An overview of micro insurance in India

The rural population comprises a majority of the population in India. People living in rural areas are poor and have limited incomes to meet their living costs. As such, the concept of insurance is not very relevant for them. However, the need of insurance is higher for rural individuals as the financial losses that they face due to uncertainties can make their lives very difficult. An insurance plan can cover such financial losses giving them a big relief. Understanding the need for insurance for the rural segment of India, the Insurance Regulatory and Development Authority (IRDA) passed the IRDA Micro Insurance Regulations in the year 2005. These regulations created the concept of micro insurance. Let’s understand what micro insurance is all about –

What is micro insurance?

Micro insurance means insurance plans which are created for providing insurance solutions to individuals living in a rural area. An area is said to be rural if the total population in the area is below 5000.

Features of micro insurance policies

Here are some of the main features of micro insurance policies which are available in India –

  1. There are different types of micro insurance plans available in the market. These plans can be life insurance or general insurance plans
  2. The sum insured under micro insurance plans is restricted to up to INR 50,000. This is done to ensure that premiums are low and affordable for the rural population
  3. IRDA has made it mandatory for life and general insurance companies to sell a specific portion of micro insurance policies every year. This has been done to promote the penetration of micro insurance in the rural sector which would create social welfare. As such, insurers are supposed to source a part of their business from rural sectors
  4. Specialised micro insurance agents are appointed to sell micro insurance plans
  5. The premiums are very low under micro insurance policies and can also be collected weekly in some cases

Types of micro insurance plans

Insurance companies offer different types of micro insurance plans for the rural sector. Some of the most common types of micro insurance plans are as follows –

  1. Term life insurance

Term plans provide financial security to the insured and his family members. The plan ensures that if the insured dies during the policy tenure, the family receives a benefit to bear the financial loss that they suffer.

  1. Endowment insurance

These plans provide policyholders with dual benefits of insurance and savings. Individuals can save over the policy period to create a corpus on maturity. Moreover, in case of premature death, the sum assured is paid to compensate the financial loss.

  1. Health insurance

Health insurance policies cover the cost of hospitalisation if the insured falls sick and needs medical help. These policies, therefore, cover medical bills and help individuals deal with the financial aspects of their sickness.

  1. Livestock insurance

This insurance policy covers the financial loss suffered by farmers or individuals who rear livestock when animals die or fall sick.

  1. Hut insurance

Hut insurance covers the damages suffered by the huts of individuals in which they live. Hut insurance policies are like property insurance policies where the insured property is the hut.

  1. Personal accident insurance

Under personal accident insurance plans, loss of life due to accidents and disablements are covered. If the insured dies or becomes disabled accidentally, these plans pay a lump sum benefit.

  1. Crop insurance

Crop insurance plans cover the loss suffered by farmers when their crops are damaged due to natural disasters. These plans pay the financial loss suffered thereby compensating individuals for the loss of livelihood.

Benefits of micro insurance 

Micro insurance definitely benefits the rural segment by providing them with an insurance cover. This cover helps the lower and backward class people with the following benefits –

  1. Life insurance plans provide financial security when the bread-winner of the family dies
  2. Savings oriented insurance plans help poor people save in a disciplined and affordable manner to create a corpus for their future
  3. Health insurance plans ensure that economically weaker individuals get access to quality healthcare facilities when they need medical assistance 
  4. Livestock insurance plans help individuals face the financial loss when their livestock die
  5. Crop insurance plans are very essential for farmers as the plans protect them financially in case of crop related damages
  6. The premiums are low and affordable and help rural people improve their standard of living

Who can sell micro insurance plans?

Micro insurance policies can be sold by the following –

  • Non-Governmental Organisations (NGO)
  • Self-Help Groups (SHG)
  • Micro Finance Institutions (MFI)
  • Micro insurance agents

Potential setbacks in the development of micro insurance

Though IRDA introduced the concept of micro insurance to promote the welfare of the rural segments, micro insurance policies are still to make a big impact. Despite the availability of micro insurance plans, the penetration is low. The potential setback is the lack of knowledge. Many rural individuals are unaware of the importance of micro insurance plans and so they shy away from it. Moreover, premium payments are considered to be a burden thereby resulting in low penetration on micro insurance plans.

The road ahead 

IRDA has been organising awareness programs through the help of NGOs, SHGs and MFIs. These programs are expected to increase the knowledge of micro insurance among individuals and drive sales. Moreover, the distribution channels are also becoming wider so that micro insurance plans can reach the nooks and corners of the country. Nowadays, the plans can be bought online making them easier to buy.

The bottom line

Insurance is essential for the economically challenged population of India and IRDA is trying its best to promote microinsurance among individuals. Different types of microinsurance plans are being offered with better coverage benefits and lower premium rates. So, if you live in a rural area, buy a micro-insurance plan for your financial security.

Frequently Asked Questions:

  1. What is the premium for micro insurance plans?

The premium for micro insurance is very low and it depends on the type of policy that you buy.

  1. Can I cover the whole family under micro health insurance plans?

Yes, micro health insurance plans allow coverage for the whole family under family floater plans. The family would include self, spouse and a maximum of three dependent children.

  1. Can micro insurance plans be offered as group insurance plans?

Yes, micro insurance plans come as both individual plans as well as group plans. Under group micro-insurance, a bank, a self-help group or any other registered group can buy a suitable micro insurance policy for the coverage of its members.

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Types fire insurance India

Fires and other related perils, i.e. events which cause a financial loss, have become a common cause of losses in recent times. These perils cause unspeakable loss to property as well as goods. That is why having a fire insurance policy becomes important. The policy covers the financial loss that you face when assets are damaged due to fire or other covered perils. You can buy a fire insurance plan under the following circumstances –

  • If you are an owner of goods and/or property
  • If you are a pawnbroker or pawnee (pawnbroker – an individual who lends money to another based on any asset pawned by another; pawnee is an individual who lends money to another individual against an asset which is pawned)
  • If you are a mortgagee (mortgagee is a financial institution which lends money based on the mortgage of an asset)
  • If you are the assignee official receiver of assets where insolvency proceedings are involved
  • If you are a warehouse owner and goods are stored in your warehouse for which you are responsible
  • If you are an individual who has lawful possession of any goods or property

Coverage under fire insurance policies

Fire insurance plans not only cover losses suffered by fire but also losses suffered by other perils. The common perils which are covered under fire insurance policies include the following –

  • Fire, explosion or implosion
  • Lightning
  • Damage due to an aircraft
  • Strikes, riots or any other type of malicious acts which cause damage
  • Storm, typhoon, flood and inundation which is collectively called STFI
  • Impact damage which occurs on impact with road or rail vehicles, animals, etc.
  • Subsidence, rockslides or landslides
  • Overflowing or bursting of water tanks, pipes and other apparatus
  • Missile testing operations and the damages caused thereof
  • Water leakage from automatic sprinkler installations which causes damage
  • Bush fire

What is not covered under fire insurance policies?

Despite covering a number of perils besides fire, fire insurance policies also have some common exclusions. These exclusions include the following –

  • Losses by fire which was caused due to earthquakes
  • Perils like war, invasion and the like
  • Perils like martial law, insurrection or rebellion
  • Underground fires and the losses that they cause
  • The loss suffered when the insured property is burned on the directives of a public authority
  • Theft related losses suffered during or after the fire
  • Spontaneous combustion
  • Losses faced because of nuclear perils
  • Losses suffered because of pollution and/or contamination
  • Any type of consequential losses

Types of fire insurance policies available in India

Different types of fire insurance plans are offered in India depending on the coverage need of different individuals. The policies can be for fixed assets like building, plant and property or for goods and stocks of the business. The commonly available types of fire insurance plans include the following –

For fixed assets

  1. Replacement value policy
    As the name suggests, this policy works on the concept of replacing the asset which is damaged due to a covered peril. The insurance company pays the replacement value of the asset which is damaged. The replacement value is calculated as the market value of the asset minus depreciation based on the asset’s age. If the property is insured, the cost of construction of the property is covered under the policy. In the case of other assets, their replacement value is calculated and paid as a claim.
  2. Reinstatement value policy
    A reinstatement value policy is nothing but an added clause under the replacement value policy. As per this clause, the insurance company undertakes to replace the damaged property to its original condition which was prior to the loss. Reinstatement clause is applicable only for fixed assets like buildings. Other assets cannot be covered under this clause. Moreover, you get coverage on a reinstatement basis only if you choose the reinstatement clause in the fire insurance policy. If the clause is not selected, claims would be paid on a replacement value basis only.

For goods, stocks and other non-fixed assets

  1. Floater policy
    This policy is ideal for assets which are located at different locations. A single policy can be taken for all the assets and the assets would be covered on a floater basis. However, to avail coverage, every location and the value of the assets at each location would have to be specified.
  2. Declaration policy
    A declaration policy is suitable for assets whose value changes during the year, like stocks in a business. Under this policy, a provisional sum insured is taken and the premium is paid for the same. The sum insured would represent the maximum risk of the insurance company. Once a month completes, the highest value achieved by the fluctuating asset is recorded and declared. Thereafter, the average of the declared value is calculated and it becomes the actual sum insured of the policy. If the actual sum insured is lower than the provisional sum insured, you can claim a premium refund.
  3. Floater declaration policy
    This policy is the combination of floater policy and declaration policy. Assets stored at different locations whose values fluctuate over the year can be covered under a single policy through this cover.
  4. Specific policy
    This policy covers the loss up to a specific amount. The specific amount is the sum insured of the policy which is usually lower than the actual value of the asset.
  5. Comprehensive policy
    As the name suggests, a comprehensive policy has the widest scope of cover and covers the asset against the maximum number of perils.
  6. Valued policy
    Assets whose market value cannot be assessed can be insured under a valued policy. Under the policy, coverage is allowed for an agreed value of the asset which is the best estimate of the asset’s market value.
  7. Valuable policy
    Under this plan, the sum insured is not decided at the time of buying the policy. The claim amount is calculated at the time of loss. To calculate the claim amount, the market value of the asset is taken into consideration.
  8. Average policy
    The average policy is a fire insurance policy which works on the principle of ‘Average Clause’. An average clause is applicable if you avail a sum insured which is lower than the actual value of the good. In that case, when a claim is made, you don’t get the full amount of claim. You get an average claim which is calculated in proportion to the sum insured that you have taken. For instance, suppose the value of an asset is INR 1 lakh and you avail a sum insured of INR 80,000. Since you have insured only 80% of the asset’s value, you would get 80% claim settlement. So, if the claim is for INR 50,000, the insurance company would apply the average clause and pay a claim of only INR 40,000.
  9. Consequential loss policy
    This policy covers the loss of profit which you can suffer when fire disrupts your business.

