Important things to know about cancer insurance plans in India

Cancer in India has become a dreaded illness and a very common occurrence. Though new treatments are being invented to fight cancer, the disease is becoming more rampant. In fact, as per the estimates suggested by the Indian Council of Medical Research (ICMR), there would be more than 17 lakhs cancer cases in India and more than 8.8 lakh deaths by the year 2020 (Source: ). 

Cancer not only wreaks physiological havocs, it puts a strain on your finances too. Cancer treatments are quite expensive which threaten to wipe out your savings in a single strike. That is why cancer insurance plans are a must. Cancer insurance plans cover cancer and pay a lump sum benefit if you are diagnosed with the illness. This benefit can be used for taking treatments or for fulfilling other financial obligations that you have. Premiums are low and so these plans are a boon in the face of cancer. However, before you think of buying cancer insurance, there are some important facts about the plan which you should know so that you can buy the best cover. Here’s what these facts are –

  • Nature of the plan

Cancer insurance plans are fixed benefit plans. A lump sum benefit is paid on diagnosis of cancer. The benefit depends on the sum insured that you have selected and not the actual cost of treatments.

  • Coverage offered

These plans cover cancer in all its stages. Whether you are diagnosed with a minor stage or major stage cancer, you would get coverage.

  • Companies selling cancer insurance

Cancer insurance plans are sold both by life insurance and health insurance companies. Life insurance companies offer a long term plan where coverage is for 5 years or more while health insurers offer plans with a term of one, two or three years. Life insurance companies pay a lump sum benefit on diagnosis of cancer. In case of plans by health insurers, there might be coverage for treatments and hospitalisation too besides the lump sum benefit paid on diagnosis.

  • Options to buy the cover

Cancer insurance can be taken either as a rider or as a standalone plan. There are critical illness riders available with life and health insurance plans. Cancer is covered in almost all critical illness riders besides other illnesses. A standalone plan, on the contrary, covers only cancer. No other illness is covered under it. Standalone plans are a better choice as they offer a wider scope of coverage and cover all forms of cancer.

  • Tax benefits

Since cancer insurance is a form of health insurance, the premiums you pay for the plan qualify for tax deduction under Section 80D up to INR 25, 000.

These are the main aspects of cancer insurance plans which you should know about. Moreover, there are some additional pointers too which should be kept in mind. These include the following –

  • Cancer insurance plans are suitable for all individuals. You should invest in a plan at a young age to get early coverage and also for the benefit of low premiums.
  • The sum insured of the plan should be sufficient enough to cover the high medical costs associated with cancer. Since premiums are low, you wouldn’t have to worry about the affordability of the plan
  • Many of you believe that if you have life and health insurance plans, cancer insurance cover is not needed. This is a misconception. If you have a critical illness rider attached to your life and health insurance policies, you can give standalone cancer insurance plans a miss. However, if you don’t have critical illness rider, buying a cancer cover is advised. Your health insurance plan or the rider coverage might not be enough. Having an additional coverage is better.

Though you cannot ensure protection against the incidence of cancer, you can definitely prepare to deal with the financial implication that the illness brings. Buy a cancer insurance plan and secure your finances.


What are the returns which you can get from your insurance policies?

When it comes to buying insurance, many of you first demand to know the returns which you can get from your insurance plans. After all, you are investing your hard-earned money in buying an insurance plan so expecting a return is justified, right? Wrong! Insurance plans are aimed at providing you financial protection from possible contingencies. Their objective is to compensate for your financial loss and provide financial security. As such, generating returns is not the primary purpose of insurance plans.

Feeling dejected? Don’t be! The story doesn’t end here. There are some insurance plans which promise returns. To know about them, let’s first understand the basic types of insurance policies.

As the above chart explains, insurance plans can be of two types – general insurance and life insurance.

General insurance plans are indemnity oriented plans. They compensate for the loss you suffer due to a covered contingency. For instance, health plans pay for the medical costs incurred if you are hospitalised. Fire insurance plans pay for the financial loss suffered due to damages caused by fires, etc. Given the nature of general insurance plans, there is no element of return. The plans simply pay for the financial loss and don’t provide any return if there is no contingency at the end of the term.

