Insurance

When it comes to buying a car insurance policy, an Indian buyer has more than one alternative. There is a mandatory policy prescribed by the regulatory body, but apart from that, there are a couple of more alternatives too. Also, selecting a car insurance policy must be based on your requirements. This makes it even more necessary to know what the features of each type of policy are and how they benefit you.

Whether you are buying a car insurance policy for the first time or due for your renewal, the selection of the right policy is essential and should be considered. This article helps you to compare how each available option differs from each other based on some common criteria –

Third-Party Car Insurance

Starting with third-party policies, it is the most basic car insurance coverage that you can buy. The regulator, Insurance Regulatory and Development Authority of India (IRDAI), has made it mandatory for all types of cars, whether used for private or commercial purposes to have a third party car insurance policy. A third-party plan protects your car against liabilities that can result due to an accident or injury to a third person. Since it is mandatory for all cars to have a third-party insurance plan, it is most affordable of all available options. The premiums for a third-party policy are decided based on the cubic capacity of your engine.

Comprehensive Car Insurance

If you find the coverage from a third-party policy limited in its scope, you can choose to opt for a comprehensive car insurance policy. This change or upgrade is even possible at the time of car insurance renewal. A comprehensive plan covers the damages to your car along with third-party liabilities. Further, this plan can be customised using add-on covers. Different add-ons have different purposes thereby being available for every kind of coverage sought. When it comes to pricing, a comprehensive policy is the most expensive of the lot due to the extensive coverage it offers and increases based on selected add-ons.

Usage Based Car Insurance

Usage based plans are a new type car insurance where the insurance coverage is for a specified duration. Alternatively, this type of insurance is also known as telematics insurance. Here, a specific device is installed in your car to monitor the driving based on kilometres and accordingly coverage is provided. A usage-based insurance is ideal for those who drive their cars not often yet want a complete peace of mind with an appropriate insurance cover. The cost of installing the telematics device is also included in the insurance cover. Unlike other types of insurance plans, the duration of a usage-based policy isn’t defined at the beginning. It depends on how much your drive your vehicle and is valid for a specified number of kilometres.

Now that you know what the differences between the various insurance plans are, make sure to compare the benefits available under each alternative and accordingly select the one that fits you the best. Afterall, having a car insurance policy is that help you have a financial backup as well as mental security.  Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

Health insurance policies are of prime importance in today’s day and age. With the soaring cost of medical treatment, it is necessary to have a financial safeguard. But not all health insurance plans are the same. Different health insurance plans have varying terms and conditions. That is why it is essential to thoroughly understand the implication of such terms and then purchase a health insurance policy.

What are sub-limits to a health insurance policy?

Among the many terms and conditions, sub-limit is one of which that needs special attention. As the name suggests, it limits the amount of expenses that you can claim. Thus, a policyholder may not be allowed to raise a claim the entire amount of that medical expenditure. It results in a higher amount that needs to be borne by you, the policyholder, when making a claim thereby increasing your out-of-pocket expenses. You must note that sub-limits do not exclude a particular category of expenditure entirely, but instead impose a capping on the compensation paid for such category of expenditure. Further, these sub-limits are not applicable on the entire bill amount but instead only a specific category of expenditure like room rent or on the treatment of certain diseases.

What are the different types of sub-limits?

There are three types of sub-limits that may be imposed in your health insurance policy.

Sub-limit on specific medical condition: With increasing instances of lifestyle diseases, there are many ailments that are commonly suffered by majority of the population in a specific age-group. To quantify it, almost three out of five individuals face them. High blood pressure, kidney stone, cataract, piles, gallstone, hernia, tonsils, knee ligament reconstruction, sinus are some to name a few. The insurance companies place a sub-limit on these procedures wherein only a specified amount of expenditure is covered by the insurance policy. For instance, the insurance company may specify a pre-defined amount of expenses or specified percentage of the sum insured for these treatments. The sub-limit on specific ailments is not only applicable to a claim settled via reimbursement mode, but also a cashless health insurance too. Any amount above such specified limits is required to be paid by you.

Sub-limit on room rent and other charges: Apart from specified expenditure, the terms of the policy may also specify a capping on the amount of expenditure admissible under the insurance policy. The most common case is capping on the room rent charges in case of hospitalisation. Here the insurance company limits the expenditure that can be claimed to a specified amount. Apart from room rent, there are other examples of similar sub-limit for expenditure which are doctor’s consultation charges, ICU charges, ambulance charges and even diagnostic tests.

