September 2015 - Turtlemint

Maternity cover: A must-have benefit?

September 27, 2015May 17, 2021 Himanshu Dixit

The maternity benefit in a health policy covers the insured during childbirth. A lot of newlyweds tend to take a health policy with maternity cover keeping in mind this certain expense in the near future. But you need to know a few things before you get this cover.

Raed more about why newly wed couples should opt for maternity policy

Maternity benefit- what does it cover?

Depending on the given policy, the maternity benefit covers the following:

-Hospitalization expenses for both Cesarean and normal delivery

–New born cover that insures the baby up to a maximum of 90 days

-Pre and post natal expenses, which also include post pregnancy complications

Not many options

Maternity benefit is not a default feature of a Health Insurance policy. In fact, many insurance companies don’t offer this benefit at all, and when they do, it’s offered with some restrictions. Apollo Munich, Religare, L&T, Cigna are among the few insurers that club it with their regular health policies.

Waiting period is justified!

There are some caveats involved with maternity covers. One is that they come with waiting periods, varying usually between 36-48 months. There is no escaping this fact and it sounds logical from the insurer’s point of view as well.

Cash limit

As it happens, there is a cap on the expenses. Even in policies with sum insured 15 lakh+, you’ll not get more than 50k for normal delivery and 1 lakh for Cesarean delivery. Typically, the benefits range between 20k to 40k. The policies didn’t cover the pre and post natal expenses before, which increasingly the new plans have started to offer. However, no plan in the market covers in vitro fertilisation, abortion and expenses related to termination of pregnancy.

Compare the cost

Since maternity cover comes with a waiting period, the incremental cost to take this cover may reduce the value of the benefit accrued. To put it simply, with premium going up every year and health cost inflation, what you are promised as part of this benefit will not have the same value as calculated at the start of the policy period.

Final word

The question that you would have to ask is whether or not maternity benefit alone should dictate your decision. Maternity is not a ‘probable’ event, it is a planned event. In that sense, it’s a benefit that will be claimed. So, in a nutshell, two things.

1. A premium policy sweetens the deal by offering a lot of benefits, of which maternity is just one. If you think you want all those benefits as well, totally go for it. But it makes little sense to opt for a premium policy JUST for the maternity benefit.
2. Maternity is a policy specific benefit and there are no two ways about it. You pick out policies with maternity benefit and see if overall they address your needs. There are health policies in the market that insure up to 15-25k, which won’t cover the cost entirely, but will ensure that your pocket doesn’t go too light!

Read more about Dejargonizing health insurance terms

Understanding IDV- Amount you can claim for vehicle damage

September 21, 2015May 17, 2021 Samskrita Jain

When you buy a motor insurance policy for your vehicle, do you ever consider the IDV offered by the policy?

Very few of you do. When buying or renewing motor insurance policies, the first thing which most of you consider is the premium charged by the policy. Some of you also consider the coverage offered, available riders, discounts and other aspects of the policy but the IDV is, usually, given a miss. The most common reason why IDV is ignored is because many of you don’t understand the concept and its relevance in your motor insurance policy. But ignoring IDV is a bad move. It is important at the time of a claim made under the policy. Do you know how? Let’s understand –

What is IDV in motor insurance policies?

Simply put, IDV, Insured Declared Value, is the maximum liability undertaken by the insurance company with respect to your vehicle. It represents the value of your vehicle in the eyes of the company. IDV is the maximum amount of claim which the insurance company would pay in case your vehicle is stolen or it suffers a total loss. You can call the IDV to be the sum insured of your motor insurance policy.

How is IDV calculated?

As stated earlier, IDV is the value of your vehicle as calculated by the insurance company. The company calculates the IDV based on the market value of the vehicle after deducting depreciation based on the vehicle’s age. The actual formula for calculating IDV is as follows –

IDV = the listed price of the vehicle as per the manufacturer – depreciation specified in the Indian Motor Tariff

The listed price is also called the ex-showroom price of the vehicle and it excludes the cost of registration, insurance and other loadings.

Moreover, if the vehicle is fitted with additional accessories the costs of which are not included in the listed price, IDV would also include the value of such accessories after depreciation. In such cases, IDV would be calculated as follows –

IDV = (the listed price of the vehicle as per the manufacturer – depreciation specified in the Indian Motor Tariff) + (value of additionally fitted accessories – depreciation on them)

The rate of depreciation applicable for calculating the IDV is as follows –

Age of the vehicle	Applicable depreciation
Up to 0.5 years	5%
0.5 years to 1 year	15%
1 year to 2 years	20%
2 years to 3 years	30%
3 years to 4 years	40%
4 years to 5 years	50%

If the vehicle is more than 5 years old, the IDV is settled based on its condition, serviceable parts available in the market and a mutual understanding between the insurance company and the policyholder.

Importance of IDV

The importance of IDV is felt at the time of claim. Since it is the maximum liability undertaken by the insurer, IDV is paid in the following instances of claim –

In these three cases of claims, the insurance company pays the IDV applicable under the policy. So, having the correct IDV in the insurance policy would determine the settlement of claim and is, therefore, important.

IDV and motor insurance premium

Since IDV represents the value of the vehicle, it is directly proportional to the premium of the policy. This means that if the IDV is high, the premium would be high and vice-versa.