Life insurance plans, however, are a different concept altogether. These plans do provide you with some form of return based on the type of plan that you choose. There are savings oriented plans which aim to create wealth. These plans promise you returns along with insurance coverage. Let’s understand the plans which promise returns and the types of returns that you can get –

Plans which provide returns

These are the three main types of life insurance plans which promise something extra on your investments. Now let us see the returns which are promised under these plans –

  • Bonus – participating endowment plans and almost all money-back plans promise bonus participation. When the insurance company earns a profit in a financial year, a major part of the profit earned is distributed among policyholders in the form of a bonus. A bonus is declared as a percentage of the sum assured and is added to the policy benefits. The declaration might be on a simple interest or compound interest basis. The rate depends on the company’s profit experience and is not fixed. Although the bonus is added every year the company makes a profit, when the policy benefits are paid on death or maturity, an interim bonus and/or a terminal bonus might also be paid. Bonus declarations help in increasing the policy benefits and provide a return on your investments
  • Guaranteed additions – another form of returns promised by endowment and money back plans is guaranteed additions. These additions have a fixed rate and are added for a specific period. Guaranteed additions might be allowed even if the policy is non-participating, i.e. it does not earn a bonus.
  • Loyalty additions – loyalty additions are those which are awarded if the policyholder continues the policy for a long tenure of 10 or 15 years. These additions, too, have a fixed rate and do not need the policy to be participating in nature
  • Market-linked returns – market-linked returns are allowed only in ULIPs, not in traditional endowment or money back plans. Under ULIPs, the premiums you pay are invested in the market and grow as per market returns. ULIPs are, therefore, investment-oriented insurance plans whose main aim is to yield returns. You can get inflation-adjusted returns if you choose ULIPs for investments.

If you are looking to avail returns from your insurance policies, choose ULIPs or endowment and money back plans. However, a term insurance plan should not be overlooked. Though the plan doesn’t provide returns, it provides financial security for your family in case of your untimely demise. So, make your insurance plans earn returns for you but don’t forget that they are primarily designed to provide financial security. So, first, secure your finances through various general and term insurance plans and then look for returns.


Read more How to save income tax in 2019

Read more 8 financial instrument you can quickly buy online to save tax in India.

10 ways to secure your family in 2021

New Year comes with the New Year resolutions. With the onset of 2019, we will talk about the Top 10 Financial Resolutions that one must-have. How much do you score in this? Have you covered all 10, or there is still some of the Financial Resolutions that you must list in your to-do list for 2019?

Whatever plans you might have made for this year, ensure that you tick off these 10 financial resolutions as well.

Give yourself a score of 1 for each resolution and then check your score for the same.

Give yourself a score of 1 for each resolution and then check your score for the same.

1. Protect your family: Opt for a Term Plan

The first step in securing your family should be investing in a good term insurance plan. Term plans allow you to avail high coverage levels at the lowest premiums ensuring that you can create a substantial corpus for your family in case of your premature death. Nothing can be better than knowing that even if you are not around your family would be taken care of financially. So, invest in a term plan which has long coverage tenure and a high sum assured.

Tip: Ideal Term Insurance coverage: Minimum of 20 times your Annual Income

Read more about Term insurance are evolving here’s what you need to know

2. Secure their health issues with a health insurance plan

After you have secured your life with a term plan, it’s time to add another layer of security through a health insurance plan. Health plans provide financial security to you ensuring that the staggering medical expenses faced in a contingency would be taken care of.

Tip: Buy a family floater health plan covering all your family members and have a coverage level sufficient enough to pay for medical contingencies.

3. Create an emergency fund

Premature death and illness are not the only two contingencies which you might face in your life. There are other contingencies too which require financial assistance. For instance, in case of loss of your job where would you get the funds to take care of your family’s expenses till another job comes along? For this and any other contingency, you should create an emergency fund.

Tip: At least six months’ worth of your income in the fund to help you sail through difficult financial times.

4. Invest and create a financial portfolio

After the first three steps are taken care of, you should invest your savings into different avenues. You should create a financial plan which would highlight your goals and their time horizon. Then you should choose the investment avenues which would meet your goals. The avenues should fit your risk appetite, give the maximum possible returns and also should be tax efficient.