Which type of fire insurance policy should you buy?

Given the different types of fire insurance plans which are available in the market, you must feel confused as to which policy you should buy. To clear this confusion, there are some factors which you should consider when choosing the right type of fire insurance plan. The factors which should determine your choice of the policy include the following –

  1. The type of risk that is being covered
    Choose a policy based on the type of risk that you face. If you have to insure assets at multiple locations, choose a floater policy. If the value of your assets cannot be accurately ascertained, a valued policy would make more sense. So, choose a policy based on the type of risk that you face
  2. The nature of the asset which you want to insure
    As stated earlier, different types of assets can be insured under different types of plans. For property and fixed assets, you can choose replacement value or reinstatement value policies while for other assets there are other policies. So, choose a policy suiting the asset which is to be insured.
  3. Exposure risks
    Assess the types of risks to which the asset is exposed and then choose the best policy.
  4. Coverage duration
    It is important to know the period for which you need to take the coverage before you select the most suitable fire insurance policy.

Documents required for claim registration in fire insurance

In case of a claim, you should submit the following documents for registering your claim with the insurance company –

  1. Copy of the policy bond which should also include the schedule of benefits as well as any clauses which have been attached therein
  2. The fire insurance claim form which should be completely filled and signed
  3. Newspaper cutting where the instance of the fire has been reported (If available)
  4. Previous claim records, if any
  5. Photographs of the damages suffered
  6. Police FIR
  7. Report of the fire brigade
  8. The forensic report, if available
  9. Final investigation report

Once the claim is registered, the insurance company would get the claim surveyed and then the claim would be settled.

Fire insurance is very important coverage for protection against the loss of assets. Losses cannot be avoided but you can insure against such losses if you are smart and buy the right type of fire insurance policy.

Frequently Asked Questions

  1. Can I change the type of fire insurance policy after I have bought it?
    Yes, you can change the fire insurance policy after the coverage period of the original policy is over.
  2. Can I increase the scope of coverage under fire insurance plans?
    Yes, fire insurance plans allow various coverage extensions which you can choose to increase the scope of coverage. Some common extensions include the following –

    • Forest fire
    • Damages suffered by the stock when they are stored in cold storage
    • Cover for earthquake-related damages
    • Damages resulting from leakage and contamination
    • Terrorism
    • Cost of debris removal which exceeds 1% of the claim amount
    • Architects, surveyors or engineers fees which exceed 3% of the claim amount
    • Omission to avail coverage for alterations, additions and extension
    • Rent paid for an alternate accommodation
  3. How is the premium calculated?
    Premiums of fire insurance plans depend on the type of policy bought, the risks covered, the sum insured, the value of the asset, usage of the asset which has been insured, expected risks and the policy extensions took.
  4. If the sum insured is higher than the value of the property would the claim be higher?
    No, the claim would be paid on replacement value or reinstatement value clause even if you choose a higher sum insured level.

Rural Postal Life Insurance – Eligibility, Premium Table (Govt. of India) (2021 Updated)

In India, the majority of the population lives in Rural area. Insurance plays an important role in giving them economic protection against losses that may arise due to an uncertain event. In order to make insurance affordable and accessible for rural people, the Government of India had initiated multiple reforms.

Malhotra Committee formed for the reforms in the Indian insurance sector has observed that only 10% of Indian household savings constitute of life insurance in the year 1993. On the basis of the Committee’s recommendations, Rural Postal Life Insurance scheme was introduced in the year 1995 in order to spread insurance awareness and for the welfare of women workers and weaker sections of rural India.

What is Rural Postal Life Insurance?

Rural Postal Life Insurance scheme was introduced in the year 1995 with a view to offering life protection to the larger population of rural India at minimal premium rates. The prime focus of the scheme is on weaker sections and women workers as recommended by the Malhotra Committee.

Benefits of Rural Postal Life Insurance

RPLI policies offer various benefits and facilities to the policyholder. Following are the benefits offered by Rural Postal Life Insurance:

  • The policyholder can change the nomination at any time during the policy
  • RPLI policies provide the benefit of assignment
  • The policyholder can avail loan against RPLI policies. However, endowment assurance plans need to complete three years and whole life assurance plans need to complete four years to pledge the policy for the loan
  • The lapsed RPLI policy can be revived. It’s important to note that if the policy is in force for less than three years, the policy will lapse after six unpaid premiums. If the policy is in force for more than three years, the policy will lapse after twelve unpaid premiums
  • Conversion of policy from endowment assurance to whole life assurance and whole life assurance to endowment assurance is also possible as per the rules
  • If the original RPLI policy bond is lost, torn, burnt or mutilated, the policyholder can request for issuance of duplicate policy bond

Schemes under Rural Postal Life Insurance

Following are the six types of RPLI policies offered:

  1. Whole Life Assurance (Gram Suraksha) Plan
  2. Endowment Assurance (Gram Santosh) Plan
  3. Convertible Whole Life Assurance (Gram Suvidha) Plan
  4. Anticipated Endowment Assurance (Gram Sumangal) Plan
  5. 10-year RPLI (Gram Priya) Plan
  6. Children Policy (Bal Jeevan Bima) Plan

Let’s learn more about these RPLI policies. Amount of premium chargeable for all RPLI policies may vary depending on the age, time period chosen and many other factors. There is flexibility offered on the mode of premium payment. It can be, yearly/half-yearly/quarterly/monthly depending on the specifications of each policy. Let’s take a look at some key features offered by each RPLI policy.

  1. Whole Life Assurance (Gram Suraksha) Plan
    The main objective of the policy is to provide financial protection to dependent family members on the death of policyholder along with maturity benefits to the policyholder. As per the policy conditions, the sum assured along with accrued bonus will be payable to the policyholder on attaining the age of 80 years or to the designated nominee in case of death of the policyholder, whichever is earlier. However, the policy should be in force to receive the benefits. Following are the key features and eligibility requirement for Gram Suraksha:

    1. Individuals between the age of 19 years and 55 years can apply for the scheme
    2. Sum assured offered under the scheme is from minimum INR 10,000 to a maximum of INR 10 lakhs
    3. The policy can be surrendered after completion of three years
    4. Loan facility can be availed by pledging the policy to Head of the Circle/to the President of India provided policy has completed four years
    5. Last declared bonus is INR 65 per INR 1,000 sum assured per year
  2. Endowment Assurance (Gram Santosh) Plan
    Gram Santosh scheme is aimed to fulfil the insurance needs of individuals by giving protection for the pre-specified period. In case of policyholder’s demise during the policy period, the sum assured and accrued bonus will be payable to the designated nominee. Following are some of the key features offered and eligibility conditions applicable for Gram Santosh RPLI policy:

    1. Individuals between the age of 19 years and 55 years can apply for the scheme. Maturity of the policy may range from 35 years to 60 years
    2. Sum assured offered under the scheme is from minimum INR 10,000 to a maximum of INR 10 lakhs
    3. Policy can be surrendered after completion of three years
    4. Loan facility can be availed by pledging the policy to Head of the Circle/to the President of India provided policy has completed three years
    5. Last declared bonus is INR 50 per INR 1,000 sum assured per year
  3. Convertible Whole Life Assurance (Gram Suvidha) Plan
    Gram Suvidha policy is aimed at providing financial protection in the event of the death of policyholder to his/her legal heirs. It is a flexible RPLI policy that comes with a main feature of convertibility, wherein policyholder can convert Whole Life Assurance plan into Endowment Assurance plan after five years of taking the policy. The policy assures to provide sum assured with an accrued bonus at the time of death till the policy attains maturity age. Compensation will be payable to designated nominee/assignee/ legal heir of the policyholder. Following are the key features of Gram Suvidha:

    1. Individuals between the age of 19 years and 45 years can apply for this RPLI policy
    2. Sum assured offered under the scheme is from minimum INR 10,000 to a maximum of INR 10 lakhs
    3. Policy can be surrendered after completion of three years
    4. Loan facility can be availed by pledging the policy to Head of the Circle/to the President of India provided policy has completed four years
    5. Last declared bonus is INR 65 per INR 1,000 sum assured per year (for policy that is not converted to Endowment Assurance Policy)
  4. Anticipated Endowment Assurance (Gram Sumangal) Plan
    Gram Sumangal is a policy that aims to provide periodical returns along with protection cover. Basically, it is a money-back plan that pays survival benefits in periodical instalments. Apart from survival benefits offered, if the policyholder dies anytime during the policy term, the full sum assured along with accrued bonus will be payable to the nominee/legal heir/assignee. Following are the key features of Gram Sumangal policy:

    1. Individuals between the age of 19 years and 40 years can apply for this scheme with 20 years term and up to 45 years for the scheme with 15 years policy term
    2. Maximum of INR 10 lakhs can be offered as the sum assured under the scheme
    3. The policy comes with the benefit of assignment
    4. Policy term can be chosen between 15 years and 20 years
    5. Survival benefits periodically payable are as below:
      1. For 15 years policy term – 20% of the sum assured payable each time on completion of 6 years, 9 years and 12 years and the remaining 40% will be paid on maturity along with accrued bonuses
      2. For 20 years policy term – 20% of the sum assured payable each time on completion of 8 years, 12 years and 16 years and the remaining 40% will be paid on maturity along with accrued bonuses
    6. Last declared bonus is INR 47 per INR 1,000 sum assured per year
  • 10 Years RPLI policy (Gram Priya) Plan
    RPLI policy is one of kind money-back policies that aims to provide benefits within a short span of 10 years only. The policy pays out survival benefits periodically and also assures to provide financial protection in the event of the demise of the policyholder. Sum assured is payable on the death of the policyholder to the designated nominee.

