respondent before Supreme Court) had taken a Life Insurance policy (the Petitioner before Supreme Court). The policy was commenced with effect from February 8, 1986. The premium was payable every six months and was paid for two years. The respondent’s husband suddenly disappeared from Bombay on July 17, 1988 and thereafter he was not traceable and his whereabouts were not known. The respondent logged a First Information Report (FIR) with the Police. On July 11, 1988 LIC sent a communication address to Mr. Sham Prakash Sharma, delivered at his residence, informing that the Insurance Policy had lapsed for non-payment of premium. On June 29, 1996, the respondent approached the LIC for release of benefits under the policy proceeding on an assumption that Mr. Sham Prakash was dead as he had not been seen and heard for seven years. The LIC turned down the claim of the respondent relying on Rule 14 of Insurance Manual which reads as under:

“Where a person is reported missing, it is to be advised to the claimant the life insured will be presumed to be dead after seven years of production of decree from the court of law and in the meantime the policy is to be kept in force by making the payment regularly.”

The respondent, aggrieved by rejection approached the State Consumer Disputes Redressal Commission complaining of deficiency of service on the part of Petitioner. The Petitioner, namely LIC, refuted the contention of deficiency and contended that the policy had lapsed, since it was not kept alive, and the claim was not maintainable. The State Commission accepted to the Respondents claim and held that the Rule 14 relied on by the Petitioner had no relevance in view of statutory presumption arising under Section 108 of the evidence Act. The Petitioner namely, LIC, preferred an appeal before the High Court and which was also dismissed.

The Petitioner, LIC, filed an appeal before the Supreme Court against the judgment of High Court and during the course of hearing an appeal, it was submitted for the council of LIC that in case it had no objection to the release of payment due under the policy to the Respondent as ex-gratia payment to honor the judgment of High Court and it was only interested to settle the law in this area.

The Supreme Court held that both High Court and the Commission held wrong in holding that after the lapse of seven years, when the matter came before the court, not only death can be presumed but also time of death could be assumed, which would be the time when the fact of missing was first noticed, the Supreme Court held under Section 108, only death can be presumed and not the time of death. This fact has to be proved by the direct or circumstantial evidence, it further held that High Court and Commission went wrong in holding “that on expiry of seven years by the time issue raised in Consumer Forum or Civil Court, an evidence was addressed that the person was not heard of for a period of seven years by wife and/or family members of the person then only the death can be presumed but it could also be assumed that the presumed death had synchronized with the date when he was reported missing, or date and time could be correlated to the point of time coinciding with the commencement of calculation of seven years from the backward of initiation of legal proceedings.

The Supreme Court further held that in order to successful maintain the claim for the benefit under the insurance policy, it is necessary for the policy to kept alive by punctual payment of premium under the claim was made. The Apex court also held that the Petitioner namely, LIC, was justified in turning down the claims by pleading that the policy had lapsed and the all that could be paid to the Claimants was the paid up value of the policy.

If I have not confused you, the inferences of the whole story are:

1. After the lapse of seven years, ONLY and only death could be presumed by the court.
2. There is no presumption of the time of death under Section 108 of Indian Evidence Act, 1872.
3. Time of death has to be proved by independent evidence.
4. The Claimant in order to successfully maintain the claim in such cases, has to continue to pay premium till the claim is made, failure to payment of premium shall lead to lapse of policy and disentitle the nominee or the Claimant to pay the entire amount payable under the policy.

Powered by Zoundry

The most important part and moreover the bigger challenge that lies ahead is the subject to write on. Stories is a big no for me. Ever since my childhood I had no passion and patience to read novels. Each time I promised myself to complete the book but gave up reading the first few pages. My school librarian tried her best without success to inculcate this habit in me. Tintin’s comics was always a preferred choice over voluminous literature.

With over five years at work place and an interest for insurance in particular, I have my own views which I’ll try to express through this site. May be down the line I’ll have even more ideas and areas to discover and display.

I promise some interesting and informative stuff. Please do not forget to drop your comments.

Powered by Zoundry