Tip: Create different buckets for different investment goals. That would make your accounting easy as well.

5. Make a Will

A Will is a legal document which states your wishes on the division of your property after your death. To avoid unnecessary hassles between your family members and a possible cause of family feud, you should make a Will designating the distribution of your property after your demise. The document should contain clear instructions so that there would be no misunderstandings between your family members.

Tip: Remember to get probate of the will as well, for the same to be valid in the court of law.

6. Educate your family about your financial holdings

Most often than not, even when you have invested in insurance products, your family fails to get the benefits. The reason is ignorance on their part. While you create a financial portfolio and buy insurance products, you don’t inform your family about them. As a result, when you are not around or are otherwise indisposed, your family members don’t know how to utilize your investments.

Tip: Inform your family members of the insurance policies you own and their claim process. Also, let them know about your investments so that they can use them when you can’t. Do not forget to add nominee details as well.

7. Invest in a house

Nothing gives your family security than having a house which they can call their own. After taking care of your short-term financial goals, invest towards a house. Your house would prove to be an asset not only for you but for your family as well.

Remember that home loans give you an additional tax benefit as well!

Tip: Remember to protect your home loan, in case you opt for one, with a Loan Protect Plan as well.

8. Plan for your child’s future

While you dream of providing your child with the best education, your dream can turn into reality only if you have sufficient funds at your disposal. Education has become very expensive and if you want the best, the costs multiply. That is why you should start planning for your child’s future from an early age.

Tip: Invest small amounts regularly to accumulate a substantial corpus which would provide for your child’s future and make it secure. The keyword here is PLANNING.

Find out how to plan your child’s future.

9. Try paying off your debts

Your debts can prove to be a burden for your family if they have to pay it off in case of your sudden demise. All the financial security which you would have created for your family would be eaten away by your debt repayments leaving your family with nothing. So, try clearing off your debts as soon as possible. Debts are liabilities and the lower debts you have the better secured your family would be.

Tip: Clear off your bad loans before the good ones, i.e. the loans where there is no additional tax benefit and is compounding in nature to give a very high rate of interest, like personal loans and credit card loans before the good loans like home loans and education loans.

10. Plan for retirement

Do you know that after retirement you need a sizeable corpus to take care of your lifestyle expenses? Given the rate of inflation decreases the value of money over time, lifestyle expenses would be double or more than they are today. So, you need a sufficient amount after retirement to take care of your expenses.

Tip: To build the retirement corpus you need to start saving early. When you start early you can save a considerable amount. Moreover, if you have a retirement fund, your spouse would be taken care of if you predecease them.

Read more about investing for requirement

So, now that you know the Top 10 Financial Resolutions that you must-have, what is your score? Are far are you from your score of Perfect 10? This new year, do something completely different and ensure your loved ones feel safe and financially secure.

Things to know before investing in an endowment policy

Life insurance plans come in different variants so that the different needs of different individuals can be met by one or the other life insurance plan. Endowment plans are one popular variant of life insurance plans which are designed to create savings for the policyholder. Let’s understand what endowment plans are and the important things that you should know about these plans before you invest in them.

What are endowment plans?

Endowment plans are savings oriented life insurance plans which promise guaranteed benefits. The plan pays a death benefit if the insured dies during the term of the plan. Moreover, on maturity of the plan, a maturity benefit is also paid if the insured is alive. Endowment plans also pay additional returns to enhance the benefits payable.

Also watch our video to know the basics of endowment plans

Things to know before buying endowment plans:

Here are some important aspects of the plan which you should know before you invest in one –

  • Nature of the plan – Endowment plans are traditional life insurance plans which have guaranteed benefits. The plans are long-term in nature and are usually offered for a term of 10 years to 30 years.
  • Returns provided– Endowment plans come as participating plans or non-participating plans. Participating plans are those that participate in bonus declarations while non-participating plans do not earn a bonus. Besides bonus, endowment plans might also provide other returns like –
      • Guaranteed additions – these additions are guaranteed and paid for a particular time period. The rate is pre-determined and is calculated on the sum assured of the policy
      • Loyalty additions – these additions are added to long-term endowment plans if the policyholder continues the policy for 10 years and more. Loyalty additions are added one time at a pre-determined rate. The rate is calculated on the sum assured of the plan.
      • Tax benefit – you can get tax exemption on premium payments, maturity and final payouts under section 80c and section 10(10D) of the Income tax act
  • Returns are not inflation-adjusted-

    Though endowment plans provide the above-mentioned returns which enhance the plan’s benefits, the returns are not inflation-adjusted. Given that endowment plans are long-term plans, the ultimate return generated after the end of the tenure might not have substantial real worth due to the effect of inflation.