    1. Individuals between the age of 20 years and 45 years can apply for this RPLI policy
    2. Sum assured offered under the scheme is from minimum INR 10,000 to a maximum of INR 10 lakhs
    3. The policy term is 10 years
    4. Survival benefits payable periodically are – 20% of the sum assured payable each time on completion of 4 years and 7 years and the remaining 60% will be paid on maturity along with accrued bonuses
    5. In case of natural calamities like earthquake, drought and cyclone etc, interest will not be chargeable up to one year on unpaid premium
    6. Last declared bonus is INR 47 per INR 1,000 sum assured per year
  • Children Policy (Bal Jeevan Bima) Plan
    Bal Jeevan Bima policy aims to provide financial security to the children of rural India, specifically the ones who belong to the weaker section of the society. Insurance coverage under this RPLI policy is provided to children of the policyholder. Following are the key features of Bal Jeevan Bima plan:

    1. Children between 5 years and 20 years can be covered under this RPLI policy
    2. A parent who is the policyholder should not be older than 45 years
    3. Maximum of two children of a policyholder is eligible for this scheme
    4. Risk cover will start from day one of the policy issuances. A medical check-up is not required for children
    5. On the demise of the policyholder, further premium payments are stopped. That means premiums will be waived off. However, the benefit of sum assured and accrued bonus will be paid on completion of the policy term
    6. Last declared bonus is INR 50 per INR 1,000 sum assured per year

RPLI policy registration process

RPLI policy registration can be done online. Following are the simple steps to follow

  • Visit India Post’s postal life insurance portal
  • Click on ‘Rural Postal Life Insurance’ under ‘products/schemes’ tab
  • Click on ‘buy policy’ option and fill in your details and coverage requirement and obtain a quote
  • Proceed for application. Start filling the application form by mentioning all the relevant details. Further, you can provide your employment history, nomination details, insurance history and medical history
  • Choose the base coverage, provide a declaration, confirm and proceed for payment
  • You can make a payment online or skip the payment if you are going to pay offline
  • You need to take the print out of the filled application and submit it at the nearest Indian Post Head Office along with relevant documents
  • Once the application is processed customer ID will be issued for further online tracking of your RPLI policy.

Documents required for registration of RPLI policy

Following are the documents required for registration:

  • Age proof- Birth certificate/SSLC mark sheet/Voter ID/Passport etc.
  • Identity proof – PAN card/ driving license/voter’s ID/ Passport/ Adhaar card, etc
  • Address proof – Driving license/passport/latest electricity bill/ telephone bill etc
  • Declaration of the medical examiner
  • Declaration in case the proposer is illiterate

Frequently Asked Questions (FAQs)

  1. What do you mean by ‘surrender value’ of RPLI policy?
    Surrender value is the amount or sum of money that is payable on cancellation of RPLI policy.
  2. How to initiate the claim in Rural Postal Life Insurance policies?
    The claimant can visit the nearest post office and obtain the claim request form and initiate the claim process by submitting necessary documents along with the form.
  3. What is ‘assignment’ in RPLI policy?
    Assignment means transferring of rights from the policyholder to another person. In this case, when assignor (policyholder) dies, compensation will be paid to assignee.
  4. How can I pay a premium for RPLI policy?
    Premium payment for RPLI policies can be made by visiting any of the nearest post offices. If you are a registered online customer having access to the customer portal with the customer ID, you can pay premiums online also.
  5. What is ‘policy number’ in RPLI policy?
    The policy number is a unique 13-digit number issued to the policyholder. This number needs to be quoted in any correspondence relating to your RPLI policy.

Keyman insurance guide

Businesses do not run themselves. They need experienced and skilled individuals to plan, execute and implement business decisions so that the business can grow. In fact, the expertise and the intrinsic talent of an individual can act as the key to the success of the business. In such cases, if the key employee who is responsible for the growth of the business dies, the business faces substantial loss. The business loses the technical knowhow and skill of the employee which helped its growth. Moreover, hiring another individual to replace the deceased also involves considerable expenses. To cover this loss suffered by the business, Keyman insurance policy is available in the market. Let’s understand what the policy is all about –

What is Keyman insurance?

Keyman insurance is a life insurance cover which is taken by an employer on the life of its employees. The employer is the policyholder as well as the one responsible for paying the premium. The employee is the life insured. If the employee dies during the term of the policy, the employer receives a death benefit which compensates the employer for the financial loss suffered due to the death of the key employee. The employee covered under a Keyman insurance policy should be the key employee of the business who is instrumental for the success of the business.

How does Keyman insurance work?

The business might decide to buy a Keyman insurance policy on its key employees. Only term insurance plans can be bought under Keyman insurance. The term of the policy is such that the policy expires when the employee retires. So, if the employee is aged 35 years when the policy is being bought and the retirement age is 65 years, the term of the policy would be 30 years. Alternatively, if the employee has a fixed employment term, the term of the Keyman insurance policy matches the employment tenure of the employee. If the employee dies during the term of the policy, Keyman insurance policy pays a death benefit to the employer. If, on the other hand, the policy matures, no benefit is paid as it is a term insurance plan.

Eligibility criteria for the employee to be covered

An employee is considered to be a Keyman if he/she fulfils the following eligibility parameters –

  1. The employee holds less than 51% of the stake in the company in which he/she is employed
  2. The aggregate shares held by the employee and his/her family members should not be more than 70% of the total share capital of the company
  3. The role of the employee should be provided and it should be proved that such role is critical for the business

Sum assured under Keyman insurance policy

The coverage amount for Keyman insurance policy is determined to be the lowest of the following –

  1. 10 times the annual package of the employee
  2. 3 times the average gross profit that the company has earned in the last three years
  3. 5 times the average net profit that the company has earned in the last five years

Tax implications of Keyman insurance policy

There are different types of tax implications of a Keyman insurance policy on the premiums paid as well as on the benefits received. Let’s understand these implications for the employer as well as for the employee in details:

  1. Tax implications for the employer:
    1. On the premiums paid
      The premium paid for buying a Keyman insurance policy is considered to be a business expense. This expense is allowed to be deducted from the taxable profits of the company under Section 37 (1) of the Income Tax Act. This deduction, therefore, lowers the taxable profits of the company and reduces its tax liability.
    2. on the death benefit received
      The death benefit received by the company in case of death of the insured employee is fully taxable. The benefit is considered to be an income in the hands of the company and it is taxed as per the company’s tax slab rates. The exemption benefit under Section 10 (10D) is not available under Keyman insurance.
  2. Tax implications for the employee:
    1. On the premiums paid
      The premium paid by the employer is not considered to be a taxable perquisite in the hands of the employee as per Section 17 (2) of the Act. Thus, the employee incurs no tax liability on the premiums paid.
    2. On the death benefit received

      Since the death benefit is not received by the employee or his dependents, there is no tax liability. However, if the Keyman insurance policy is assigned to the employee when he quits the employer, the employee becomes the owner of the policy. The employee, then, nominates an individual to receive the policy benefits in case of his/her death. In this case, the death benefit is paid to the employee’s nominee. This death benefit would be taxable. No tax benefit would be allowed under Section 10 (10D).

Benefits of Keyman insurance policy

A Keyman insurance policy is considered to be very beneficial for the business because of the following reasons –

  1. The policy helps businesses face the financial loss incurred in case their key employees die prematurely
  2. The policy gives a boost to the morale of key employees as their importance is outlined through the Keyman insurance cover on their lives
  3. The price of the company’s stocks do not fluctuate wildly when the company has a back-up plan in the form of Keyman insurance even in case of death of its key employee
  4. The premium paid for a Keyman insurance policy is considered a business expense. Businesses can claim tax benefits on such expenses
  5. If the business has availed loans on the key employee’s guarantee, the death of the employee would result in substantial liability in the hands of the business. The policy proceeds of a Keyman insurance policy can help the business meet such liabilities and avoid a financial crisis
  6. If the company is being acquired by another company, the valuation of the company would be higher if it has a Keyman insurance policy covering the risk of premature death of its key employees

Drawbacks of Keyman insurance

Though a Keyman insurance policy is very beneficial, there are some drawbacks of the policy too. These drawbacks include the following:

  1. Since the death benefit is taxable, the company has to part with a considerable amount of benefit towards tax. This reduces the effective benefit received by the company for the loss of its employee
  2. Only term insurance plans are available under Keyman insurance which might not be suitable for every business

Things to remember about Keyman insurance

Here are some important things which you should remember about Keyman insurance policy –

  1. The company cannot choose riders under the plan
  2. The nominee of the policy would be the employer who is also the policyholder
  3. Loans cannot be taken under Keyman insurance plans
  4. The employee is neither required to pay the policy premiums nor does he/she receive any death benefit

How to buy Keyman insurance?

Businesses which want to buy a Keyman insurance policy would have to approach an insurance company and propose for insurance. The company would assess the insurance requirement of the business and offer coverage under Keyman insurance.

Businesses would have to submit the following documents to avail the policy –

  1. Copies of the Memorandum of Association and the Articles of Association of the company
  2. Copies of the audited financial records of the company of the last three financial years. The records include the Profit and Loss Account and the Balance Sheet
  3. A certified true copy of the board resolution which has been passed in a meeting of the Board of Directors of the company. The resolution should contain the following details:
    1. The required sum assured
    2. Name and signature of the employer who is authorised to act as a proposer for insurance and fill up the proposal form
    3. The seal of the company
  4. Copies of the income tax returns of the business of the last three financial years
  5. A consent by the company to place an endorsement on the insurance policy
  6. A keyman questionnaire should be filled and attached to the proposal form. The questionnaire should be signed by the proposer

A Keyman insurance policy protects the financial interests of the business if its key employee dies prematurely. Though the policy cannot replace the loss of skill, it can provide the business with the funds to deal with the loss and replace the employee with another. A Keyman insurance policy is, therefore, important and should not be ignored.

