How You Can Securely Store Your Insurance Policies Digitally

Consider the example of Meera, whose father was hospitalised due to a sudden medical emergency. She rushed to initiate an health insurance claim settlement process to cover the treatment expenses.

But Meera faced a stressful situation -- she couldn't access the policy details, despite her father having adequate health insurance coverage.

Her father was the only person who held the information. With time running out and medical expenses piling up, Meera struggled to retrieve the information from the insurer.

Though she eventually located the details, the delay meant unnecessary out-of-pocket expenses that could have been avoided if the policy details had been readily available.

In contrast, consider Rahul, who faced a similar crisis when his mother was hospitalised but was far more organised. Rahul had stored all insurance policies digitally on a centralised platform and ensured that his close family members had access to them in case of any emergency. He was able to retrieve the necessary documents within minutes, allowing the insurer to process the claim without any undue delay.

Emergencies highlight the stark difference between being organised and unorganised and unprepared when it comes to storing critical documents, such as insurance policies.

To ensure you and your family are equipped to handle such situations, do the following:

• Maintain Documents in an Organised Manner - This shall enable you to be better prepared to handle any situation.

• Share Access Details with Trusted Family Members - Make sure your loved ones, particularly your close family members, viz. spouse, children and parents, know where to find the documents and how to access them in times of need.

• Store Documents in Easily Accessible Ways - While you may leverage on technology to store important documents digitally, make sure it is done securely and is retrievable anytime with its access also to family members; keep them in the loop.

• Keep Original Physical Copies as Backup - While digital storage is highly efficient, it would be prudent to have backup in rare instances of technical glitches or connectivity issues.

Here are Different Ways to Store Important Documents Digitally

1. Cloud-Based Services

Services like Google Drive, OneDrive, Dropbox and iCloud, offer secure, cloud-based storage for your critical files.

They allow you to organise documents into folders, access them from anywhere, and share specific files with trusted individuals. These platforms often come with encryption and additional security features to protect sensitive information.

2. Digital Lockers

Platforms like DigiLocker (a flagship initiative of the Ministry of Electronics & IT under the Digital India programme) provide a safe, digital space for storing and accessing critical documents. These are particularly useful for retrieving authenticated digital copies of official documents.

3. Document Management Software

If you're managing a high volume of documents, specialised document management systems (like Zoho Docs or Evernote) can also streamline storage and retrieval. These tools often include tagging and search functionalities to help you locate files quickly.

4. External Hard Drives or Encrypted USB Drives

While cloud storage is convenient, having an offline backup of digital files on an external hard drive or encrypted USB drive adds another layer of security. These can be stored in a safe place at home or in a bank locker for extra peace of mind.

Mandatory e-Insurance as per the IRDA

Recognising the need for better organisation and accessibility, the Insurance Regulatory and Development Authority of India (IRDAI) has announced that starting April 1, 2024, all new insurance policies in India will be issued in digital form.

This regulation applies irrespective of whether the proposal is submitted electronically or through traditional means.

The concept is very similar to how investors hold shares in a demat account. The electronic insurance policies will be held in an e-Insurance Account or an eIA, which can be opened with any of the four repositories: CAMS Insurance Repository, Karvy, NSDL Database Management (NDML), and Central Insurance Repository of India.

The cost of opening the eIA will be borne by the insurer. There will be only one eIA for all your insurance policies. This means that all your insurance policies -- be it life, health, or general insurance -- will be stored in one place.

The five key benefits of e-Insurance Account (eIA):

• Reduced Paperwork - By digitising your policies, you minimise clutter and avoid the hassle of handling physical documents.

• Ease of Claims - During emergencies, you won't need to search for physical copies or separate online records. Potentially, claims would be processed faster with all the details readily available in your eIA.

• Easy Policy Maintenance - If you update personal details, such as your address or contact number, you only need to make the change in your eIA. All your insurers will automatically have access to the updated information. Similarly, updates from your insurer will be visible in your account, simplifying policy maintenance.

• Enhanced Security - Storing your documents securely in a centralised digital repository, reduces the risk of theft, damage, or unauthorised access to documents.

• One-time KYC Verification - Since your KYC documents are already verified by the insurance repository, you won't need to repeatedly fill out KYC forms or submit the same documents each time you purchase a new policy.

Note that while the transition to digital insurance is mandatory for all new policies issued after April 1, 2024, you will still have the option to request physical copies if you prefer.

Additionally, these IRDAI guidelines currently apply only to new policies, and there has been no official mention of existing insurance policyholders. However, given the numerous benefits, it would be wise to consider digitising your existing physical policies.

Use of DigiLocker to Securely Store Insurance Policies

In addition to eIAs, DigiLocker is another effective way to store your insurance policies digitally and access them easily.

Launched by the Government of India, DigiLocker is a secure digital platform for storing and sharing authenticated documents. DigiLocker aims at 'Digital Empowerment' by providing access to authentic digital documents to the citizen's digital document wallet. DigiLocker is a secure cloud-based platform for storage, sharing and verification of documents and certificates.

While an eIA is exclusively designed for storing and managing insurance policies issued by registered repositories, DigiLocker is a broader platform that stores various types of official documents (such as Aadhaar card, PAN, driving licence, etc.).

Creating a DigiLocker account is straightforward. You can simply sign up using your mobile/Aadhaar number. Once you verify the information with an OTP and set a security PIN, your account will be set up and you can start uploading your documents.

Benefits of DigiLocker for both insurers and policyholders:

• Cost Reduction - Insurers save costs by eliminating the need to print and dispatch policy documents.

• Elimination of Non-Delivery Complaints - With DigiLocker, you can directly access your policy document without relying on postal or courier services.

• Faster Claims Processing - During emergencies, you can quickly retrieve your policy details, enabling faster claims settlement process.

• Reduction in Fraud and Disputes - Securely storing verified documents reduces the risk of document tampering or chances of discrepancies during claims.

To Conclude...

As digital storage is becoming a new practice, it is crucial to leverage on platforms like DigiLocker and e-Insurance Accounts to ensure all critical documents are safely stored and easily retrievable.

By keeping your policies organised and sharing access with trusted family members, you can avoid unnecessary stress and expenses in times of need.

Be thoughtful in your approach.

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.