Apart from the Loss to Vehicle and Third Party Cover, all insurance companies offer add-ons to the policy. These add-ons come at an extra premium and will give you extra cover.

The most common add-ons are:

1. Personal Accident Cover For Owner Driver (PA)

This provision deals with Personal Accident cover and only the registered owner in person is entitled to this cover where he/she holds an effective driving license.  The extra cost is usually around Rs 100 for a maximum cover of 200,000/-

Hence Personal Accident cover cannot be granted where a vehicle is owned by a company, a partnership firm or a similar body corporate or where the owner-driver does not hold an effective driving license.

In all such cases, where compulsory PA cover cannot be granted, the additional premium for the cover for the owner – driver will not be charged and the compulsory P. A. cover provision in the policy should also be deleted. Where the owner-driver owns more than one vehicle, PA cover can be granted for only one vehicle as opted by him/her.

The maximum limit is Rs 200000 for private car provided always that

1. Compensation shall be payable under only one of the items (1) and (4) above in respect of the owner driver arising out of any one occurrence. That is to say that a claimant cannot claim twice. Once for Loss of limb and other for permanent disablement.

1. No compensation shall be payable in respect of death or bodily injury resulting due to

1. 1. Intentional self injury or attempted suicide
   2. Under the influence of intoxicating liquor or drugs

2. Personal Accident Cover to the insured or any named person other than paid driver or cleaner

3. Personal Accident Cover to unnamed passenger other than insured and the paid driver and cleaner

4. Personal Accident Cover to paid driver

The above category of people can be covered for any Personal accident upto a maximum of Rs 200,000. The cover is applicable only to a maximum of the number of seating capacity of vehicle.

Conclusion: Before buying insurance for your vehicle it is advisable to discuss the above subjects with the agent and get a proper written quotation from the insurer.

Note – It’s always better to get the quotation from insurer rather from any intermediary or service provider.  File the quotation and check the policy document and reassure all the covers are mentioned in the document. This will help us avoid any surprises when faced with a situation where we need to claim.

When considering a life insurance policy with riders, make sure to understand the exclusions in the policy. For example, under Term Insurance, if the insured person commits suicide, whether sane or insane, within one year from the date of commencement of a term policy, the cover will become void, i.e. the nominee cannot claim the sum assured. Only the premiums paid up to the date of death will be refunded; after deducting the expenses incurred by the insurer for issuing the cover.

Why is life insurance important? Is it something that you should consider? Have you thought about your family’s financial state, or your security after you’ve retired? How will you take care of them, or yourself?

Before we get into the whys of life insurance, here’s a brief overview:

Types of Insurance

There are four types of insurance: Life, Fire, Marine and Miscellaneous Insurance. Life insurance is treated separately, while Fire, Marine and Miscellaneous insurance all fall within the General Insurance umbrella.

What is Life Insurance?

Life insurance is a policy that may be bought from a life insurance company, which helps beneficiaries financially after the owner of the policy dies. It is a contract between the policy owner (you) and the insurer (the life insurance company), which assures the paying out of a sum of money in the event of the policy holder’s death, or terminal or critical illness. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, and war. The cost or premium on your life insurance decides the type and kind of coverage you get under a life insurance plan.

Life Insurance can also be a form of savings in the long run, which we will discuss shortly, or it can be tied in with a pension plan. Life insurance can provide security, protect home mortgages, and facilitate other retirement savings.

Life Insurance in India

The Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999, have made life insurance in India a federal matter. Therefore, all life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA), irrespective of whether they are state-owned (Life Insurance Corporation of India) or private (ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance Company).

Types of Life Insurance

Taking out a life insurance policy covers the risk of dying early, by providing for your family in the event of your death. It also manages the risk of retirement – providing an income for you in non-earning years. Choosing the right policy type with the coverage that is right for you therefore becomes critical.

There are a variety of policies available in the market, ranging from Term Endowment and Whole Life Insurance, to Money Back Policies, ULIPs, and Pension plans. Let’s see what each of these is about, so that you can consider the one that best suits you.

Term Insurance

Term Insurance, as the name implies, is for a specific period, and has the lowest possible premium among all insurance plans. You can select the length of the term for which you would like coverage, up to 35 years. Payments are fixed and do not increase during your term period. In case of an untimely death, your dependents will receive the benefit amount specified in the term life insurance agreement.

You can customise Term life insurance with the addition of riders, such as Child, Waiver of Premium, or Accidental Death.

Endowment Insurance

Endowment Insurance is ideal if you have a short career path, and hope to enjoy the benefits of the plan (the original sum and the accumulated bonus) in your life time. Endowment plans are especially useful when you retire; by buying an annuity policy with the sum received, it generates a monthly pension for the rest of your life.