  • Paid-up value, surrender value and policy loan are available-

    Endowment plans provide you with the option of making the policy paid-up, surrendering the policy or availing a policy loan. You have to pay premiums for a minimum period to avail these benefits. Usually, if the premium paying term of the plan is up to 10 years, the first two years’ premiums are required. If, however, the premium paying term is 10 years or above, three full years’ premiums are required to avail these benefits.

Know about Insurance terms you should know while buying life insurance.

How to decide to buy an endowment plan?

Now that you know what endowment plans are and their important aspects, you must be wondering whether you should buy the plan or not. The answer is in your requirements. If you are a risk-averse investor looking to create guaranteed savings with life insurance cover, you can buy an endowment plan. However, if you need inflation-adjusted returns which help you maximise your wealth, you should choose unit-linked plans instead as they provide market-linked returns. So, assess your risk profile and the return potential of endowment plans to find out if the plan is suitable to you or not.

Which plan to buy?

If you want to invest in an endowment plan as it suits your investment needs, choose a participating endowment plan which promises a bonus. Bonus additions would help you earn good returns. Choose a term which helps you accumulate a corpus for a particular financial goal. The sum assured should be optimal and the premium should be affordable.

So, understand these things about an endowment plan, what it offers, its important aspects and its suitability before buying the plan. You wouldn’t want any nasty surprises after purchasing the plan, would you?

Read more about Types of life insurance

Read more about Are life insurance a good investment options?

Read more about 7 things you need to know about life insurance


Personal accident insurance – Standalone or add-on rider, which is better?

Accidents have become quite common whether they occur on roads or anywhere else. Severe accidents might result in death or disabilities and cause a financial loss. These financial losses might prove to be a financial strain on you and your family which is why a personal accident insurance cover is advised. You can opt for a standalone cover or choose a personal accident rider with various insurance plans. Have you wondered which alternative is a better choice?

Before discussing on the better alternative, let’s first understand what personal accident insurance is all about –

What is personal accident insurance?

A personal accident insurance policy is a policy which covers the risk of accidental death and disablement. The policy pays a benefit if you die or become disabled in an accident.

Buying personal accident cover

There are two options of buying a cover for personal accident insurance. These are as follows –

    1. Through riders and add-ons

Health insurance plans and motor insurance plans allow personal accident add-ons which can be chosen with the basic policy by paying an additional premium

    2. As a standalone plan

There are independent personal accident insurance plans available in the market too. You can buy an independent plan to opt for the cover.

Which option is better?

A standalone personal accident cover is always the better alternative because it provides various benefits. These benefits include the following –

     – Wider coverage

Coverage under riders is limited compared to standalone personal accident plans. While riders might cover only accidental deaths and permanent total or partial disablements, standalone plans cover the following –

             – Accidental death

            – Permanent total disablement

            – Permanent partial disablement

            – Temporary total disablement

            – Dismemberment

Moreover, standalone plans also provide additional coverage benefits like coverage for ambulance costs, funeral expenses, education fund for dependent children, loss of job, etc. Such coverage features are absent in riders.

     – Scope of customisation

Independent plans also have the option of choosing add-ons for a more comprehensive scope of coverage. You can choose the required extensions in the policy and make your plan customised. Riders don’t allow any scope of customisation. When you choose a personal accident rider, you get the coverage which is promised in the rider, nothing more and nothing less.

     – Level of sum insured

Personal accident sum insured under riders is, usually, restricted. However, in case of standalone policies, the sum insured depends on your income and you get the flexibility to choose a higher amount.

Standalone policies have these three distinct advantages over riders. But when you consider rider premiums, standalone policies are dearer. Since the coverage provided is wider in standalone plans, their premiums are higher than that of riders.