Choosing the correct IDV of the motor insurance plan

Since IDV determines the premiums of the motor insurance policy, many of you are tempted to opt for lower IDVs when buying the plan. You should not do so. Choosing the correct IDV is important because IDV not only affects your insurance premium, it also affects your insurance claim. If you choose an IDV which is considerably lower than the market value of your vehicle, you would end up getting a very low claim if the vehicle is stolen or completely damaged. The claim would not be sufficient to pay for a replacement vehicle and might cause a financial strain. That is why it becomes imperative to choose an IDV which is closest to the market value of your vehicle after factoring in depreciation.

That said, choosing a very high IDV is also bad. If you go for very high IDVs, you would end up paying unnecessarily high premiums for your policy.

So, be careful when selecting the IDV of your policy. It should be ideal, not more and, definitely, not less.

The next time you compare your car insurance or bike insurance policies to buy or renew your plan, make sure to factor in the IDV offered too besides considering premiums and coverage features. Having the right IDV is equally important as paying the right premium and you should, therefore, make sure to choose the most optimal IDV for your vehicle.

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Know your health policy exclusions

September 14, 2015May 17, 2021 Himanshu Dixit

Choosing a health insurance policy calls for factoring in a number of things. One such important thing is exclusions of the policy.

Exclusions are events and conditions that the insurance policy doesn’t cover. They can be of two types: (a) Permanent exclusions and (b) Time-sensitive exclusions (Benefits with a waiting period).

1. Permanent exclusions are the events, treatments and diseases that are never covered by the policy. Cosmetic treatments, Facial surgeries, treatment of HIV/AIDS and war related injuries are some of the permanent exclusions. Every policy lists out an exhaustive list of these exclusions.

2. Some benefits of the policy require you to wait for a specified period of time before they can be availed. These are time-sensitive exclusions or benefits with a waiting period. For instance, the first waiting period, also called “cooling off period”, is 30 days long, after which most of the policy benefits come through.

Every policy clearly names treatments that you can’t make a claim for in the first 2 (or 3) years of the policy. Common among them are treatments pertaining to cataract, hernia, varicose veins, osteoporosis, non-infective arthritis and many more. In addition, specific benefits like maternity coverage come through after a waiting period of 9 to 48 months depending on the policy. Pre-existing diseases too are covered only after the lapse of specified waiting period.

The law demands these exclusions to be specific and precise as they are not part of the coverage (or imply conditional coverage). In case there happens to be considerable difference in the interpreted meaning, the law sides with the policyholder by applying a possible restrictive definition. Visit our website to compare and buy health insurance.

Read more about Dejargonizing health insurance terms

The winning case of critical illness covers

September 11, 2015May 17, 2021 Himanshu Dixit

A critical illness is a severe illness like Cancer, Cardiac arrest etc. that puts your life at high risk and even after treatment, changes your ordinary day to day life. One aspect of these changes is financial.

Insurance customers often ask this question: Why do I need a critical illness cover when I have a health policy? The answer is fairly simple. They don’t conflict each other. Critical illness cover is like a health coverage booster, which serves a different function than that of a health policy.

Health policy or Critical illness cover? Actually, both!

–The treatment of a critical illness is three times more expensive on an average than other ordinary treatments. The regular health insurance policy covers only for hospitalization related costs, however incidental costs like loss of income, family travel & stay, canteen bills, alternate accommodation etc. are not covered. These costs can be significant especially during prolonged treatment. Result: You end up dipping into your own savings, and to no end!

-Critical illness cover is specifically designed to protect the insured from this situation. It functions as a benefits policy that provides a lump-sum amount on detection of specified critical illnesses.

–Critical illness covers are not expensive and are offered by all major insurance companies. Also, do note that the premium increases with the age of the insured. The earlier you apply, the less you pay.

Read more about benefits of critical illness policy

Rider vs. Standalone policy

Critical illness covers are offered as either riders (top-ups) or stand-alone policies. Here you will need to evaluate the extent to which you want to get covered. The critical illness rider can be taken at low premiums but typically, this cover doesn’t assure you of a sum greater than the insured sum of the base policy. Also, you don’t get much flexibility in terms of choosing a high sum insured and it can be continued only until the term of your base plan. In contrast, a standalone policy gives you all the freedom to choose a high sum insured, but the premiums too are slightly high. As a rule of thumb, with a basic health plan of 5 lakh, a critical illness cover of 15 lakh strikes a good balance.

Clauses you must know

Some policies specify a survival period of 30 days, which means that insurance company will make the payment only if after diagnosis, the insured survives the specified period. Here, it is important to make the distinction between policy waiting period and survival period. Like any other policy, critical illness policy entails a waiting period of 90 days after which the benefits come through. If you’re diagnosed with a critical illness in the first 90 days, insurance company will reject your claim.

As mentioned earlier, critical illness benefit doesn’t depend on whether or not you’re hospitalized. On diagnosis of the illness, you’re paid a lump-sum. A few insurance companies spread the payouts in several installments that you receive over a given period of time.

Some of the critical illnesses commonly covered in the policies are:

Cancer
Paralysis
Heart attack
Kidney failure
Coronary artery bypass surgery
Stroke
Major organ transplant (e.g. heart, lung, pancreas)

Most policies cover the aforementioned illnesses but the count can go as high as 36+ depending on the policy. Also, always keep an eye on medical definitions of the covered illnesses(failure of a single kidney is not critical enough, partial paralysis too will be skipped over, things like that), exclusions and claim settlement ratio of the insurer (higher the better), and only after making sure of all these policy credentials should you buy the policy.You can compare health insurance policy on our website.

Read more about Dejargonizing health insurance terms