Whole Life Insurance

Whole Life Policies have no fixed end date for the policy; only the death benefit exists and is paid to the named beneficiary. The policy holder is not entitled to any money during his or her own lifetime, i.e., there is no survival benefit. This plan is ideal in the case of leaving behind an estate. Primary advantages of Whole Life Insurance are guaranteed death benefits, guaranteed cash values, and fixed and known annual premiums.

Money-Back Plan

In a Money-Back plan, you regularly receive a percentage of the sum assured during the lifetime of the policy. Money-Back plans are ideal for those who are looking for a product that provides both – insurance cover and savings. It creates a long-term savings opportunity with a reasonable rate of return, especially since the payout is considered exempt from tax except under specified situations.

ULIP

Unit-linked Insurance Plans (ULIPs), introduced by the private players, are hugely popular, because they combine the benefits of life insurance policies with mutual funds. A certain part of the premium is invested in listed equities/debt funds/bonds, and the balance is used to provide for life insurance and fund management expenses.

Pension Plan

Insurance companies offer two kinds of pension plans – endowment and unit linked. Endowment plans invest in fixed income products, so the rates of return are very low. Unit-linked plans are more flexible. You can stop contributing after 10 years and the fund will keep compounding your corpus till the vesting date. You can opt for higher exposure in the stock market for your plan if your risk appetite allows it. Lower risk options like balanced funds are also offered.

Riders: Comprehensive coverage

In addition to the insurance plan of your choice, you might want to consider additional risk covers, in which case you can you can opt for riders: additional benefits that can be purchased with an insurance policy. Examples of riders include the Term rider, the Accidental Death Benefit rider, and the Critical Illness rider. Choosing the right set of riders ensures a comprehensive insurance cover.

When considering a life insurance policy with riders, make sure to understand the exclusions in the policy. For example, under Term Insurance, if the insured person commits suicide, whether sane or insane, within one year from the date of commencement of a term policy, the cover will become void, i.e. the nominee cannot claim the sum assured. Only the premiums paid up to the date of death will be refunded; after deducting the expenses incurred by the insurer for issuing the cover.

As important as it is to buy Life Insurance, it is even more important to pay your premiums on time. A life insurance company provides the insured with a grace period of 30 days i.e. a period of 30 days after the start date of the policy. The insured can pay premium on any day during this grace period. In case the insured dies during the grace period, the insurer is liable to pay the death benefit to the nominee less any amount outstanding (including the unpaid premium). This provision helps the insurer to minimise the risk of policy lapse unintentionally.

In these uncertain times, you’re better off planning ahead, and securing the future for yourself, and your family. Arm yourself with the facts for an assurance of a lifetime of security.

One of the most popular and important riders added to an insurance policy is the ‘Waiver of Premium’  rider. If this rider is a part of one’s insurance policy, it ensures that the premiums to be paid by the insured are waived in the event that the insured becomes ‘completely disabled’ or loses his source of revenue because of unemployment owing to an injury or sickness. In such a situation, even though the premiums are not paid by the insured, the policy does not lapse.

With the growing uncertainty of life, getting an insurance policy has become a must for almost every individual. When you take an insurance policy, you also tend to add ‘riders’  to the policy. Riders are the additional benefits that you may buy and add to your policy. They are options that allow you to enhance your insurance cover, qualitatively and quantitatively. Riders can be mixed and matched based on one’s preferences for a small additional cost.

One size does not fit all

A one size fits all approach does not apply to insurance policies. Therefore, the kind and number of riders added to an individual’s insurance policy depends on the many factors such as the individual’s health, future plans, purpose of the insurance etc.

One of the most popular and important riders added to an insurance policy is the ‘Waiver of Premium’  rider. If this rider is a part of one’s insurance policy, it ensures that the premiums to be paid by the insured are waived in the event that the insured becomes ‘completely disabled’ or loses his source of revenue because of unemployment owing to an injury or sickness. In such a situation, even though the premiums are not paid by the insured, the policy does not lapse.

What is a waiver of premium?

A waiver of premium is an extra option life insurance companies provide you with on top of your purchased life insurance policy at an additional cost. This offers protection and cover for your premiums if you should fall seriously ill or incur injuries that leave you impaired – in a situation where you cannot earn. In such an unfortunate event, the life insurance company will become responsible to pay the premiums which you were expected to pay.

The best part about this rider is that anyone who takes up the insurance policy can effectively add this rider to the policy. The amount of premium to be paid depends on the premium you pay on the base policy and on other riders. The higher the premium on the base policy, and the more the riders you add, the higher will be the premium you pay on this rider.