Frequently Asked Questions:

  1. What would happen if the keyman, on whose life the policy has been bought, quits the company?

    If the employee quits the company and Keyman insurance policy is in force, the employer has the following four options –

    • The employer can stop premium payments and let the policy lapse
    • The employer can assign the policy in the name of the employee
    • The company can continue the policy and avail the claim as to and when it falls due
    • The employer can transfer the Keyman insurance policy to the new employer on mutually agreed upon terms and conditions
  2. Which companies cannot buy Keyman insurance?

    Companies which are making a loss cannot buy a Keyman insurance policy.

  3. Can I buy unit-linked plans under Keyman insurance?

    No, only term insurance plans are allowed to be bought under Keyman insurance.

Cargo Insurance guide India

With globalisation making the world small, businesses have crossed the geographical boundaries. Nowadays, businesses are not localised in nature. Manufacturers are selling their goods in other countries and exploring new markets for their products. That is why the transportation of goods from one place to another has become a common practice for almost all businesses. This is why cargo insurance becomes of utmost importance to most businesses.

Though transportation of goods helps businesses expand their market, the risks associated with such transportation cannot be ignored. If the goods are damaged in transit, the business incurs a heavy loss. To cover such losses suffered by businesses, marine insurance policies are available. These policies cover the damages suffered when goods are transported from one place to another.

Marine insurance is broadly divided into two parts – cargo insurance and hull insurance. While cargo insurance covers the goods being transported, hull insurance covers the transportation vehicle. Cargo insurance is relevant for businesses transporting goods and is, therefore, very popular. Let’s understand what cargo insurance is all about –

What is cargo insurance?

Cargo insurance is a type of marine insurance policy which covers the goods which are transported from one place to another. A cargo insurance policy usually covers the goods from their place of transport to the destination. The policy, thus, safeguards the business from the loss suffered if the goods being transported are damaged before reaching their destination.

Covered transportation under cargo insurance

A cargo insurance policy covers transportation through the following means –

  • Water
  • Air
  • Road
  • Rail
  • Registered postal parcel
  • Courier

You can also buy a policy for covering transport by more than one of the above-listed means.

Who can buy cargo insurance?

Cargo insurance can be bought by the following –

  1. Merchants involved in importing and exporting of goods
  2. Buyers of goods
  3. Sellers of goods
  4. Buying agents
  5. Banks
  6. Contractors, etc.

What is covered under cargo insurance?

Coverage under a cargo insurance policy is determined by the Institute Coverage Clause (ICC) which you buy with the policy. ICC is the standard coverage under cargo insurance which is accepted by all marine insurance companies. There are three types of ICCs which are as follows –

  1. Institute Coverage Clause ‘C’

    This clause gives the basic coverage under a cargo insurance policy. The coverage includes only named perils which are as follows:

    1. Fire and/or explosion
    2. Overturning, collision or derailment of the transportation vehicle
    3. Jettison
    4. Discharge of the cargo at a point of distress
  2. Institute Cargo Clause ‘B’

    This clause is wider than ICC ‘C’ as it covers the damages suffered due to the following perils:

    1. Perils covered under ICC ‘C’
    2. Earthquakes
    3. Lightning
    4. Volcanic eruptions
    5. Water seepage into the transport vessel or storage area
    6. Losses suffered when loading or unloading the goods
  • Institute Cargo Clause ‘A’

    This is also called ‘All Risk Cover’ as it includes all the perils due to which the goods can be damaged. The coverage includes the following perils:

    1. Perils covered under ICC ‘C’ and ICC ‘B’
    2. Loss due to rainwater
    3. Theft, pilferage or any other type of malicious damage
    4. Shortage, breakage or any type of partial loss
    5. Any other losses suffered by the cargo other than the excluded ones

You can choose any type of coverage clause but ICC ‘A’ is better because of the comprehensive scope of coverage that it provides.

Exclusions under cargo insurance

Though cargo insurance policies provide quite a comprehensive scope of coverage, there are some perils and instances of loss which are not covered by the policy. Common exclusions under marine cargo insurance policies include the following –

  1. Damages suffered due to negligence and/or wilful misconduct
  2. The loss suffered due to delay in transportation
  3. Damages which occur when goods are not properly packaged
  4. Perils like war, riots, civil commotion, strike, etc.
  5. Costs incurred in removing the wreckage after a damage
  6. Damages suffered due to biological, nuclear or chemical weapons
  7. Damages due to radioactive contamination
  8. If the charterers, managers, owners or operators of the vessel become financially insolvent and are unable to transport the goods, the consequent losses would not be covered
  9. Inherent vice in the cargo which is certain to cause damage
  10. Normal loss in weight of the cargo and leakage or breakage of goods
  11. If the transportation vehicle is unseaworthy, i.e., not fit to transport the goods, but the vessel is used for transportation, consequent losses would not be covered

Types of marine cargo insurance policies:

Now that you know the coverage and exclusions under cargo insurance plans, you should also know the different types of plans which are available in the market. Since the transportation needs of different businesses might be different, cargo insurance plans come in the following variants –

Type of policy Meaning 
Voyage policy The policy covers a particular voyage from one place to another
Time policy The policy covers any number of voyages within a particular tenure. The tenure is, usually, one year
Mixed policy The policy combines voyage and time policies. It covers unlimited transportation in one route during a particular time period
Valued policy Under this policy, the value of the cargo is mentioned before taking insurance. Coverage is, therefore, limited up to the specified value of the cargo
Unvalued policy Under this policy, the cargo is not valued before it is insured. The value is determined after a loss occurs
Floating policy Multiple voyage policies make up a floating policy. The policy has a floating sum insured and multiple voyages are covered up to the sum insured
Block policy The policy covers the cargo from the time it leaves the seller’s warehouse and up to the time it reaches the buyer’s warehouse

Important terms associated with cargo insurance

Marine cargo insurance policies have some technical terms associated with them which might confuse you. So, here are some common technical jargons simplified –

  1. EXW (Ex-Works)

    The full form of EXW can be Ex-works, ex-warehouse, ex-place, etc. Under EXW cargo insurance plans, the buyer is supposed to collect delivery of the goods from the seller. Any damage to the cargo before the buyer collects it would be the liability of the buyer. As such, the buyer buys a cargo insurance policy on EXW to insure his liability.

  2. FOB (Free on Board)

    FOB means Free on Board. FOB policies make it the seller’s liability for loading the goods on the ship. If the goods are damaged before they are loaded on the vessel, the seller would face a loss. That is why the seller buys a FOB cargo insurance policy for covering his liability. The seller’s liability is over once the goods are loaded. The buyer then needs to buy another policy to cover the risk of damage during transportation and unloading of the goods.

  3. CFR (Cost and Freight)

    The full form ofCFR is Cost and Freight. If the seller pays the freight charge for booking the transportation vehicle, he incurs an additional cost. To cover this cost the seller buys CFR policy which pays the loss of freight in case the goods are damaged.

  4. CIF (Cost, Insurance, Freight)

    CIF means Cost, Insurance Freight. If the buyer asks the seller to buy a marine cargo insurance policy from the seller’s warehouse to his warehouse, the seller can buy a CIF policy. This would be a single policy covering all the risks from the origin to the destination. The policy would belong to the seller until the goods are loaded onto the transportation vehicle. Once loaded, the ownership of the policy would change and the buyer would become the policyholder. Thus, a single policy would cover the risks faced by the buyer as well as the seller.

  5. DDP/DAP (Delivered Duty Paid / Delivered at Place)

    DDP/DAP meansDelivered Duty Paid / Delivered at Place. These contracts are applicable if the buyer has superiority over the terms of transportation. Usually, in such situations, the sellers are required to transport the goods to the buyer’s place. Thus, the seller faces the liability of loss if the goods are damaged until they reach the buyer’s place. To cover this liability the sellers buy a DDP/DAP cargo policy and the buyers are not required to buy any plan since they don’t face any risk of loss in transportation.

    Cargo insurance plans can be a bit complicated if they are not understood properly. So, understand the policy in detail, its coverage clauses, perils covered and the important terms associated with it before you buy so that you know the coverage inside out.

Frequently Asked Questions:

  1. Who is responsible to buy cargo insurance?

    A cargo insurance policy is to be bought by the buyer or seller depending on the liability faced by them.

  2. Is inland transportation covered under cargo insurance?

    Yes, transportation of goods within India is also covered under cargo insurance.

  3. What is the Institute Cargo Clause (Air)?

    This coverage clause is applicable if the goods are being transported by air.

  4. Do cargo insurance policies provide extensions?

    Yes, coverage extensions are available under marine cargo insurance policies. Common extensions include the following –

    1. Costs incurred on loading and unloading of goods
    2. Customs duty
    3. Removal of debris after the loss has incurred, etc.

Laptop insurance

In today’s modern time, computers dominate almost everything that you do. Digitisation has become so important in today’s age and businesses and companies run on technology. Computers and laptops have, therefore, become quintessential for completing your work. These gadgets are quite expensive and if they are damaged you incur quite a substantial loss. Though the gadgets are expensive, they are quite easily damaged. Mishandling related damages, theft, short circuits, damage due to liquid spillage, etc. are some of the common causes which damage your laptops. Can you insure these damages?

Actually, you can. There are laptop insurance policies available in the market which cover the damages suffered by your laptop. Let’s understand what the policy is all about.

What is laptop insurance?

Laptop insurance is a general insurance policy which covers the damages suffered by your laptop due to specified perils, i.e. events that cause a financial loss. If your laptop is damaged due to the covered perils, the insurance policy would cover the cost of repairs that you incur.

Why you should buy laptop insurance?