Which one to choose

Choosing the best alternative for personal accident cover depends on you. If you want a comprehensive scope of coverage with the flexibility of choosing your sum insured and additional coverage features, standalone policies are best. However, if you think that the restricted coverage under riders would be enough to fulfil your coverage requirements you can save on the premium and choose riders. So assess your requirements and then make a choice.

Read more about personal accident cover in car insurance

Read more about personal accident cover

Read more about Third party insurance for two wheeler

Do I need multiple insurances in 2021 if I have more than one car?

We are aware of the fact that a car insurance policy is legally mandatory in India. The Motor Vehicles Act, 1988 mandates that every car which is driven on Indian roads should have a valid insurance cover attached to it. That is why car owners are supposed to buy a car insurance policy on their cars if they want to drive their car on Indian roads.

But what if you have two or more cars? You must be aware of the rules of your car insurance coverage for multiple vehicles, but there is a change in the norm in 2019. Are you aware of the recent development? Do you need independent insurance covers for each of them?

In order to understand the changes in the car insurance norms in 2019, an in-depth understanding of the car insurance policy and the law governing it needs to be well understood.

In the parts of car insurance coverage. These include the following –

  • Third party liability cover – this covers any third party financial liability which you face if you physically harm an individual or damage someone else’s property. Third party cover is mandatory as per the Motor Vehicles Act, 1988
  • Own damage cover – This covers the damages which are suffered by the car itself. This cover is not mandatory and is available in comprehensive car insurance policies
  • Personal accident cover – this covers accidental death and accidental permanent disablement suffered by the owner/driver of the car while using the car. This cover is also mandatory in car insurance policies and available in the third party as well as comprehensive car insurance plans.

Now that you have understood the various aspects of coverage offered by car insurance plans, let’s understand what happens when you have multiple cars. Different covers have different implications in case of having multiple cars. Let’s understand how –

  • Third party cover – Independent third-party cover is required for each car that you own. So, if you have three cars, you should have a separate third party policy for each car.
  • Own damage cover – Own damage cover is optional. If you have third party cover, your legal obligations towards car insurance are fulfilled. However, if you want comprehensive protection for your cars, own damage cover is advised as it covers the damages suffered by the car itself. Own damage cover also works independently like third party cover. You would have to buy the cover separately for each car you own if you require. So, if you have multiple cars try having own damage cover on each car for wider coverage. However, if affordability is an issue, you can be selective. You can choose own damage cover for one or two cars which are used extensively. For other car(s), if they are not used very much or if they are quite old, you can skip own damage cover and make do with only third party cover. The choice would be yours to make.
  • Personal accident cover – In case of personal accident cover, the newly updated rules of IRDAI (Insurance Regulatory and Development Authority of India) would apply. As per the new rules, having a personal accident cover totaling at least INR 15 lakhs is enough. You can buy this cover with your car insurance policy or as a standalone personal accident policy. Whatever you do, if the cover is at least INR 15 lakhs, you don’t need to buy multiple personal accident covers with multiple car insurance policies. Say, for instance, you have an independent personal accident policy worth INR 20 lakhs. In this case, when you buy a motor insurance policy for your cars, you don’t need to opt for the personal accident cover. Moreover, if you have bought a new car on or after 1st September 2015 you would get a personal accident cover of INR 15 lakhs as per the updated rules of IRDAI. Thereafter, if you buy another car or renew the car insurance policy of your older cars, you don’t have to buy another personal accident cover with the policy. So, in the case of multiple cars, you don’t need multiple personal accident covers for each car as long as the aggregate cover in your name is INR 15 lakhs.

So, to sum up, you should know about the insurance requirements on your multiple cars and fulfill these requirements so that you don’t face any legal complications when caught driving without a valid insurance cover.

Read more All you need to know about car insurance

Read more Car insurance terminologies you should know

Read more Anatomy of a car insurance plan

Retirement and annuity pay-outs – what you should know?

Retirement is that phase of your life when you stop earning actively. Though your income dries up, your expenses don’t. To fund these expenses you need a regular source of income. This regular source of income can be provided by annuities that are regular pay-outs paid for as long as you live. Usually, annuity pay-outs happen after you retire but that is not all there is to it. There are various things to know about retirement and annuity pay-outs. Let’s find out what these are –

What is annuity?