Is it worth it?

Many ask whether this rider is worth being latched on to the base policy. With the increasingly stressful lifestyle, hazardous traffic situations and a horde of other factors, addition of this rider to an insurance policy would be very helpful. This rider also ensures that in the event of death of the insured during the term of the policy, the policy does not lapse and remains in force even during the Auto Cover period. The Auto Cover Period is a term of two years during which full death cover continues even if the insured has not paid premiums – subject to at least two full years’ premiums having been paid.

One other feature of this rider that bears attention is the fact that the premium paid for this rider qualifies for tax deduction under section 80D of the Income Tax Act.

How is it useful?

This rider is especially useful in a child insurance policy as this primarily has been set up in place to provide money for your child in the hour of his or her need.

In the case of a child insurance policy, where you are ensuring your child receives a sum of money at a certain pre-defined age, this will ensure that the process is uninterrupted and premium payment is continued, so that your child receives the money at the pre-determined date.

Imagine the scenario if do not opt for this and end up in an unfortunate situation, where you are unable to pay your premium and the policy lapses. Then it would be no good to anybody, so to have this drawback plugged, its better to pay up the additional cost to ensure continuity in the premium payment.

The terms and conditions regarding what constitutes serious illenss or injury and conditions regarding the time frame when the premium payment starts by the insurer etc.  are defined by the insurance company and may vary from one company to another. Be sure to research on this thoroughly and understand the clauses and conditions of the insurance company until you choose an option offered by a company with which you are most comfortable with.

Usually, the premium paying term for the rider is throughout the benefit period but a few companies restrict the time frame to the policy owner attaining a particular age or for a maximum duration of 25 to 30 years.

Therefore, choose riders according to your need and budget. Sometimes its is the choice that we make that will help us through tough times.

Choosing the right kind of insurance cover not only determines the care that we receive should our health take a wrong turn, but it can be the wild card in your financial plan. There are many benefits of an insurance cover; however, topping the list of benefits is the financial support that a family gets in the event of the untimely death of the income provider. As getting the insurance cover is an important aspect of a sound financial future, choosing the right insurance cover is equally important.

With the increasingly uncertain times, what with terrorist attacks and tumultuous financial markets, getting an insurance cover for you and your family has become imperative. However, many of us do not take decisions because of it being such a big ball of wax.

Choosing the right kind of insurance cover not only determines the care that we receive should our health take a wrong turn, but it can be the wild card in your financial plan. There are many benefits of an insurance cover; however, topping the list of benefits is the financial support that a family gets in the event of the untimely death of the income provider. As getting the insurance cover is an important aspect of a sound financial future, choosing the right insurance cover is equally important.

First and foremost, choosing an insurance policy must be based on your current and projected income or simply put your current and projected ability to pay the insurance premiums, your medical state, your age, future financial plans etc.

Secondly, you also need to look at:

Cost-Benefit Ratio

The cost of the insurance cover depends upon many reasons, some mentioned above and other factors depending on what is covered in the cover or its riders. Thus, you have to keep a close eye on the cost of buying insurance and ensure that it justifies the benefits covered under the policy. Simply put, a right balance must be struck between the cost and benefits available.

Cover

You need to ensure that the insurance covers all your dependants and that it also covers the majority of health problems.

Thirdly, the promises made by different insurance companies are all fine; however, it depends on you whether you need a pure insurance cover or you need an insurance cover coupled with an investment opportunity. The four major kinds of insurances that most people opt from are:

• Term Insurance – Term life insurance or term assurance is life insurance which provides coverage for a limited period of time
• Endowment Policy- An endowment policy is a life insurance contract designed to pay a lump sum after a specified term (on its ‘maturity’) or on earlier death.
• ULIPs – Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time.
• Money-back Policy – Unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, money back policies provide for periodic payments of partial survival benefits during the term of the policy

When comparing between these plans it is important that you keep in mind the factors that were talked about in the first point. Let’s take a look at an example:

Arun is a 25 year old businessman who wishes to take an insurance cover for Rs. 20 lakh for a period of 20 years. There are two options he can choose from.

• Option 1 – He can opt for an endowment/money-back policy and pay a premium of Rs 90,000 annually. If he survives through the policy term, he shall be eligible to receive the entire sum assured and vested bonuses, if the same are declared by the insurance company.
• Option 2 – He pays Rs 4,000 annually and enjoys the risk cover of Rs 20 lakh. Being a term insurance cover, he is not eligible to gain any survival benefit from the insurance company and the insurance premium paid can thus be treated as the cost of covering his life for 20 years.

