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HindustanTimes Thu,10 Jul 2014

Five covers to protect you from rainy days

Deepti Bhaskaran , Hindustan Times   November 02, 2013
First Published: 00:01 IST(2/11/2013) | Last Updated: 02:44 IST(2/11/2013)

The festive season has kicked off and celebrations have begun. Asking you to think about insurance now may look like a spoiler, but wouldn't you want complete peace of mind when you enjoy this season of festivities? A look at five essential covers you must have.

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Life insurance
Pick up a term plan. It only includes the cost of insurance and therefore is the cheapest form of life insurance. If you die during the term, your nominees get the sum assured but if you survive the term, you get nothing back. Ideally you should have a life cover or sum assured equal to 12-15 times your annual expenses or 8-10 times your annual income. Also make sure that big-ticket loans such as a home loan are insured.

Health insurance
A must for all members of a family. The first health insurance policy should be a basic plan that pays for hospitalisation. It's also called an indemnity policy. There are two ways of buying this policy. You could either buy it individually for each member of the family or buy a floater policy, which considers the entire family as one unit. If one member uses the policy, the cover on the others will reduce by that much. But, you need to buy sufficient cover.

You can supplement your health insurance needs with defined benefit plans that covers maximum illnesses or surgeries.

Personal accident cover
A personal accident cover offers you financial compensation if you meet with an accident that leaves you permanently or temporarily crippled. This policy comes with four covers: death, permanent disability, permanent partial disability and temporary total disability. For death or permanent disability, it pays you lump sum compensation which is 100% of the sum assured. For permanent partial disability, it pays a portion of the sum assured and for temporary disability it pays a weekly compensation usually up to 104 weeks.

Householder insurance
This is a must if you own a house and live in it as it protects your home from unpredictable events. The basic fire insurance in the policy covers financial losses due to damage to your house and its contents on account of fire and other allied perils such as earthquake, lightening, storm, floods and riots.

Opt for a reinstatement cover that will cover the cost of reinstating the damaged portion of your house and the contents. The householder's policy also insures the contents against burglary, theft, electrical or mechanical breakdown.

Car insurance
If you own a vehicle then you should definitely have this. Insurers offer a comprehensive cover that not only covers your liability towards a third party but also pays for damages to your car and to the passengers in case of death.

The structure and benefits of a comprehensive policy usually stays the same, but insurers have started offering interesting riders that you should look at. "Customers should consider three riders: depreciation cover, return to invoice and insurance for the car engine. There are many riders and for high-end cars one could opt for more riders, but these three are essential," said KK Mishra, CEO, Tata AIG General Insurance Co Ltd.

 

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