Annuity, in simple terms, means a fixed regular income which is paid to an individual throughout his/her life.

Which investment avenues promise annuity pay-outs?

Annuity pay-outs are promised under two types of investments –

  • Life insurance pension plans and
  • National Pension Scheme offered by the Government of India


What are the different types of annuities?

Annuities can be of two types –

    1. Deferred annuities

Under these types of annuities, you get an accumulation phase during which you can invest to create a corpus. You can choose the accumulation tenure and pay an amount over the duration. Once the accumulation phase comes to an end, the plan vests or matures. Vesting of the plan means that the annuity phase is starting. In the annuity phase, fixed annuity pay-outs are paid from the accumulated corpus.

    1. Immediate annuities

Under immediate annuity plans, there is no waiting period before annuity payments start. You pay a lump sum amount to purchase the plan. Immediately after the plan is purchased, annuity pay-outs start from the next month.

Life insurance pension plans come in both variants of deferred and immediate annuities. National Pension Schemes, however, are deferred annuity schemes where you first invest and then get annuities.


Which annuity is suitable for you?

The suitability of the annuity depends on your life stage. If you are young and retirement is 10 to 20 years away, deferred annuity plans are better. You can save affordable amounts every year to build up a sizeable corpus for your retirement. Later on, when you retire, you can avail annuity pay-outs.

Immediate annuity plans, on the other hand, are suitable for individuals who have already retired. They can invest their lump sum savings in an immediate annuity plan and get regular incomes every month, quarter, half-year or year as is suitable. The annuity pay-outs would continue throughout their life providing them with a steady source of income after retirement. Moreover, immediate annuity plans also have different pay-out options. They can be taken on a joint life basis too where annuities are paid till the lifetime of the surviving spouse even if the primary annuitant passes away.


Why is annuity beneficial?

Annuities are beneficial because they promise a source of regular income even when you retire. They are promised for your lifetime and take care of your expenses even in your golden years.

So, understand the concept of annuities, their types, suitability and benefits and then invest in an annuity plan to financial secure your life after retirement.

NCB and how to retain it in your Car Insurance Policy

Comprehensive car insurance plans provide you with innumerable benefits. Besides offering you a comprehensive scope of coverage, you get add-ons to enhance the coverage, value-added services and also attractive premium discounts. In fact, the premium discounts offered in car insurance policies can reduce the premium by more than half. No Claim Bonus (NCB) is one such way to reduce your car insurance premium. Do you know what no claim bonus is and how can you maximise its utilization? Let’s find out –

What is NCB in insurance?

Coverage under the comprehensive car insurance policy comes with a term of one year. If, during the year, you don’t make any claim in your policy you get a no claim bonus. This no claim bonus lets you claim a premium discount in the renewal premium for the next year. Moreover, if you do not make any claim in simultaneous policy years as well, the no claim bonus rate keeps increasing and offering you higher premium discounts every year.

NCB Rate

Now that you know what is NCB in insurance and that it increases every year, let’s have a look at the NCB rates. Here are the applicable rates of no claim bonus available in car insurance policies –

Period NCB Rate
No claims in the first policy year20%
No claims in two successive policy years25%
No claims in three successive policy years35%
No claims in four successive policy years45%
No claims in five or more successive policy years50%

NCB Retention

Though NCB allows attractive premium discounts, you lose the accumulated NCB if you make a claim in your policy. Moreover, if you sell your car, you need to transfer the accumulated NCB from your car insurance policy in your name to retain it.

Process of retention

The process to retain the NCB depends on the situation when retention is required. As stated earlier, there are two instances wherein you are required to retain your NCB –

  1. When making a claim
  2. When selling your car

Here is the process for each instance –

  1. When making a claimWhen you make a claim in your policy, you lose the NCB. To retain, you can either not raise a claim or you can choose a NCB insurance add-on. Not making a claim is advised if your claim amount is small. For smaller claims, it is beneficial to pay the costs from your pockets rather than making a claim and losing the NCB discount. However, when the costs are substantial, making a claim is inevitable. In that case, having a NCB insurance add-on is advised. The add-on protects the accumulated NCB even if a claim is made under the policy. You just have to choose the NCB insurance add-on when buying or renewing your car insurance policy and pay an additional premium. If you do so, your NCB would be protected even when you make a claim.
  2. When selling your carIf you are selling your car, you should request the insurance company for a NCB transfer. The insurance company would ask you to submit a proof of the sale of the car and then issue a NCB Certificate in your name. This certificate helps you in retaining your accumulated NCB. When you buy a new car and a new car insurance policy, you can use the certificate to claim a NCB discount in the policy’s premium. The certificate would be valid on another car insurance policy in your name.