Whereas under Option 1, he has earned an annualized return of about 6%; Option 2 gives him about 9% returns during the period. Therefore, it is important for Arun to decide what he wants and opt for a plan accordingly.

It’s important to correctly identify your dependants’ financial needs to establish just how much life insurance cover to arrange. A general rule is to choose a policy providing at least ten times your salary, but more may be appropriate, with the amount varying depending on how you intend it to be used. Basically you decide how much you want your dependants to receive in the event of your death, and your premiums will be determined accordingly. Hence, make sure you keep all these factors in mind, compare different plans and choose your cover accordingly.

Make provision for important events in your dependents’ lives. Your dependents will experience certain important life events, and you have to provide for these events. E.g. illness of the dependents, children’s education and marriage. Also once your children leave home or start working, then your household expenses will reduce. So from then on, you just have to think about your spouse.

Satish was married with a wife who was a homemaker and a 2 year old son. He bought a life cover of Rs. 5lakhs. But one day, Satish met with an accident and passed away on the spot. His wife got the sum assured from the insurance cover. However the claim amount she got was very less. She found it difficult to meet her household expenses after the untimely demise of her husband, as the compensation she received was not enough to meet her regular household expenses. Why did it happen? The reason: HLV was not taken into account when determining the life cover for Satish.

Here we cover what is HLV, its importance and the steps to determine the actual HLV. 

What is HLV?

HLV or Human Life Value is the probable income of the insured person, or the total income the person is likely to earn during the remaining part of working life. E.g. A person aged 24 will work till 60 years of age. If he is expected to earn Rs. 90 lakhs throughout his life, then his HLV is Rs. 90 lakhs. This is not the actual income but rather the target that you should try to achieve in order to live a secure life and to take care of your dependents should you die in unfortunate incidence.

Importance of HLV

We all want our dependents to remain safe and well provided for in case of our death. This can be achieved by buying the appropriate insurance cover. To get the correct insurance cover, you must compute the HLV. Unfortunately most people tend to ignore this important calculator.

Steps to calculate HLV

Are you wondering how to calculate HLV? Then here are 6 simple steps to help you achieve that goal.

- Calculate the period over which you intend to provide for your dependants. If you are married, the period should include the remaining lifetime of your spouse. To do this you have to assume how long you expect your spouse to live. Then subtract your spouse’s age from this expected lifespan. E.g. if your spouse is 35 and you expect your spouse to live for 100 years, then you will be required to provide for next 65 years.

- Make provision for important events in your dependents’ lives. Your dependents will experience certain important life events, and you have to provide for these events. E.g. illness of the dependents, children’s education and marriage. Also once your children leave home or start working, then your household expenses will reduce. So from then on, you just have to think about your spouse.

- Calculate your present household expenses. Find out what are your present monthly expenses and from that deduct the amount you spend on yourself. E.g. if your monthly household expenses is Rs. 30,000 and you spend Rs. 10,000 on yourself. In case of your death, your dependent’s monthly household expenses is Rs. 20,000 (Rs. 30,000 – Rs. 10,000) or Rs. 2,40,000 per year.  So you should provide for this sum after taking into account the inflation.

- Calculate the effect of inflation on expenses. This is essential to compute the future household expenses. This is important step in the process of computing HLV. Inflation can erode the value of money. So if you have not considered inflation, the provision you make for your family will lose its worth. Hence for longer periods, you have to take into account the effect of inflation on the expenses.

- Find out the current value of your expenses. This is the next step in calculating HLV. A rupee spent in future is worth less than the rupee spent today. This happens due to inflation. E.g. Rs. 1000 today will be worth less in 5 years from now. So you have to calculate the value of your future expenses in current monetary terms. It will give you an estimate of the amount you should put aside for your dependents.

- Take into account the current value of current liabilities and medical expenses. If you have any unpaid loans and/or medical expenses should be considered while calculating HLV. This is because in case of your untimely death, your dependents will have to pay off.

Once you complete all the above steps, you have reached the correct HLV. But remember, computing HLV is not a one-time affair. It is a continuous process as you move through life. Any change in your lifestyle will mean fluctuation in the expenses. Also you are assuming certain things like rate of inflation, how long you expect your spouse to survive etc. These will affect your HLV and so it is advisable to calculate it each year to ensure your dependents are sufficiently provided for in case of your death.

Generally, we are very cautious while taking a loan or a life insurance policy to save those last minute surprises. But most of us have a misconception about general insurance that choosing a tailor made policy will take care of you and your belongings. Besides the required coverage and sum insured, it is important to ensure that the final policy document of a general insurance should comply with all the terms that the agent / insurer has agreed with you.