A laptop insurance policy proves beneficial because of the following reasons –

  • The policy covers even those damages which are not covered under the laptop’s warranty
  • You get financial assistance in case of damages suffered by your laptop. This assistance helps you to get the laptop repaired properly
  • If the laptop is stolen you get the sum insured which helps you buy a new laptop without a financial pinch

What is covered under laptop insurance?

Damages to the laptop due to the following contingencies are covered under laptop insurance plans –

  • Cracks or damages to the laptop screen
  • Electrical or mechanical breakdown
  • Theft or burglary of the laptop
  • Loss of the laptop
  • Any type of accidental damage suffered by the laptop
  • Damage due to liquid spillage or seepage
  • Faulty laptop battery or loose port
  • Failure or error in the RAM of the laptop
  • Burn out of the LCD
  • Crash of the hard drive of the laptop

What is not covered under laptop insurance?

There are some instances that are not covered under laptop insurance policies. If you make a claim for these instances, the claim would be rejected. Instances include the following –

  • War, riots, terrorism and related perils and the damages that they cause
  • Damages due to wilful negligence of the policyholder or any other individual using the laptop
  • Any pre-existing defects which were in the laptop before laptop insurance was bought
  • The natural wear and tear of the laptop due to usage and depreciation
  • Damage to the laptop due to climatic conditions
  • Normal maintenance charges incurred on the laptop

How does laptop insurance work?

If you own a laptop you can buy a laptop insurance policy to cover the risks of damage. To buy the policy you would have to approach an insurance company which offers laptop insurance. Understand the coverage benefits and exclusions and then buy the policy by paying the premium charged. The company would assess the proposal for insurance and would accept or reject your proposal. If the policy is accepted you would be given laptop insurance coverage and the company would promise to pay for the damages specifically covered under the plan.

Eligibility parameters for buying laptop insurance

To buy a laptop insurance plan you should be the legal owner of the laptop. The laptop can be purchased in India or imported from an international country through proper import channel. You would have to submit the bill of purchase when buying the insurance policy.

How to make a claim under the laptop insurance policy?

To make a claim in your laptop insurance policy, you should follow the below-mentioned steps

  • The first and the most important step of a claim under your laptop insurance policy is intimating the insurance company. Once your laptop is damaged and the damage is covered under the policy, call up the claim department of the insurance company and inform them about the claim. The insurance company would register your claim and give you a claim reference numbe which you should keep at your disposal during the claim process
  •  If your laptop has been stolen, a police FIR is a must. File an FIR and make copies of it as they would be required with the claim documents
  • Once the company is informed, the company can engage a surveyor to assess the damages suffered
  • Alternatively, the company might direct you to send the damaged laptop to the nearest service centre which is authorised by the insurance company to assess the damages
  • The claim related documents should be submitted to the insurance company quickly for a quick settlement
  • Once the damages have been assessed by the company appointed surveyor or service centre, a claim report would be prepared to estimate the amount of claim
  • Based on the claim report, the laptop would be repaired
  • The claim would then be paid by the insurance company. In case of cashless repairs, the claim is directly settled by the company with the service centre. In case of theft or reimbursement claims the company would credit the claim amount directly to your bank account

Documents required for laptop insurance claims

As mentioned in the claim process, you are required to furnish a complete set of documents for your claims to be processed. These documents include the following –

  • Claim form which should be filled in and signed by the policyholder
  • Photo of the damaged laptop along with the serial number
  • Proof of identification of the individual who bought the laptop
  • Police FIR in case of theft claims
  • If you own an Apple laptop, you would also have to submit a photo of disabled function of ‘Find my Mac’, i.e. when your “find my Mac” command is not working on your MacBook.

Companies offering laptop insurance

In India, only a few insurance companies offer laptop insurance. These are as follows –

Name of the company Name of the policy Salient features 
ICICI Lombard General Insurance Company Electronic Equipment Insurance Policy
  • The sum insured can be taken on a replacement value basis where the company pays the cost of the new laptop
  • Cost of restoring the damaged or lost data is also covered under the sum insured
  • Add-on covers are also available
Future Generali General Insurance Company Electronic Equipment Insurance
  • An all-risk policy is offered by the company which covers almost all types of perils
  • Other electronic equipments are also covered under the policy besides laptops
OneAssist Laptop Insurance Plan
  • The company provides doorstep pickup services for damaged laptop and claim documents
  • Spare parts used are 100% original
  • Doorstep delivery of the repaired laptop
TIMES Global Assurance Laptop Insurance Plan
  • 100% coverage in case of screen-related damages
  • In case of theft, 90% of the invoice value of the laptop is paid
  • Up to 50%, no claim premium refund is allowed in long term plans
  • A free extended warranty on your laptop is allowed with the plan

Things to remember

Before you buy a laptop insurance policy, here are some aspects of the policy which you should remember

  • The premium of the policy would depend on the coverage features and the cost of your laptop. The more inclusive the coverage benefits the higher would be the premium. Similarly, if the laptop has a higher value, the premiums would be high
  • The exact coverage benefits depend on the insurance company. you should, therefore, read the coverage features before buying the policy
  • Always compare laptop insurance plans offered by different companies before you buy. Comparing would give you a policy which has the best coverage benefits at the lowest premium rates
  • Add-ons are also available with laptop insurance plans which enhance the scope of coverage. Common add-ons include the cost of air transport if you are buying the laptop internationally, coverage for the cost of customs duty, etc.

Laptops are expensive gadgets and damages might involve substantial financial costs. Moreover, warranties are applicable only for a specified period after which you are required to pay for the repair costs of your laptops. A laptop insurance policy comes in handy in covering the damages suffered by the laptop. The policy provides a good scope of coverage along with the option of customising the coverage with add-ons. So, if you own a laptop, buy a laptop insurance policy and secure the costs faced in case of damage or theft.

Frequently Asked Questions

  1. What is the tenure for laptop insurance policies?
    Usually, laptop insurance plans come for a period of one year. However, some companies also offer longer coverage durations.
  2. Are there any discounts on laptop insurance plans?
    Yes, many plans offer you a premium discount if you buy a long term policy or if no claims are made in a policy year.
  3. What is the limit on the number of claims which I can make in a policy year?
    The limit on claims depends on the insurance company offering the laptop insurance plan. Some companies keep a maximum limit to the number of claims while in some companies there is no limit to the number of times you can claim.
  4. What would happen if my laptop is completely damaged?
    In case the laptop is completely damaged where the cost of the repair exceeds 75% of the sum insured of the policy or the invoice value of the laptop, the claim is made on a Beyond Economic Repair (BER) basis. In that case, you get the sum insured after deducting the scrap value of your laptop.

Dental Insurance

Today, rising exposure to foods like chocolate, cakes, pastries and shakes, oral healthcare problems have become very common. Be it a root canal, extraction of a wisdom tooth or treating gum disease, dental healthcare treatments are expensive. You may have adequate health insurance policies to protect you financially against all the health contingencies. But, the health insurance plans also come with various exclusions. Dental treatments are the most common exclusions that you can find in any health insurance policy. Without insurance, expensive dental treatments can get unaffordable for many.

What is dental insurance?

Dental insurance is a type of health insurance plan that is specially designed to provide coverage against certain costs associated with oral healthcare.

In India, insurance coverage for dental healthcare can be availed in two ways –

  • Stand Alone dental insurance
  • Dental health cover included in your health insurance policy

In India, hard thing is that there are not many options available when it comes to stand-alone dental insurance. However, many health insurance products include coverage for dental healthcare.

How dental insurance works?

Dental insurance coverage can include preventive treatments, basic or major oral care treatments. Depending on the type of coverage compensation will be paid under insurance policies with dental coverage.

Types of general insurance plans that may cover dental healthcare

Following are the general insurance plans that may cover your oral health:

    1. Individual health insurance policies: Individual health insurance policies may cover certain dental procedures. Most of the policies cover dental treatment costs arising out of accidental injuries. However, the cover may vary from policy to policy
    2. Family floater health insurance policies: Family floater health insurance plans covering many members of the family for medical contingencies sometimes include few dental care treatments under the coverage
    3. Travel medical insurance policies: Most of the travel insurance plans cover emergency dental care needed and dental treatments needed due to accidental injury. However, the policies may place limits on compensation to be paid under dental coverage
    4. Critical illness policies: Critical illness policy is a standalone plan that covers only specific illness and pays compensation in one go. Some of the critical illness policies may cover dental surgeries as a part of their plan
    5. Personal accident policy: Most of the personal accident policies include dental treatment expenses arising out of accidental injuries
    6. Preventive healthcare policies: Preventive healthcare policies that usually pay for regular health check-ups and doctor consultation may sometimes cover oral health check-ups and consultation

List of dental insurance plans (as a part of general insurance plan) offered in India

Plan Name Dental Coverage
Apollo Munich Maxima Health It is a comprehensive health insurance plan that offers various unique benefits on individual and family floater basis. The policy provides coverage for outpatient dental treatments excluding the treatment types that comprise cosmetic treatment. However, the policy offers only limited coverage up to a certain amount specified in the policy document.
Bajaj Allianz Health Guard Policy Bajaj Allianz health guard policy is an all-rounder health insurance plan that addresses the extensive healthcare needs of people. The policy offers coverage for dental procedures and treatments that requires hospitalisation. However, the oral treatments that do not require hospitalisation are excluded from the policy.
Bharti AXA Smart Health Insurance Plan This plan offers extensive healthcare coverage with its two different variants. The policy provides the provision for coverage of dental treatment that is necessitated by an accident.
New India Mediclaim Insurance Policy The policy provides a comprehensive healthcare solution with dental coverage for oral treatments that requires hospitalisation and are needed due to an accident. However, dental treatments that do not require hospitalisation are excluded from the policy.
Birla Sun Life Saral Health Plan It is a unit-linked health plan that helps you build contingency fund for healthcare needs. Health reimbursement benefit offered by the policy can be used for dental care expenses.
ICICI Prudential Health Saver It is a unit-linked health plan that helps you build contingency fund for healthcare needs along with an option of investment. Health savings benefit offered by the policy can be used for dental care expenses.
Chola MS Travel Insurance Chola MS travel insurance protects you against medical emergencies during your trip. Dental care treatments are also included in the coverage.

