When the insurance regulator allowed portability in health insurance, the intent was to ensure policyholders were not trapped in a bad product or poor claims experience.
The idea was to preserve continuity benefits while allowing customers to move to a different insurer or health insurance plan. But what was introduced in the interest of consumers has become a sales tool.
Health insurance retention data disclosed in insurers' public disclosure documents throws up some interesting insights. On average, one in four policies does not get renewed. This is not necessarily due to a poor claims experience or a weak product, but often to an incentive-led push to port policies, especially among younger customers, largely during the initial years after purchase.
In a Mint Money analysis of insurers' product-level retention data, we found that distribution economics, rather than consumer dissatisfaction, appears to be one of the key drivers of this early churn.
These retention numbers, however, need to be interpreted with caution because the disclosures are noisy and far from perfect. For one, the data does not capture internal migration between different products offered by the same insurer. It also does not adequately reflect product vintage, making it difficult to accurately analyse early churn.
More worryingly, we found instances where insurers had reported incorrect data. Despite these limitations, the disclosures offer a useful directional indicator of how persistency varies across products and insurers, revealing patterns that were widely suspected but difficult to quantify. For policyholders being nudged by an agent to switch to a new plan, it is worth doing a careful cost-benefit analysis.
Unless the incremental benefits are substantial or the price difference is significant, portability should be considered with caution.
Caution is key in investing as well. Take the euphoria around gold, for instance. After touching record highs, gold and silver prices have corrected sharply. Although less pronounced in rupee terms, partly due to import duties, the noise and excitement around precious metals clearly seem to be fading.
Just as last year's rally in gold could largely be explained by a buying spree by central banks worldwide, the recent correction can also be explained by changing market conditions. Expectations that the US Federal Reserve will raise interest rates, a stronger US dollar, and profit-taking have all contributed to the recent decline.
Bringing both the highs and the lows into perspective, Shefali Anand, in this story, explains why neither should worry you if you understand the basic purpose of holding precious metals in your portfolio and are not investing in them to chase short-term gains. An allocation of up to 15% to gold can provide an effective hedge and lend stability to your portfolio when markets turn volatile.
In the investment space, Jash Kriplani looked at how balanced hybrid funds are making a comeback. After the market regulator removed the restriction that required fund houses to choose between offering an aggressive and a balanced hybrid fund, more fund houses are expected to launch balanced hybrid schemes, aided by favourable tax treatment.
Unlike aggressive hybrid funds, which invest 65-80% in equity and 20-35% in debt, balanced hybrid funds, as the name suggests, take a more measured approach, with both equity and debt allocations capped at 40-60% of the portfolio. The idea is to strike a balance between downside protection through debt and long-term growth through equity.
And since balanced hybrid funds hold at least 40% in equity, they qualify for a long-term capital gains (LTCG) tax rate of 12.5% if held for more than two years. Gains on units sold within two years are taxed at the investor's slab rate. A 50:50 blend of equity and debt has historically cushioned the blow during equity market corrections, which is why balanced funds could be a good fit for first-time investors seeking equity exposure with relatively lower volatility. But wait till they build a track record before investing.
Aprajita Sharma wrote about two important topics this week. One highlights the importance of having a comprehensive motor insurance policy that includes own damage (OD) cover, and not just the mandatory third-party insurance.
Understanding this cover is especially important during the monsoon season, when flooded roads, fallen trees and waterlogged basements increase the risk of vehicle damage. An OD cover, along with add-ons such as zero depreciation and engine protection, can protect your vehicle against rain-related damage and significantly reduce out-of-pocket repair costs when the rain-related mayhem strikes.
The second story looks at the Employees' Provident Fund (EPF) Scheme, 2026. One of the most talked-about changes under the new rules is the simplification of withdrawal provisions. The new scheme collapses more than a dozen withdrawal categories into three broad buckets: essential needs, housing, and special circumstances.
Under the new framework, an employee who has completed 12 months of service can withdraw up to 75% of the EPF balance without any paperwork. Upon becoming unemployed, the employee can also withdraw the remaining balance after a 12-month waiting period.
The scheme also seeks to make the EPFO more accountable by stipulating that claims must be processed within 20 days. If there is an unjustified delay, the regional provident fund commissioner concerned can be held personally accountable, with penal interest for the delay recoverable from the erring officer's salary. It's a must-read if you want to understand how the new EPF Scheme, 2026, could impact your finances.
And finally, in this week's Money Guru, Ananya Grover spoke to Sachin Seth, regional managing director, India and South Asia at CRIF, about lending trends amid the rise in consumption-led unsecured borrowing and important questions borrowers should ask before taking on debt.
That’s all from the Mint Money team this week. Until next time!