Why it is important to evaluate your insurance policy

As another year began so did the rise of Covid-19 cases all across India. This year proved to be a challenge for our health care system. The death toll had increased every minute, it had crossed 4K deaths in a single day, the cumulative Covid death toll stood at 2.8 lakhs. The Indian variant had left the patients gasping for air and hospitals scrabbling for beds.

Due to this unprecedented period, many people lost their jobs or took pay cuts, servicing home loans, paying children’s school fees and funding household expenses. Which is taking a huge toll on people’s mind as well as their pockets. Amid this continued financial uncertainty, reliance on just your savings can be dangerous. In such a scenario, saving money and investing in adequate insurance policies has become essential to protect you and your family from any financial crisis.

The pandemic has acted as a catalyst, for increased awareness and importance of insurance. And with that, one needs to re-evaluate their insurance needs too. As, paying for an insurance cover which may not fulfil your current needs anymore is a waste, especially when everyone is in a financially critical situation.

HEALTH INSURANCE

In the recent years the cost of healthcare treatments in India is sky rocketing. Especially, the cost of hospitalisation due to Covid infection is also quite high. As, the infection is spreading like a wildfire all over the world, it has driven more people to re-asses their health insurance needs. The most important factor that one must look for while re-evaluating an insurance plan is to look for a high sum insured cover which enables you to avoid large medical bills that can cause financial hardships. Also, while choosing a plan one needs to keep in mind the average cost of hospitalization not just today but also 20-30 years from now.

Hence, It is advisable to invest a health insurance plan with higher coverage as today there are plans available in the market which are highly affordable. A Rs 1 crore health insurance plan which is available at the same price as Rs 10 lakhs sum insured plan is the best option that one can invest in. Also, it is always a safe bet to have more than adequate health cover so that it won’t just pay for your claims today but also take care as you grow older. Moreover, you can even choose to pay the health insurance premiums in easy monthly instalments if you feel paying the premium, as a lump sum will be difficult for you. A Rs 1 crore sum insured plan for 30-year old individual costs approximately Rs 600 – Rs 800 per month.

Other features that you should consider while making the ideal choice is the waiting period, always choose a plan which come with a minimum waiting period to be able to claim the benefits in case of a health emergency. In addition to that, you should look out for the co-payment clause, it is preferable to buy a plan which has no co-payment clause as it makes it mandatory for you to pay a portion of the claim amount, which is the last thing one want in a medical emergency.

TERM INSURANCE

Term insurance protects you in case, the breadwinner of a family dies unexpectedly due to the Covid-19 infection or any other miss-happening. It helps maintain the future lifestyle of the family and their goals are not disrupted in your absence.

In this uncertain times, a term insurance policy that was bought five to seven years ago may no longer offer the right coverage, for your current situation and even your future financial needs may look different, especially with the rising Covid cases every day. Therefore, experts suggest re-assessing your current term insurance is important. One needs to consider income, expenses, expected future responsibilities, and most importantly keeping in mind the inflation. For calculating the ideal cover you need, to go by the common thumb rule of having a sum assured that is 10 times your annual income. So if your current annual income is Rs 10 lakh, you should have a life cover worth at least Rs 1 crore.

At the start of the Covid-19 pandemic, reports indicated that the disease was mostly affecting older adults, and that young people were more likely to have milder cases of the disease. But, with the second wave of coronavirus hitting India, with a new strain, it is largely affecting the younger age groups, the ones between 25-40 years. In April, the Centre showed data claiming that in the first wave, 31 per cent of people affected were under the age of 30 years while in 2021, the percentage rose to 32.

Making it highly recommended to buy life insurance plan at an early age and allows you to enjoy the benefits. Moreover, you end up paying less premium amount when the plan is bought at an early age.

MOTOR INSURANCE

As many companies have shifted to work-from home model due to the pandemic. Which means people are spending more time in their homes and less time in their cars. This naturally changes your auto insurance needs. The average price of a fully comprehensive motor insurance policy for a 1200CC sedan car ranges between Rs 15,000 and Rs 18,000. Which clearly may seem like a waste as when your vehicles are only put to use while getting essential items or in case of an emergency.

Thus, making it important for you to re-evaluate your current insurance needs, so that you don’t shell out your money on something which is you might not even need.

As it only makes sense to pay for the features that are useful to you at this point. Insurance companies have come up with a combination of third Party, Fire and Theft Car Insurance plan to help save on large premiums. This is a plan which provides cover for accidental damage caused to another person’s vehicle. In addition to this, your car is covered in the event of theft or fire. As, keeping the car at home for long may expose it to such accidents. Furthermore, theft is one of the major crimes in India and unfortunately vehicle theft is on the rise.

Therefore, third party, fire and theft becomes a particularly sensible option as you’ll be paying low premiums and getting coverage which you actually need right now.

(The author is CBO-GI, Policybazaar.com; views expressed are personal)