Inclusions and exclusions under dental coverage plans in India:

Though you may not get an exclusive dental insurance plan in India, some of the health insurance, travel insurance and personal accident policies cover various dental care expenses. Following are some of the dental care expenses covered under the policies:

  • Routine oral health check-ups and preventive treatments
  • Tooth extraction
  • Dental x-rays
  • Tooth filling
  • Oral cyst and infections
  • Tongue-tie for infants and kids
  • Dental injury due to an accident
  • Root canal procedures
  • Dental implants
  • Dental surgeries
  • Clearance exam before chemotherapy
  • Treatment for gum diseases
  • Follow-up care and treatment

However, most of the plans exclude dental care treatment expenses comprising of cosmetic treatments, dentures, jaw alignment and dental implants etc.

What are the criteria to choose these companies as they do no offer stand-alone dental insurance?

Following are the key points to keep in mind while choosing the insurer for dental coverage:

  1. Know what the policy covers and limitations on the benefits offered
  2. Check on the list of dentists in the network hospitals of the insurance company
  3. Look for the insurer who cover major dental procedures in a health policy
  4. Compare cost and benefits and choose wisely

How to apply for dental insurance?

Dental coverage in India can be availed as a part of many health insurance policies. Health insurance policies with dental care included can be purchased online after comparing various plans. You can buy dental insurance plans (health insurance plans including dental cover) through Turtlemint by following below steps:

  1. Go to Turtlemint and choose the category of insurance as ‘health’
  2. Click on ‘buy new policy’ and proceed
  3. Fill in your profile details such as gender, members to be insured, age, health history and contact details etc.
  4. Compare the various health plans with dental insurance coverage available and select the best suitable plan as per your need and affordability
  5. Provide necessary coverage details
  6. Make the payment online. That completes your insurance buying process!

Documents required for dental insurance

Following are the documents required for buying dental insurance plans:

  • Age proof – Birth certificate/Passport/SSLC mark sheet/Voter ID etc.
  • Identity proof – PAN card / passport/aadhaar card/ driving license/voter’s ID, etc
  • Proof of address – Driving license/passport/latest electricity bill/ telephone bill etc.
  • Photographs

Claim procedure in dental insurance

Claim procedure in availing dental insurance coverage plan under the health insurance plan is quite easy which is same as that of availing other hospitalisation benefits under the policy. In case of dental care that requires hospitalisation or something that is caused due to an accident, the following is the claim procedure to follow for availing cashless claim:

  • If you are availing treatment in-network hospital, intimate the insurance company and seek approval for cashless facility
  • You need to produce health card and necessary documents to hospital authorities and third-party administrators (TPA) for initiating the cashless claim.
  • Once the hospital receives the approval, your treatment papers and other relevant documents are sent to the insurance company
  • Amount of dental care bills as per the terms and conditions of the policy are settled directly to the hospital by the insurance company.

In case, you have availed out-patient dental care treatment or preventive care treatments, you can pay the expenses out of your pocket and then place a reimbursement claim request depending on the terms and conditions of the policy.

Frequently Asked Questions (FAQs)

  1. How to choose a dental insurance plan?
    Dental insurance coverage provided by the policies in India is limited. Hence, read through the fine print carefully, understand the exclusions and inclusions in the policy carefully before you choose dental coverage.
  2. Does dental coverage include tooth extraction?
    Almost every health insurance, travel insurance and personal accident policies cover dental treatments necessitated due to an accident. Some policies may cover wisdom tooth extraction, but it totally depends on the terms and conditions of the policy.
  3. Is root canal procedure covered in dental healthcare coverage under health insurance?
    Dental surgeries and treatments necessitated by an accident is covered by almost all policies. However, some policies that cover out-patient dental care may cover root canal procedures.

National Pension Scheme

Having a retirement corpus is very essential and that is why you contribute towards a provident fund scheme during your employment tenure. While salaried individuals have the backing of the employee’s provident fund scheme, self-employed individuals look to create their own retirement corpus through investment into different avenues. There are different investment avenues for both salaried and self-employed individuals. The National Pension Scheme is one such avenue which helps you create a retirement corpus when you are working and also gives you a tax benefit. Let’s understand the scheme in details –

What is the National Pension Scheme?

NPS scheme was first introduced in the year 2004 by the Government of India. The scheme was designed to be a pension scheme covering the employees of the Government. However, in the year 2009, the NPS scheme was made open to all. Today, you can invest in the National Pension Scheme to build up a retirement corpus and also earn additional tax benefits in the process. The scheme is a market-linked scheme where your investments are invested in the market as per your preference. You can contribute towards the scheme when you earn an income. Thereafter, when you retire, the scheme can be redeemed. You can get a lump sum amount as well as annuity payments from the scheme which would help fund your retirement.

Who is eligible to invest in the National Pension Scheme?

Anyone who is aged between 18 and 60 years can buy the scheme. You can be a resident Indian or an NRI and you would be eligible to join the scheme. However, if you are an NRI and your citizenship status changes after you have bought the scheme, the scheme would terminate on such change.

How to invest in NPS?

To invest in the National Pension Scheme you would have to approach an authorised financial institution through which investment is allowed. Nowadays, every Indian bank and non-banking financial companies accept NPS investments. These institutions are called Point of Presence (POP) and each POP has an authorized branch through which you can make NPS investment. These authorized branches are called Point of Presence Service Providers or POP-SPs.

Though all banks and financial institutions are registered POPs, you can still check the list of POPs at the official website of Pension Fund Regulatory and Development Authority (PFRDA) https://www.npscra.nsdl.co.in/pop-sp.php. The National Pension Scheme is governed by the PFRDA and so POPs have to get themselves registered with PFRDA before they accept NPS investments.

Besides investing offline, you can also invest online. The registered POPs allow their customers with online banking facilities using which you can invest in the National Pension Scheme. You just have to log into your online bank account, fill up an online application form and apply. You can then invest the desired amount in the NPS scheme.

Documents required to invest

To invest in the National Pension Scheme you would have to submit the following documents –

  • The Registration Form, filled and signed
  • Your identity proof like PAN Card, Voter’s ID card, passport, Aadhar Card, etc.
  • Proof of age like passport, voter’s ID card, PAN card, Aadhar Card, etc.
  • Proof of address like driving license, passport, Aadhar Card, etc.

Types of NPS investment accounts 

When you choose to invest in the NPS scheme, there would be two accounts to choose from. You can invest in only one account or in both accounts. The types of NPS accounts are as follows –

  1. Tier I AccountThis account is the compulsory account into which you would have to invest when you choose the NPS scheme. The minimum investment which you are required to do in Tier I Account is INR 500. You would also have to invest a minimum of INR 1000 into the account in one financial year.

    Once invested, you cannot withdraw from Tier I account till the NPS scheme attains maturity. However, to provide liquidity to investors in times of need, National Pension Scheme allows you to withdraw from your Tier I investments at specified events. These events are as follows –

    • If you are unemployed for a continuous period of 60 days and above
    • If marriage expenses are to be paid
    • If medical emergencies are to be financed
    • If you want to buy a house, etc.
  2. Tier II AccountTier II Account is a voluntary account. You might invest in this account or only in Tier I Account. The benefit of Tier II Account is the fact that the account is flexible. You can invest whenever you want to and even withdraw from the account at any time. There are no limitations on withdrawals from Tier II Account. However, Tier II Account would be available only if you have invested in Tier I Account. The minimum investment for Tier II Account is INR 250.

Things to remember 

  • You cannot have multiple NPS accounts in your name
  • If the minimum investment in any of the accounts is not done in a financial year, the account would freeze. To unfreeze the account you would have to visit the POP through which you invested in the scheme and pay a penalty of INR 100 along with the amount that you want to invest.

How do the investments in the NPS Account grow?

As mentioned earlier, National Pension Scheme is a market-linked retirement scheme which gives you market-linked returns. Let’s understand how these returns are earned –

When you invest in NPS, you have a choice of two investment strategies. You have to choose a strategy based on your risk profile and investment preference. Let’s understand these strategies –

  1. Active choice –Under the Active Choice, you hold the reins on your investments. This strategy gives you a choice of different investment funds. You can choose any one or a combination of two or more funds. The available funds include the following-
    1. Asset Class A – whose portfolio is invested in alternative investment funds like REITS, MBS, AIFs, etc.
    2. Asset class C whose portfolio is invested in fixed interest instruments except for Government securities
    3. Asset Class E whose at least 50% of the portfolio is invested in stocks
    4. Asset class G whose portfolio is invested only in Government securities.

    Asset Class E has the highest risk and so you cannot choose to invest 100% of your investment in that class. You can invest a maximum of 75% in Asset Class E and rest in Asset Classes C and G in any proportion that you like. Asset Class A is optional. If you choose this fund, the maximum investment would be limited to 5%. Furthermore, under the Active Choice, the investments also depend on age. As you reach 50 years, equity exposure would start reducing. The reduction would be done @ 2.5% every year till your overall equity exposure reaches 50% when you are 60. Thereafter, in older ages, equity exposure would be restricted to 50%.

    However, if you do not choose Asset Class E the total investment can either be invested in Asset Class C or G without any investment restrictions.

  2. Auto choice –The Auto Choice strategy is a readymade strategy where your investments are managed automatically depending on your age. You just have to choose your risk profile from three available options – Aggressive, Moderate and Conservative. Thereafter, your investments would be split into different Asset Classes in the following manner –
    1. If you choose the Aggressive Risk Profile – Aggressive Life Cycle Fund:
      Age bracket Asset Class E Asset Class C Asset Class G
      Up to 35 years 75% 10% 15%
    2. If you choose a Moderate risk profile – Moderate Life Cycle Fund:
      Age bracket Asset Class E Asset Class C Asset Class G
      Up to 35 years 50% 30% 20%
    3. If you choose a Conservative risk profileConservative Life Cycle Fund:
      Age bracket Asset Class E Asset Class C Asset Class G
      Up to 35 years 25% 45% 30%

    This is how your investment is initially placed. Then, as you age, equity exposure reduces in all the profiles. This reduction is redistributed between Asset Classes C and G in specific ratios.

