“Know Your Customer”, which is mostly referred to as KYC, is a set of mandatory standards that every financial institution follows. It incorporates financial transactions executed by them. Identity verification and address of customers seeking insurance is verified through KYC. This has been designed to protect the financial institutions against fraud, corruption, money laundering, and financing. So, KYC is mandatory for travel insurance as it involves financial transactions.
Why is KYC required for travel insurance in India?
Travel insurance shields the policyholder against various unanticipated events such as trip cancellations, medical emergencies, and loss of luggage either on domestic or international level. One of the key prerequisites for purchasing travel insurance in India is the documentation required for KYC.
Know your customer shields the policyholder against various unanticipated events such as trip cancellations, medical emergencies, and loss of luggage.
The process involves the verification of the identity and the address of the people seeking insurance. It is designed to protect all the financial institutions against fraud, corruption, money laundering to name a few. So, KYC is required for travel insurance as it involves financial transactions.
What documents are essential for updating KYC?
Insurance providers carry out KYC documentation to ensure that the insurance policy is being issued to the right person. Different insurers may ask for diverse documents for authenticating KYC.
The majority of the insurers ask for the following documents:
Photo ID: KYC is conducted to verify the identity of the person purchasing travel insurance. The process checks fraudulent identity usage for acquiring insurance coverage. Generally, the essential KYC documents include an Aadhar Card, a Voter Id, a valid Passport, or a valid Driving license, for the authentication process. If you are using your passport as your ID, make sure it has validity above 6 months.
Address Proof: Documents to validate the address of the insurance holder are required for the KYC process. For this, you require a document with address proof such as an electricity bill, a phone bill or a rent agreement if any.
Income Proof: Some insurance companies while conducting the KYC also ask for an income proof. This is generally required when policies with a high insured sums are considered. Documents such as a salary slip or an income tax return are used as proof.
Here are a few advantages of completing KYC for travel insurance:
It facilitates fast processing: Completion of the KYC process expedites the processing of travel insurance coverage. Once the KYC verification is complete, the insurance policy is issued in no time.
Facilitates Easy Claim Settlement: Completion of the KYC process also simplifies the claim settlement process, which otherwise is a cumbersome process. Since the insurance company already has relevant documentation and information on record, settling the claim and dispensing with finances becomes easier for them.
It guards against fraud: Completion of the KYC process establishes transparency between the insured and the company. It mitigates the risk of any fraudulent activities such as using false or stolen identities, by ensuring that the policy is extended to the right person.
Summing up
One of the key prerequisites for purchasing travel insurance in India is the documentation required for KYC. To sum up, we can say that KYC is an essential part of the due diligence process for insurance providers in India. It helps maintain the integrity of the insurance industry, protects customers' interests, and ensures compliance with regulatory requirements. Completion of KYC is essential before purchasing a travel insurance plan.