A few things that should be cross checked in a GI policy

Personal Details-

In case of health insurance policies even a misspelled name or a wrongly entered age can cause rejection of a claim. For others, a full description of the property has to be given to the financier. Commercial policies should have correct door numbers if the insurance is for a building and correct serial numbers in case of machinery.

Vehicle Details-

Vehicle models or seating capacity can be entered wrong if the software of the insurance company is not updated with that particular vehicle model. If you have made any alterations in the vehicle, like seating, LPG kit etc, check whether it has been entered in your policy. Errors in registration numbers can also cause disputes when claims arise.

Hypothecation-

If your belongings are hypothecated to any bank or financial institution, the details of the same should be mentioned in the policy. This is because in case if the property is lost, the claim has to be settled against the financier and not to the insured.

Address-

The address of the insured to which all communications in respect to the insurance contract should be sent is important. There is a practice among agents to direct the communications of their clients through them. It is better to make communications direct than routing through agents, as there are chances of delay or failures in passing them on the right time. For example, a renewal notice if not reached on time can put you in trouble if a claim comes during the lapsed time or you can lose your No Claim Bonus.

Period of Insurance-

Always check the date of issuance of the policy. Delay can happen in policy issuance even if you had paid cash for renewal to your agent. Always ensure that your policies are renewed at least a day before the date of expiry. Because, in case if an event occurs even in an hour’s gap between policy expiry and renewal, the claim will not be considered.

Sum Insured-

Ensure that correct estimate of the assets are made, to avoid the risk of under insurance or over insurance. For commercial policies, the average value of the products in your premises and their possibilities of wear and tear should be mentioned. Don’t ever compromise on asset value for getting a lower premium. Cross checking the insured amount and value of your assets on a regular basis is highly recommended.

Things Covered and Not Covered-

Insurance companies today sell products in combinations as package policies, both pre underwritten and underwritten after considering the needs of customers in different segments. Ensure that your policy covers all your needs, considering all risk factors associated with your product service or belongings.

Deductibles-

Always check if there are any special conditions attached to the policy like loadings, voluntary / compulsory excesses. For a bargaining customer, the agent / company would give the policy at lesser rates compromising any of the mentioned. This could trouble you at the time of making a claim.

Take time to go through the underwriting guidelines to know about the coverage, extensions, riders, omissions, voluntary / compulsory deductibles. These may vary from product to product and company to company.

Third Party Insurance

The obligations of the insured in relation to the subject matter of insurance to those who are associated with it in case of occurrence of a claim are covered under the third party section of the policy.

For example, if a fire damages a customer’s car in your workshop, you are liable to your customer also. In auto-loans third-party component is compulsory. But in others we can make a choice considering the possibilities.

Carefully choose them in consultation with an expert in the field and check with the policy documents whether all are covered.

Policy Endorsements

If there are errors in the policy, it can get endorsed from the insurer, but ensure that you receive the endorsement certificate duly signed and stamped from the branch.

Policy Cancellation

All policy holders have the right to cancel a policy within 15 days of receipt of the policy document, if they are not satisfied with the policy terms and conditions or on grounds of misrepresentation, non-disclosure of material facts or non-cooperation of the insured. Refund of the premium will be made, subject to deduction of a proportionate risk premium for the period on cover and the expenses incurred by the insurer on inspection.

It is suggested that you get all your insurance needs fulfilled by a single company. This will help build a good relationship which is useful both in terms of discounts as well as claims.

Photo credits : team dalog

Third party Car insurance policy covers only the inter-alia accountability of the vehicle owner for loss or damage to life or property of the third parties. Whereas comprehensive Car insurance policy covers in addition to third party accountability, loss or damage to the vehicle itself by way of accident, theft, etc. and specified dangers

All of us having motor vehicles have to go through the yearly ritual of buying Insurance on our car; Motor insurance as the market calls it. This article tries to demystify the jargon and processes involved in General Insurance.

The basic jargon:

Insured - Owner of the private car

Insurer - The Insurance Company

Under the provision of motor vehicles act all vehicles running in the public should have car insurance policy. The car insurance policy can be either

• Third party or
• Comprehensive insurance policy.

Third party Car insurance policy covers only the inter-alia accountability of the vehicle owner for loss or damage to life or property of the third parties.