    You can choose any investment strategy and investment fund. Moreover, you can also switch between the selected strategies and funds. Switching is allowed once every year.

Management of investment funds

The management of the funds invested in the NPS scheme is done by registered fund managers. Currently, there are eight fund managers who are registered with PFRDA to manage NPS investments. They are as follows-

  1. Reliance Capital Pension Fund
  2. LIC Pension Fund
  3. SBI Pension Fund
  4. ICICI Prudential Pension Fund
  5. DSP Blackrock Pension Fund Managers
  6. Kotak Mahindra Pension Fund
  7. UTI Retirement Solutions Pension Fund
  8. HDFC Pension Management Company

You can choose any of the above-mentioned fund managers for managing your investments.

Maturity of the National Pension Scheme: Annuity Options available

The NPS scheme matures when you reach 60 years of age. You also have the option to defer the maturity age by 10 years. If you choose this option, your investments would remain invested for another 10 years and the scheme would mature when you reach 70 years of age.

When the scheme matures, you can withdraw 60% of the accumulated amount in a lump sum. From the remaining 40%, you would receive annuity pay-outs. There are different types of annuity pay-outs provided under NPS scheme. These include the following –

  1. Lifetime annuity at a uniform rate
  2. A guaranteed annuity which is payable for 5, 10 or 20 years as you choose. Once the guaranteed period is over lifetime annuity would be paid
  3. Lifetime annuity at a uniform rate and on death the purchase price is returned
  4. Increasing lifetime annuity which increases at a simple rate of 3%
  5. Lifetime annuity paid at a uniform rate. In case of death, 50% of the annuity amount would be paid for the lifetime of your spouse
  6. Lifetime annuity paid at a uniform rate. In case of death, 100% of the annuity amount would be paid for the lifetime of your spouse
  7. Lifetime annuity paid at a uniform rate. In case of death, 100% of the annuity amount would be paid for the lifetime of your spouse. Moreover, when the spouse also dies, the purchase price would be refunded to the nominee

You can choose any of the annuity payout options and the amount of annuity would depend on the option selected.

If your accumulated fund is below INR 2 lakhs, annuity pay-outs would not be possible. In that case, the entire amount would have to be withdrawn in a lump sum.

Withdrawals from National Pension Scheme:

You can withdraw from the NPS scheme before the scheme reaches maturity. Withdrawals can be done in full or partially. If you choose to withdraw completely, you can avail 20% of the accumulated amount in a lump sum. The remaining would be paid in annuity pay-outs.

Partial withdrawals can be done from the NPS scheme provided the following terms and conditions are met –

  1. You cannot withdraw more than 25% of the accumulated corpus at once
  2. Withdrawals would be allowed only from the third year of opening the NPS account
  3. Withdrawals would be allowed only for special instances. These instances are the same as those in Tier I Account like for meeting marriage related expenses or medical expenses, etc.
  4. A maximum of three withdrawals are allowed over the entire duration of the scheme
  5. After one withdrawal there would be a gap of 5 years before the next withdrawal is done

The tax implication of NPS scheme

As mentioned earlier, National Pension Scheme investments give you tax benefits. The investment done, the amount withdrawn and maturity proceeds have different tax implications. Let’s understand these implications in detail –

  1. Tax implication on NPS investmentWhen you invest in Tier I Account of the NPS scheme, the investment that you do is eligible for deduction from your taxable income. This deduction helps in lowering your taxable income and, consequently, your tax liability. There are multiple deductions which you can claim which include the following –
    1. Under Section 80 CCD (1)If you are a salaried employee, NPS contribution of up to 10% of your basic salary plus dearness allowance can be claimed as a deduction under this section. For self-employed individuals, the deduction limit is up to 10% of annual income. The maximum deduction that can be claimed under this section is INR 1.5 lakhs which also includes deductions under Section 80C.
    2. Under Section 80 CCD (2)If you are a salaried employee, NPS contributions done by your employer would also be allowed as a tax-free deduction. Contributions up to 10% of your basic salary and dearness allowance would be allowed as a deduction.
    3. Under Section 80 CCD (1B)Investment into the NPS scheme, up to INR 50,000 would be allowed as a deduction under Section 80 CCD (1B). This deduction would be available over and above the deductions which you can claim under Section 80C.

    Tier II investments, however, do not give you any tax benefits. Those investments form a part of your taxable income and would be taxed at your income tax slab rates.

  2. Tax implication on the maturity benefitWhen the NPS scheme matures, the 60% lump sum withdrawal is completely tax-free in your hands. Annuity payments from 40% of the corpus would be taxable in your hands at your slab rate as annuities are considered an income.
  3. Tax implication on closing the scheme before maturityIf you exit from NPS before it matures, 20% of the benefit received in a lump sum would be tax-free. Annuities received from 80% of the corpus would be taxed in your hands.
  4. Tax implication on partial withdrawalsAny partial withdrawal done from the scheme would be tax-free in your hands provided you withdraw up to 25% of the corpus at any one time.

Benefits of National Pension Scheme:

The Indian Government launched the National Pension Scheme to help individuals create a retirement fund for them. The scheme, therefore, allows you to build up a retirement corpus. Besides this, the NPS scheme has other benefits which include the following:

  1. Investments into the National Pension Scheme allow you an additional tax benefit of up to INR 50,000. Thus, you can claim a total deduction of up to INR 2 lakhs through 80C investments as well as by investing in the National Pension Scheme. This deduction helps in lowering your tax liability
  2. Since the NPS scheme gives market-linked returns, you can create an inflation-proof corpus which would give you sufficient funds on retirement
  3. The investment strategy of NPS is such that equity exposure reduces as you age. This reduction helps in safeguarding the returns which you have earned from the scheme allowing you to build a safe corpus
  4. The investment amount required for National Pension Scheme is quite low making the scheme accessible to all

So, if you want to create a retirement fund for yourself and also save tax in the process, choose the National Pension Scheme. The scheme would help you build a good corpus with market-linked returns and also promise lifelong income through annuities.

Frequently Asked Questions

  1. What would happen to my investments if I die before maturity?In case of death, your nominee can withdraw the accumulated corpus from the NPS scheme in one lump sum. This withdrawal would be tax-free in the hands of the nominee.
  2. What is PRAN?PRAN stands for Permanent Retirement Account Number. This number is associated with your NPS account. In other words, your NPS account is identified through your PRAN number. The number can be used for making contributions or for withdrawals.
  3. Who pays annuities under NPS scheme?There are specific insurance companies who can pay annuities under the NPS scheme. You can choose any company as per your preference. The companies are as follows –
    • Reliance Life Insurance Company Limited
    • Bajaj Allianz Life Insurance Company Limited
    • Life Insurance Corporation of India
    • ICICI Prudential Life Insurance Company Limited
    • HDFC Standard Life Insurance Company Limited
    • Star Union Dai-ichi Life Insurance Company Limited
    • SBI Life Insurance Company Limited
  4. Are any documents required for making withdrawals from the scheme?Yes, if you want to withdraw from the scheme you would have to submit some documents which include your PRAN card, cancelled cheque of your bank account and attested copies of your identity proof and address proof.

Personal accident insurance – coverage that you must buy

Accidents have become quite common in today’s age. Whether it is a simple fracture or a major burn or a road accident, you might face severe physical disabilities. When accidents occur, they result in a substantial cost in treatment and recovery. Moreover, in the case of permanent disabilities or death, you lose your ability to work and incur a loss of income. While health insurance policies cover the medical costs associated with accidents, accidental deaths and disablements are not covered. Here is where a personal accident insurance policy comes into the picture. Here is a complete lowdown on accident insurance and why you need it.

What is personal accident insurance?

A personal accident insurance policy is a plan of insurance which covers accident-related contingency. If you suffer from any of the covered contingency, the plan pays a lump sum benefit which helps you in dealing with the financial loss suffered due to the contingency.

Types of personal accident insurance plans

Personal accident insurance plans can be of two types which are as follows –

  1. Individual personal accident plan
    Under this plan, one individual is covered under the policy.
  2. Group personal accident plan
    Under this plan, a group of individuals are covered under the policy. Group insurance plans are bought by registered groups to get coverage for their members. These groups can be employer-employee groups, banks and their account holders, clubs and their members, etc. A single policy is issued and the policy covers all the named members of the group.

Features of accident insurance plans:

Accident insurance plans have the following salient features:

These fixed benefit plans which pay a lump sum benefit in case of covered contingencies

  1. The premiums are very low. Moreover, the premiums paid are allowed as a deduction from your taxable income under Section 80D. You can claim a deduction of up to INR 25,000 if you are below 60 years and up to 50,000 if you are 60 years and above
  2. No medical check-ups are required to buy the policy
  3. The sum insured under the plan depends on your income
  4. Coverage is available only on individual sum insured basis. You cannot avail coverage on a family floater basis

Determination of the sum insured under accident insurance

As mentioned earlier, the sum insured under accident insurance policies depends on your annual income. The coverage is expressed as a multiple of your annual income and the multiple depends on the insurance company. If you want to cover your dependent spouse and children, you would have to buy individual policies for each of their lives. The coverage for a dependent spouse would be restricted to 50% of your coverage amount. Similarly, for dependent child coverage would be restricted to 25% of your sum insured.

What is covered under accident insurance plans?