Sub-limit on post-hospitalisation expenses: Not all treatments can be provided in the hospital itself. Some treatments require medication and other ancillary treatment to be followed up post main procedure. Thus, some insurance policies place a sub-limit on the amount of post-hospitalisation expenses. Any amount exceeding these post-hospitalisation costs shall be required to be borne by you.

Make sure to read the terms of your insurance policy specifying the sub-limits for various expenses. You should select a policy with higher amount sub-limit so that more expenses are covered by your insurance provider. Whether you are buying a individual plan or a critical illness policy, remember to account for these sub-limits to have maximum coverage.  Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

Four-wheeler insurance is mandatory for all vehicles in India. If you are caught driving an uninsured car, you need to pay a fine for violating the country’s laws. Precisely the reason why most of us buy insurance. However, car insurance goes beyond abiding by the vehicle laws of the country.

It offers you financial security if you incur monetary expenses or liability arising out of the vehicle. It covers your financial penalties if your car gets damaged, stolen, or destroyed owing to natural or human-made calamities. It handles your third-party liabilities if the vehicle causes injuries or damage to the third-party person or asset. You also receive compensation if the accident results in your disability or death.

Broadly, you can either buy a third-party or comprehensive insurance plan. The third party covers you against third-party legalities arising from your car. On the other hand, you receive broader coverage under a comprehensive plan by including add-ons.

Which is the ideal plan for your car?

The ideal car policy is the one that provides adequate coverage to pay off the financial liabilities arising out of your car without paying costly premiums. You need to strike the right balance between insurance coverage and premiums.

Thus, before buying the car insurance policy, you should thoroughly analyse the coverage you will receive for your premiums. Use the insurance calculator to know the premium of the plan accurately. You can find the instrument easily online and check different premiums offered by other insurers.

The auto insurance calculator considers parameters like insurance type, car details, geographic location, add-ons, and the IDV for determining the policy premium. The IDV is the biggest factor that influences the premiums of the comprehensive policy.

What is IDV?

The Insured Declared Value is the maximum sum insured amount fixed by the insurance company. It is the maximum claim amount that your company agrees to pay under the insurance policy if your vehicle gets damaged due to an unforeseen accident. In case of theft or a total loss, the insurer pays you the entire IDV as decided when buying the insurance. The IDV gets determined based on the current market value of your vehicle.

This is because the value of your car starts depreciating as soon as it moves out from the showroom. Even if the vehicle is as good as new after a year, it suffers depreciation owing to its age. Depreciation is considered an estimated reduction in the vehicle value following its age. The higher the age of the vehicle, the higher depreciation on it.

The calculation of IDV is as follows:

IDV = Selling price of the car as listed by the manufacturer – Depreciation depending on the age of the vehicle

Now, the IDV differs between insurers. Hence, it is essential to check them before you buy offline or online car insurance. Meanwhile, the depreciation for older cars is fixed for up to five years.

Why decide the correct IDV?

Premium

The IDV of the vehicle is directly proportional to the premiums of the comprehensive policy. The higher the IDV of the insurance plan, the higher will be the premiums. Therefore, opt for an IDV amount that does not result in an expensive insurance premium.

Maximum claim amount

The IDV is the maximum claim amount that the insurance company pays if your car witnesses’ complete loss or gets stolen. If you opt for a lower IDV, the claim amount might be insufficient to cover the actual cost. So, choose a comprehensive policy with an IDV, which is sufficient to cover the losses of the car.

COVID-19 has infected almost 11 million people in India, as of February 12, 2021. In the face of the pandemic, it has become evident that a medical emergency can strike at any time. Apart from the physical and emotional trauma, it can be huge pressure on your finances. So, here are some steps to take to prepare yourself for a medical emergency in 2021.

Start an Emergency Fund

• Open a savings account only for the purpose of saving for a medical emergency. Opening a savings account online is very easy. Moreover, savings account generates interest, which can help grow your funds.
• Choose a bank that offers the best interest rates on savings accounts.
• Regularly deposit money in this account. You can plan your expenses and set aside a small amount monthly, as soon as you receive your salary or any other form of income you may have.
• Refrain from withdrawing money or conducting transactions from this account for non-medical purposes.
• Keep track of how your funds fluctuate. This will help you to prioritise replenishing funds if you need to make a withdrawal for any reason.
• Savings accounts have much higher liquidity than other investments like fixed deposits or mutual funds. This means you can access the funds at any time and don’t need to borrow money or make an overdraft on your investment.