Whereas comprehensive Car insurance policy covers in addition to third party accountability, loss or damage to the vehicle itself by way of accident, theft, etc. and specified dangers

Motor Insurance Policy Covers

Section 1. Loss of or damage to the vehicle insured

The company will reimburse the insured against the loss or damage to the vehicle insured for the following

• 1. by fire, explosion, self ignition or lightning
  2. by burglary, housebreaking or theft
  3. by riot & strike
  4. by earthquake
  5. by flood, typhoon, hurricane, storm, tempest, inundation, cyclone
  6. by accidental external means
  7. by malicious act
  8. by terrorist activity
  9. whilst in transit by road, rail, inland-waterway, lift, elevator or air
  10. by land slide, rockslide

Cost of protection to the nearest car repair service- Rs 1500

Vehicle Valuation

The car is neither to be insured for reinstatement value nor for depreciated value. It is to be insured for second-hand value in the local market for a similar type of car for a similar model. In the event of loss, the liability of insurance company is the maximum compared to the market value or the amount of insurance whichever is less.

Factors determining premium of a car

• cubic capacity
• Year of car
• Geographical Location
• Value of car proposed
• Various extensions opted for

What does company pay in case of claim for comprehensive cover?

In case of an accident, the insurance company pays for cost of damaged parts which are to be replaced and the labor cost to repair the vehicle.

Will I be eligible for complete reimbursement?

No, it is all subject to a deduction or depreciation at the rates mentioned below in respect of parts replaced

For all other parts depreciation will be as below

The insurance company will not be liable to make any payment in respect of

• Consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures or breakages
• Damage to tyre and tubes unless the vehicle is damaged at the same time, in which case the liability of the company shall be limited to 50% of the cost of replacement
• Any accidental loss or damage suffered whist the insured or any person  driving the vehicle under the influence of intoxicating liquor or drugs

Section II - Liability to third parties

1. Death of or bodily injury to any person including occupants carried in the vehicle (provided the occupants are not carried for hire or reward)
2. Damage to the property other than property belonging to the insured

Section III - Personal Accident Cover for Owner Diver

Due to bodily injury/death sustained by the owner-driver of the vehicle by violent accidental external and visible means which independent of any other cause shall within six calendar months of such injury results in

Sl. No	Nature of injury	Scale of Compensation
1	Death	100%
2	Loss of two limbs or sight of two eyes or one limb & sight of one eye	100%
3	Loss of one limb or sight of one eye	50%
4	Permanent total disablement from injuries other than named above	100%

Apart from the above covers the private car insurance policy can include the following endorsements at discounts and payment of additional premium

• Discount for membership of recognized automobile associations
• Installation of anti-theft device
• Personal accident cover to the insured or any named person other than paid driver or cleaner
• Personal accident to unnamed passenger other than insured and the paid driver and cleaner
• Personal accident cover to paid drivers

Deductibles

It means the minimum amount which cannot be claimed

• 1. Compulsory deductible – Rs. 500 for each and every claim
  2. Voluntary deductible – The client whilst taking a policy can decide on voluntary deductibles through which the insured may avail a discount on the premium
  3. Legal liability to employees of the insured other than paid driver who may be traveling or driving in the employers car

The sample insurance policy detailed above is the traditional insurance policy still operated in India. Few insurance companies like Cholamandalam, TATA AIG have launched new motor insurance policies which cover even depreciation, loss of driving license, daily allowance whilst at the garage. Keep reading this column to know more.

Flood insurance denotes the specific insurance coverage against property loss from flooding. The protection offered by most policy covers losses incurred due to some failure at the home itself. However, Flood insurance indemnifies the insured for the loss of property that occurs specifically due to overflowing water bodies or flood. Flood insurance is specifically needed for properties situated in flood-prone areas.

Shubhodeep, a civil engineer by profession, led a very happy life in Orissa, with a beautiful life and two adorable kids. All in all after buying his own house, he thought he had everything that a humble man like himself would want. Unfortunately, nature had other plans for him. A devastating hurricane hit Orissa, flooding the area that he used to live in and Shubhodeep had to evacuate the house. In an instant he had lost his house that he had strove hard for and his beautiful life crumbled around him.

This is a situation that anyone of us who stay in area receiving heavy rainfalls might face. This scenario may also be true for people where floods are not a frequent phenomenon. Who would have imagined a submerged Mumbai!? However, safeguarding ourselves from natural calamities like floods is important. That’s where flood insurance might help you.

Flood insurance denotes the specific insurance coverage against property loss from flooding. The protection offered by most policy covers losses incurred due to some failure at the home itself. However, Flood insurance indemnifies the insured for the loss of property that occurs specifically due to overflowing water bodies or flood. Flood insurance is specifically needed for properties situated in flood-prone areas. A flood insurance policy has to be taken separately because most policies do not cover the natural disaster of flooding. Flood insurance, however, is not a very popular insurance option in India.