An accident policy covers the following instances –

  1. Accidental death
  2. Accidental permanent and total disablement
  3. Accidental permanent and partial disablement
  4. Accidental total and temporary disablement

Important terms associated with accident insurance plans

There are some important terms associated with the coverage under personal accident plans. You should understand them to understand the coverage correctly. So, let’s see what these terms are –

  1. What is an Accident? How is it defined?
    An accident is said to be an external, visible, violent and uncertain event which causes loss of life or disablement.
  2. What is Permanent and total disablement in a personal accident plan?
    Permanent and total disablement means a disability which renders the insured unable to work lifelong. These disabilities include loss of both hands, loss of both legs, loss of sight in both eyes, loss of hearing in both ears.
  3. What is Permanent partial disablement in a personal accident plan?
    This means a partial disability which is permanent in nature for instance loss of one hand and one leg, loss of sight in one eye, loss of hearing in one ear, etc.
  4. What is a Temporary total disablement in a personal accident plan?
    This is when you are completely disabled but the disability is temporary in nature for instance when you suffer fractures or are advised complete bed rest after an accident

Benefits payable under accident insurance

The benefits payable under an accident insurance policy depends on the type of contingency that you suffer. The benefits are, usually, the following:

  1. In case of accidental deaths, you get 100% of the sum insured
  2. In case of permanent total disablement, you get 100% of the sum insured
  3. In case of temporary total disablement, you get a portion of the sum insured depending on the type of disability suffered
  4. In case of temporary total disablement, you get a weekly benefit for a specified number of weeks. This benefit is expressed as a percentage of the sum insured

Add-ons under personal accident insurance plans

While the afore-mentioned accidental contingencies are covered under all accident insurance plans, there are additional coverage features too which are provided under many plans. These features can be inbuilt in the policy or you can buy them by paying an additional premium.

Some of the common add-ons include the following –

  1. Children Education Fund 
    This cover pays a lump sum benefit in case of accidental death or permanent total disablement. The benefit is supposed to provide an education fund for your dependent children
  2. Funeral expenses
    This benefit covers the expenses incurred on arranging a funeral for the insured who dies in an accident
  3. Medical expenses 
    Under this cover, hospital expenses incurred due to an accidental injury are covered
  4. Transportation expenses
    This benefit covers the expenses incurred on transporting the mortal remains of the insured from the site of the accident to a hospital or to the residence of the insured
  5. Coverage for fractures and burns
    Under this cover, fractures and burns are covered and their medical expenses are paid under the policy
  6. Ambulance expenses
    This feature covers the cost of the ambulance incurred in taking the injured to the hospital after an accident
  7. Unemployment cover
    If the insured loses his/her job following a permanent disablement, this cover pays a lump sum benefit to compensate for the loss of income suffered
  8. Adventure sports cover
    Accidents suffered when engaging in adventure sports are excluded from the scope of coverage of accident insurance plans. However, you can pay an additional premium and secure coverage for the same.

What is not covered under accident insurance?

Accident insurance plans do not cover the following instances of claims

  1. Suicide or self-attempted injuries
  2. Accidents suffered when engaging in acts of criminal nature
  3. Accidents suffered when engaging in adventure sports
  4. Accidents suffered when under the influence of alcohol, drugs and/or other hallucinogens
  5. Accidents suffered when engaged in defence-related operations
  6. Accidents suffered due to war, rebellion, mutiny or related perils
  7. Expenses incurred on pregnancy, maternity and childbirth
  8. Any type of accidents suffered due to nuclear contamination
  9. HIV/AIDS and other types of venereal diseases
  10. Accidents suffered due to mental disorders
  11. Non-allopathic medical treatments
  12. Any type of pre-existing disability

How are premiums calculated?

Premiums of an accident insurance plan are calculated on the following parameters –

  1. Your age:
    Age is directly proportional to the premium. If you are older, the premiums would be higher and vice-versa
  2. The coverage level that you have selected:
    Higher the coverage level higher would be the premiums
  3. The risk class that you belong to:
    There are three risk categories based on your occupation. Premiums depend on the risk class that you belong to. The risk classes and their respective effect on personal accident premium are as follows:

    Risk class Risk Class I Risk Class II Risk Class III
    Type of risk Low High Very high
    Examples Bankers,

    executives, accountants, managers, etc.

    Contractors,

    promoters, builders, employees who carry money

    Mountaineers,

    journalists, miners, individuals who work in explosive industries, etc.

    Effect on premium Premiums are low Premiums are

    slightly high

    Premiums are the

    highest

  4. Term of the policy:
    Usually, accident insurance plans are offered for one year. However, some companies allow multi-year plans. If you choose such plans, the premiums would be higher since you would have to pay the multi-year premium at once.
  5. Discounts available:
    There might be discounts offered by accident insurance plans. If you are eligible for the available discounts, the premiums would reduce.
  6. Coverage features
    The more coverage benefits the plan offers the higher would be the premium charged
  7. Add-ons selected
    If you add optional coverage benefit to your plan, the premiums would increase

Why accident insurance plans are a must?

A personal accident plan is a must in today’s times because of the following reasons-

  1. Accidents have become very common and you need a financial cushion to deal with the financial implications of an accident. An accident insurance plan provides this cushion and helps you face the financial losses in case of any accidental contingency
  2. The premiums are very low compared to the coverage provided under the plan. This makes the plan affordable and accessible for all
  3. You can get a tax benefit on the premiums that you pay for an accident insurance plan. This would help you lower your tax liability while at the same time enjoying the coverage provided
  4. The range of coverage benefits provided under accident insurance plans ensure that every possible financial emergency is covered and you enjoy a comprehensive scope of coverage
  5. You can get compensation for the loss of income in case of disablements
  6. In case of accidental death, your family would be financially secured through the financial assistance provided by an accident insurance plan
  7. Most plans offer you worldwide coverage against accidental contingencies. So, you would be insured wherever you are

These reasons stress the importance of accident insurance plans and make them a must in today’s age when the number of accidents is increasing on a daily basis.

Buying accident insurance – as a rider or standalone policy?

To buy accident insurance, you have two options. You can either buy the coverage as a rider with your life or health insurance plan or you can invest in a standalone personal accident policy. Both these options have their respective benefits and drawbacks. Let’s understand what they are –

  1. Personal accident rider
    Life and health insurance plans offer an additional personal accident cover if you pay an additional premium for the same. Similarly, motor insurance plans allow a compulsory personal accident cover for the owner/driver of the vehicle. So, if you have a motor insurance plan, you already have a personal accident cover under it. Alternatively, you can opt for a personal accident rider with your existing life or health insurance policy by paying a small premium. While this would ensure coverage at a low premium rate, there are specific drawbacks to this cover. In the afore-mentioned covers, you get restricted coverage amount as well as features. Coverage is only available for accidental death and disablement. You don’t get any other optional or value-added covers. Moreover, these covers are relevant only to your policy continues. If the policy terminates, you lose the accident insurance coverage as well.
  2. Standalone accident insurance policy
    A standalone accident insurance policy can be bought as a separate cover. The benefit of having a standalone policy is the wider scope of coverage. You can avail coverage for different types of financial contingencies faced in an accident. Moreover, you can opt for a higher sum insured level to ensure that your family is optimally secured in case of accidental death. The policy can be renewed for as long as you want to ensure that the coverage is not dependent on any other insurance policy that you have. The premiums are slightly higher than accident insurance riders but the coverage benefits offered far outweigh the increased premium.

How to buy accident insurance?

To buy a personal accident insurance policy you have two options which are as follows –

  1. Offline Mode:
    You can buy the policy through an insurance agent or through the insurance company offering the policy. To buy the policy through the insurer, you can visit the company’s branch office and apply for a policy.
  2. Online Mode:
    Online purchases can be done from your home or office without having to visit the insurer’s office physically. The online medium is simple and quick to grant coverage. However, before you buy online, you should compare accident insurance policies of different insurance companies and then zero in on the best cover. Comparing would let you choose a policy which has the coverage features that you need at the lowest premium rates. So, compare online and then buy an accident insurance policy.

Documents needed to buy a Personal Accident Plan:

Whether you buy online or offline, you would have to submit some documents to complete the buying process. These documents include the following-

  1. Your photographs which should be recent and coloured
  2. Your identity proof
  3. Age proof
  4. Residence proof
  5. Employment-related details
  6. PAN Card
  7. Aadhar Card

How to make a claim under accident insurance plans?

In case of any accidental claim which is covered under your accident insurance policy, you should follow the claim process to get easy and quick settlement of your claims. The process is as follows –

  1. Inform the insurance company immediately about the claim
  2. If it is a road accident or any other accident where the police needs to be informed, inform the police and file an FIR
  3. Fill up the claim form stating the details of your accident insurance policy and claim. You should inform the time and date of the accident, policy number, insured’s details, location where the accident happened and how the accident happened in details so that the claim can be assessed
  4. Submit the form and other relevant documents with the insurance company
  5. The company would assess your claim and then pay the promised benefit if the claim is genuine and the documents are in order

Documents required to process a personal accident insurance claim:

The following documents are needed at the time of claim –

  1. Death certificate in case of death claims
  2. Post-mortem report in case of death claims
  3. FIR report
  4. Medical certificate showing disability
  5. Medical bills
  6. Doctor’s report certifying disability
  7. Any other document required by the insurance company

Given the rising incidence of accidents and the financial loss associated with them, personal accident policies become a must. The policy covers you against accidental death, disablements and other contingencies that you face ensuring that an accident wouldn’t disable you financially.

Frequently Asked Questions 

  1. Can I buy more than one accident insurance policy?
    Yes, you can buy any number of personal accident policies that you need.
  2. If I have a health insurance plan do I need an accident insurance plan?
    Yes, you do. A health insurance plan will cover you for the medical expenses that you incur in case you suffer from any accidental injuries. However, in case of accidental death or disability, the plan would not pay any benefits. Accident insurance plans, on the other hand, cover these specific contingencies and compensate you financially.
  3. Up to what age can I buy accident insurance?
    Personal accident policies are available up to 65 to 70 years of age. The actual restricting age depends on the plan that you are buying.
  4. Do I have to nominate someone when buying the policy?
    Yes, appointing a nominee is recommended when buying an accident insurance plan. By doing so you are authorising the person who could collect the policy benefits in case of your death.