    NCB is, therefore, a great way to reduce your car insurance premiums by up to 50%. You should, therefore, be careful in retaining your policy’s NCB whether you sell your car or make a claim. NCB protect add-on is a must for protecting your accumulated NCB and earning a considerable premium discount. Make sure to choose this add-on when buying or renewing your car insurance policy. In case of selling your car, make sure to avail the NCB certificate. Protect and use your policy’s NCB and save on your premium costs.

CNG Fitting vis-à-vis car insurance – What you should know

Petrol and diesel prices have skyrocketed in the past few years and it is becoming increasingly unaffordable for many. On the other hand, cars have become a necessity for convening and many of you are buying a car for your travel needs. But how do you afford driving a car with the increasing fuel prices?The answer is simple – by opting for CNG fuel kit and reducing the fuel costs. CNG is quite affordable and that is why many individuals opt for CNG kits for their cars to reduce their fuel costs especially when the car is used quite frequently. While fitting CNG kit is a good option to lower your fuel costs, you should know that CNG fitting affects your car insurance policy and its premium. Do you know how?

CNG fitting is an additional modification to your car. As such, you need to modify the associated car insurance policy too. You can opt for two ways of getting your car a CNG kit –

  1. You can fit a new kit in your old car
  2. You can buy a new car with a pre-fitted CNG kit

The way you choose would determine how you should go about making changes in your car insurance policy. Let’s understand –

Way #1 – Fitting a new kit in an old car

If you fit a new kit in an existing car you own, you have to inform the insurance company of the fitting so that the kit gets covered under the policy. Your existing insurance policy would not be valid and you would have to change it to reflect the modification done to your car. After you inform the insurance company, the company would issue a new policy covering the CNG kit and the premium would be increased. You would have to pay the additional premium for insuring the CNG kit so that you can make a claim in case of any damages suffered. Besides informing the insurance company and getting your car insurance policy changed, you should also inform the RTO of the CNG fitting so that the RTO puts a CNG seal on your RC book approving the fitting. This seal would be necessary to authenticate the CNG kit you have fitted in your car. In fact, many insurance companies insist on the RC Book with the RTO’s seal before they change your car insurance policy to cover the CNG kit.

Way #2 – Fitting a new kit in a new car

If, at the time of buying the new car, you want to get a CNG kit fitted, the process is much simpler. The registration of your new vehicle would be done after the CNG kit is fitted into the car. As such, the RC Book would reflect the CNG seal. Thereafter, when you go for a car insurance policy, the company would know of the CNG fitting to your car and would issue you a policy covering the kit and the premium would also be charged accordingly.

Implications of not getting CNG kit covered under the insurance policy

In the first instance where you install a CNG kit in an old cart, many of you choose to avoid upgrading your insurance policy fearing the burden of additional premium. While upgrading your policy is not compulsory, it is important. Here’s why –

  • Only if the policy is upgraded do you get coverage for the damages suffered by the CNG kit
  • Since CNG cars are more fuel efficient, you might use the car more frequently. This would increase the chances of claim and to get maximum claim settlement, upgrading the cover to include CNG kit is recommended
  • If the policy is not upgraded and you make a claim, there is a possibility of claim rejection.

The additional premium payable for upgrading the policy is a fraction of the cost which you would incur if your claim is rejected or if your claim doesn’t cover the damages to your CNG kit. Fitting your car with a CNG kit would reduce your fuel costs. Why don’t you direct a part of your savings to upgrading your insurance policy? The scope of coverage would increase and you can also get your kit covered. It would be a smart move, wouldn’t it?

Read more about how modification will affect your car insurance

Read more about how much car insurance do you really need

Read more about car insurance in detail