Everything you need to know about bite sized insurance policies

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Have you ever noticed the insurance option you get while booking a train ticket on the IRCTC website or flight tickets booked online? These are classic examples of bite-sized or small-ticket insurance products. The concept of selling small and affordable size of products to make them familiar has been an age-old phenomenon in the market.

Initially, shampoos were sold in sachets across India to penetrate at the remotest levels. The insurance industry followed a similar strategy to popularize their products by selling them at minimal prices in the form of bite-sized policies.

What is bite-sized insurance?

Bite-sized or small-ticket insurance is a non-comprehensive insurance plan focusing on specific needs like disease-specific (vector-borne), travel-specific, home appliances and electronics (mobile, home protection, cycle theft) or for lifestyle needs (marathon, fitness). However, bite-sized insurance is different from micro-insurance. The latter has been around for a long time and taps into the lower end of the consumer market.

The key draw for these insurance products is the nominal premium charge and less documentation, unlike most conventional policies. It makes a first-time buyer confident of not losing out on much while opting for the insurance policy. You start with the bare minimum and slowly become familiar with the concept and the need for long-term health or life insurance with adequate coverage.

Companies offering small-ticket insurance

Many companies like Toffee Insurance, Digit Insurance and ICICI Lombard provide bite-size insurance online digitally. These products don’t require any medical tests or proposal forms. The fast-paced world that we inhabit leaves us little time for extensive paperwork. Bite-sized insurance is boon to avoid such chaos.

Different small-ticket insurance products from Toffee Insurance

Toffee Insurance has a tie-up with general insurers like Tata-AIG and Chola MS. It offers services for several things including bicycle insurance where it covers both rider and the cycle for theft, damage and personal accident. Bajaj Allianz and HDFC ERGO offer cyber liability covers for their smart device users whereas another company Go Digit General Insurance offers mobile insurance covering screen damage and theft, depending on the plan.

Watch outs

Policyholders don’t have much to lose from these products as they can simply choose not to renew the cover next year without incurring any major loss on premiums paid. However, experts do suggest that such products are temporary solutions and must not be looked upon as substitutes for long term plans.

Such sachet products can be a good entry point for consumers to familiarize themselves with the world of insurance, buying proper term insurance should top your priority list. Insurance is a key component of your financial planning and must be treated like one.

You must also keep in mind that low premium means less coverage as well. Also, since these products are sold mostly on group platforms, there are always chances of the insurer and intermediary parting ways. Such case scenarios will leave you in the midst of further complexity.