Benefits of Flood Insurance

• Compensation for the loss of property due to flood
• Personal belongings can be covered
• Insurance may also cover loss caused due to overflowing of other water bodies, clogged storm drains, melting snow, etc.

Types of Flood Insurance

There are two types of flood insurances:

• Building Property Coverage – This type of policy covers the insured building and the electrical and plumbing systems, furnaces, water heaters, centralized air conditioning system, cooking stoves, refrigerators, built-in appliances, window blinds inside the building. It also covers the insured for the cost of the debris removal. However, a separate clause or policy needs to be taken for structures outside the insured building.

• Personal Property Coverage - This type of coverage compensates against the loss of personal belongings, such as furniture, electronic equipment and clothing. It also covers curtains, air conditioners (both window and portable), clothes washers and dryers, portable microwave ovens and dishwashers, food freezers, including stored food, and carpets that were included in the building coverage. Furs, original artwork and other such valuable items can also be covered.

The following are excluded from the cover

• Cash, jewelry and valuable certificates
• Damage arising from mold, mildew and moisture
• Temporary housing and other living expenses, cars and other self-propelled vehicles (including their parts) and the loss caused to business due to interruption.
• Any property such as decks, fences, patios, hot tubs, seawalls, swimming pools, wells, plants, trees and septic systems located outside the building

The premium for flood insurance depends on a variety of factors, foremost of which is the flood zone or flood plain in which your house is located.

Flood insurance being something that is not very popular in India, you may need to check with your insurance company whether they offer this kind of insurance.

The most neglected is health insurance. Most often this tax saving instrument is brushed aside with the logic that after all it’s an expense (no monetary gains) and well we all save for the “rainy day”. So why incur an additional expense? The moot point – Is it truly an additional expense?

It’s soon going to be time for filing income tax returns. Most of us will be in a hurry to make the most of the tax deductions available. It’s done in haste to meet the deadlines. How many of us look at tax planning from a holistic perspective?  How many of us have discussions on what would be the best tax saving instrument to utilise from a variety of perspectives- returns, coverage, benefits among others. The most neglected is Health Insurance. Most often this tax saving instrument is brushed aside with the logic that after all it’s an expense (no monetary gains) and well we all save for the “rainy day”. So why incur an additional expense? The moot point – Is it truly an additional expense?

Why should Health Insurance be given due consideration?

- Medical Inflation: Prices of medicines and treatment are constantly on the rise making it difficult to rely on savings.

- Lifestyle related issues: Increase in incidence of medical problems due to

- The stressful environment we work in

- Change in the eating habits – fast food and meals at irregular hours

-  Irregular sleep patterns

- Dependents: If you have dependents and are overwhelmed with responsibility, the  health insurance coverage can come to your rescue.

- Health insurance coverage will release you from the burden of worrying how much to save for the rainy day. After all how much is enough?

Case Study

Imagine a situation where due to a medical emergency Mr. X had to be admitted to a hospital for an operation and the bill comes to a whopping Rs. 1 lakh- Guess what? Mr.X does have health coverage which covers this medical emergency and is within the overall limit. Mr. X would not have to shell out a penny. Neither Mr. X nor his family will have to undergo any financial strain. Isn’t the premium more of an investment than an expense? So what if there is no claim every single year. Didn’t it help Mr. X reduce the burden of worrying on an important parameter- saving for health related emergencies? Besides, most insurance companies provide some incentive for every claim free year (5% is added to the sum assured).

Your work does not end at making the decision of buying a health insurance product, choosing the right one is equally important. There is a bouquet of products in the market offered by several public and private insurance players. Earlier only general insurance companies and pure-play health insurance companies offered health related products but now even life insurance companies have entered this domain. So in all you have almost 30 players in the market offering health insurance products- A wide basket to choose from.

Types of Health Insurance Plans:  A Brief Snapshot

Individual Health Plan: These are commonly known as mediclaim policies. They mainly cover hospitalisation expenses provided it is for at least 24 hours. Usually pre-existing diseases are not covered. Claims for specific ailments may not be allowed in the first or second year. For every claim-free year, most plans add 5 per cent to the sum insured.
Family Floater Policy: As the word suggests, this is a plan that will cover members of the family. Single premium is to be paid for the entire family. The benefits of the policy are similar to the individual health plan except for the fact that the sum insured can be availed by any or all members of the family and not a single person. Thus it has an advantage over an individual plan if more than one plan is required in a family. E.g. If a one lakh policy is required person, your family will need two individual policies if there are two people. Instead, if one family floater policy is taken for the two of them, for two lakhs, the coverage for each member will be Rs. 2 lakhs unlike the individual plan where the coverage per person is one lakh.