Weigh the Costs

• Study your family’s medical history and consult a doctor. For example, if you have a family history of heart disease, consult your doctor regarding the steps to prevent it.
• Make a list of the most common medical emergencies and reach out to a hospital to understand the estimated cost for each. This should give you a rough idea of how much you need to save in your emergency fund. Start eliminating unnecessary expenses so that you can achieve this target quickly before an emergency occurs.
• Improve your health by eating a balanced diet, exercising regularly and getting enough sleep. Encourage your loved ones to make the necessary lifestyle changes.

Get Health Insurance

• Health insurance is an excellent option to help you cover most of the costs in case of an emergency. This can be supplemented by your savings.
• For a low premium each month, health insurance will pay most of your medical expenses.
• Different health insurance plans cater to different types of emergencies, like accidents, heart disease, general health, etc. Therefore, it is important to consider your family history and your lifestyle before choosing an insurance plan.
• You can also include your immediate family in your health insurance policy.

Consider Personal Loan as a Backup Option

• Sometimes, even the best preparation is unable to meet the demands of the situation. In such a scenario, consider taking a personal loan.
• Check the interest rate and loan tenure and read the loan document carefully before going ahead.

During a medical emergency, you would like to focus on getting better, rather than having to worry about arranging funds. So, take the necessary steps like opening a savings account that offers high interest, and be prepared for any contingencies.

Riding a bike is a truly underrated experience. The feeling of the wind on your face is a freeing experience. Moreover, it is also a practical vehicle. Using a bike to travel, means that you can weave through traffic while others have to be stuck until it clears.

However, for all its great qualities, riding a bike is very dangerous. Even after wearing protective gear, there is a chance that a bike accident can lead to grave injuries. Moreover, unlike a car, a bike is an open vehicle. This means that a single error in judgement while riding a bike can lead to major consequences for you and your two-wheeler. Hence, it is ideally recommended to drive safely. However, there is no harm in being as secure as you can at every step. Hence, to avoid the financial and emotional burden of having your bike damaged, you can get a bike insurance policy.

However, any good thing in life requires effort and care. This applies to bike insurance as well. Once you have bought a policy, you will have to make sure that it performs to the best of your needs.  This includes renewing it on time. However, being the lengthy process that it is, there is a chance that you may miss the due date of your bike insurance renewal.

Missing the renewal due date

A bike insurance is like a subscription. It needs to be renewed each year before a specific date. This renewal is done by paying the right amount of premium before the due date. However, if for some reason you fail to renew your policy before this date, the coverage mentioned in your policy is considered expired.

Once, this coverage is declared expired, you will be given a grace period by the insurance provider. While every insurance provider has a different operational policy, most insurers offer a break-in period of 90 days. During this period of time you can restore your coverage as it was by paying the premium and renewing your policy. Until you do so, you will not have any benefits of the policy to redeem. As a worst-case scenario, if you miss this opportunity as well, your coverage becomes null and void.

At this point, you lose coverage for own damages as well as third party liabilities. This firstly means that in the case of an accident you will be completely unprotected against the financial burden of repairs.  Secondly, you will have to cover for the legal and the financial liabilities for any harm you cause to a third-party or his/her property. The worst part about losing your bike insurance policy is that you cannot legally ride your bike on the roads. If you are caught riding without a valid motor insurance policy, you will have to pay a fine.

Renewal of policy

The purpose of insurance is to make things better and simpler. In that spirit, many insurance providers have launched apps that can offer you a whole host of benefits. However, the best these apps do is give your better control over your policy and everything related to it. This includes policy renewal.

Firstly, you can keep track of the due date of your policy in the app. Knowing what the due date is you can plan your renewal well in advance. This includes taking a look into how much coverage you need, how much you have, and what changes are necessary to bridge the gap. This time can also be used to look into ways that you can lower your premium.

Once the preparation is over, the first thing you have to do is log into the app. After logging in, you have to select the policy renewal option. At this point, the app will require your policy details. Adding the policy details will take you to the step where you can change the coverage of your policy to your liking. With the change of coverage, you will also see a change in the premium. The last step is to make the premium payment. Select a payment mode and complete the payment. Once done, your policy will be instantly renewed and you will receive the new policy documents through email or other digital means.