What are the limitations of parametric insurance?

While parametric insurance provides fast payouts, it does not cover actual losses, which could lead to a mismatch between payout and financial impact. Additionally, basis risk—the difference between the payout and actual loss—can be a concern if triggers are not well-calibrated to the insured's exposure.

Can a beneficiary be changed after the policyholder’s death?

No, once the policyholder passes away, the beneficiary designation becomes final. However, if the policyholder had named a contingent beneficiary, that person may receive the benefits if the primary beneficiary is unavailable.

Can I add additional insured parties to my policy?

Yes, businesses can add vendors, landlords, or clients as "additional insured" to extend coverage to them under specific conditions.

Are there tax benefits to Universal Life Insurance?

Yes, UL policies offer tax-deferred cash value growth, meaning you don’t pay taxes on earnings until withdrawal. The death benefit is also generally tax-free to beneficiaries. However, excessive withdrawals or loans may trigger tax liabilities, so it’s important to manage funds carefully.

How do moral hazards impact insurance risk?

A moral hazard occurs when a person’s behavior increases risk due to dishonesty, such as filing false claims or intentionally damaging property to receive an insurance payout.

What is business interruption insurance for freelancers?

It helps replace lost income if a gig worker’s business is disrupted due to covered events like disasters or legal shutdowns.

What penalties can IRDAI impose on insurers for non-compliance?

IRDAI can impose fines, revoke licenses, issue warnings, or restrict business operations if insurers violate regulations. Penalties vary depending on the severity of the non-compliance, ensuring insurers adhere to ethical and financial standards.

Do accident-only plans include coverage for hospitalization?

Yes, hospitalization due to accidents, including overnight stays for monitoring or post-surgery recovery, is typically covered by accident insurance.