Critical Illness Plan- Add on: This product is not a substitute for any mediclaim plan (simple traditional product); instead it is a rider that could be added to it. This rider provides coverage if the insured develops a list of ailments spelt out by the company, generally of a serious nature such as cancer, coronary heart disease, stroke among others. If critical illness occurs, the company pays the entire sum insured.

Senior Citizen Health Plan: These plans are available for people between the age of 60 and 80 years. The coverage is generally fixed and the policy can be renewed lifelong or in some instance up to the age of 90 years. Read the fine print carefully on illness covered. An add-on in the form of a critical illness plan may be required.

Unit Linked Health Plan: This is a plan that serves dual purpose- coverage and returns. Part of the premium goes towards coverage and the balance is invested in a fund that functions like a mutual fund (a mix of debt and equity instruments can be chosen)

Things that may matter

Read the fine print carefully: The devil usually lies in the details. So a careful reading would help.

Product Details: Make sure you have carefully read about the exclusion of diseases such as pre-existing illness etc. Be aware of the sub-limits in the policy for specific expense heads.
Claim Settlement: There are two ways in which settlements are made. Reimbursements and Cashless settlements. In order to avail of the cashless settlement facility, the network hospitals should be utilised. Make sure you have details on the same. Take note of the time you have at hand to notify the required party for claim. Third party administrators (TPA) handle claim settlement on most occasions. At this point, claims on health insurance are very high in India, so if you want your claim to pass through smoothly, kindly follow the rules outlined.

Documentation: For any claim settlement, proper documentation is a must. Please ensure that documents are kept safely and also keep a tab on the premium payments (monthly, quarterly, semi-annually or annually) else the policy will lapse.

Tax Advantage- An incentive

In order to encourage individuals to invest in health insurance, Section 80 D of the Income tax Act provides a deduction on health insurance premium paid

- Up to Rs. 15,000 for self, spouse and dependent children and

- Additional Rs. 15,000 for parents (Rs. 20,000 in case of senior citizens)

So pick up the phone or surf the net and set the ball rolling. Remember “Health is Wealth”. We all believe in it. It’s now time to act.

Little is known about a wine taster who insured his nose for $8 million. The man’s name is Ilya Gort, and his nose is so vital to his job at his French vineyard that Lloyd’s of London wrote an insurance policy protecting him should he lose either his nose or his sense of smell!

What kind of insurance covers have you heard of? Let’s see - medical, life, property, auto. What about body parts? Yes! Even parts are being insured by insurance companies.

Think about this. If you were a famous pianist and your source of livelihood was your music, then wouldn’t you want to insure your hands because quite literally, it’s those hands that feed you!

Celebrities are known by one of bodily features and it serves as their means of livelihood and fame. Therefore, it is important for them to safeguard what brings them fame and money! Even though this kind of insurance is yet to get a hold in the Indian market, celebrities like Lata Mangeshkar and Sania Mirza have insured their voice and hands respectively. The Vanguard Olympic bronze medallist boxer, Vijender Singh, is contemplating getting his hands insured in the near future from Bajaj Allianz.

Normally body part insurance is more than Rs 50 lakh to Rs 1 crore or more. These are no traditional policies, as they are customized according to individuals. The general insurance arm looks into this type of insurance and, usually, the policy is for a year and renewed thereafter.

Though this kind of insurance is still in its nascent stages in India and insurance companies do not normally have ready policies for such insurance requests, this kind of insurance has been available in the West for a very long time. The insurance scene there is dominated by movie stars and singers and the foremost among insurance companies has been Lloyd’s of London.

Look at these examples:

- $70 million for footballer David Beckham’s legs and feet
- $1 billion for American singer-songwriter Mariah Carey’s legs
- $6 million covering Bruce Springsteen’s voice
- $5 million for German super model Claudia Schiffer’s face
- $10 million for America Ferrera’s smile (she plays Ugly Betty on a  television show)

Little is known about a wine taster who insured his nose for $8 million. The man’s name is Ilya Gort, and his nose is so vital to his job at his French vineyard that Lloyd’s of London wrote an insurance policy protecting him should he lose either his nose or his sense of smell.

There are many more in the list of the ‘insured’, however, one thing which is sure is that these kinds of insurance covers are meant for celebrities, owing to the big dent it will make in your wallet. Unless, you think you really need to protect your smile to make a living, its better to stick with the traditional types of insurance….. For now!