Important questions to ask before buying insurance
Term insurance plan
Term plans are the purest form of life insurance plans that are cheaper to purchase compared to whole life insurance and unit-linked insurance plans as term plans provide only death benefit and no maturity benefit. Here are 3 commonly asked questions about a term plan:
● Will the insurance premium of a term insurance policy change over the policy period? The answer is no unless any such condition has been mentioned in the policy document. During the policy term, if the life insured discloses any life-threatening habits (like smoking or drinking) or a disability, then the insurance company may revise the premium rate accordingly. Otherwise, the premium of a term insurance plan will remain the same throughout the policy term.
● Do term insurance plans offer death benefit in the case of an accidental death of the life insured? Yes, a term plan will provide death benefit in the case of a natural death or an accidental death of the insured member during the policy term. You can enhance the coverage by attaching riders such as accidental death benefit cover, critical illness cover, and permanent disability cover to the base term policy.
● Will death benefit be provided under a term insurance plan if the life insured dies outside India? Yes, the beneficiaries of the life insured will receive death benefit if the life insured passes away due to natural or accidental causes on foreign land. This is subject to the policyholder previously intimating the insurance company about the move to a foreign country for whatever reason. The insurance company has the right to reject the claim if the life insured moves to an unsafe country.
Health insurance plan
There are a few important factors to keep in mind when purchasing a health cover such as waiting period, coverage, and sum assured:
● What is the waiting period of your health insurance policy? There is an initial waiting period of 30-90 days from the date of policy purchase during which you can't make a claim. Likewise, there are specific waiting periods for pre-existing diseases, critical illness riders, maternity benefit riders, and senior citizen health insurance plans. Read the policy document carefully to find out the waiting period of your chosen health insurance plan so as to avoid a hassle at the time of making a claim. Waiting period differs from insurer to insurer and policy to policy.
● What is the right sum assured amount? Keeping the medical inflation and rising cost of healthcare services in mind, it is important to have sufficient coverage in order to get adequate and timely healthcare treatments. Depending on how big a coverage you want, your age, and annual income, you have to choose the right sum assured. Also, don’t forget to look into sub-limits on room rents and co-pay conditions of your health insurance policy.
● What is covered under your health insurance plan? Find out what are the inclusions and exclusions of your chosen health insurance policy. Most health insurance plans offer coverage for medical expenses such as pre and post-hospitalisation, planned and unplanned hospitalisation, medical check-up, etc. Pre-existing ailments, dental procedures, cosmetic surgeries, and maternity expenses are usually not covered under standard health insurance plans. However, you can purchase riders like critical illness plan, maternity benefit cover, and hospital cash benefit cover to boost your health insurance coverage.
Motor insurance plan
As per the Motor Vehicles Act, 1988, all vehicles on public spaces in India must have a third-party motor insurance policy. Whether you are looking to buy a four-wheeler insurance or a two-wheeler insurance , there are 3 important questions you must ask yourself before purchasing it:
● What type of motor insurance policy should I opt for? A third-party motor insurance policy will offer coverage only against third-party damage whereas a comprehensive insurance plan will offer coverage against third-party damage as well as damage to you and your vehicle. Third-party car insurance policies are cheaper than comprehensive car insurance policies, but you can get better coverage under a comprehensive insurance plan.
● How to reduce your motor insurance premium? The premium rate of a car insurance policy for instance, is determined based on the age, engine capacity, geographical location, and model of the car. Installing safety devices in your car, foregoing making claims for minor repairs, redeeming your accumulated No-Claim Bonus for a discount on the insurance premium, and being a member of the Automobile Association of India are some of the ways by which you can bring down your car insurance premium.
● Should I increase the voluntary deductibles? Another way to reduce your insurance premium is to increase voluntary deductibles which is the sum you pay when making a motor insurance claim. Depending on your income and payment capacity, you can decide to either increase or decrease the voluntary deductible limit of your car insurance policy, and your insurance premium will be adjusted accordingly.
Date: 09/03/2018/ Source: Forbes India