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Inside Re1 insurance cover

Apart from private companies and the Railways, the government also provides a life insurance scheme – Pradhan Mantri Suraksha Bima Yojana – priced at a premium of ₹1 per month and ₹12 a year, which is auto-debited from your linked bank account.

business Updated: Apr 09, 2019 11:23 IST
Revati Krishna
Revati Krishna
Hindustan Times, Mumbai
insurance cover,Re1,money
A circular released by the IRCTC states, “The premium, with effect from October 1, 2018, is 49 paise per passenger.” (ILLUSTRATION SUDHIR SHETTY)

What can you buy for ₹1? Well, financial products such as personal accidental cover, life insurance and gold cannot cost as low as ₹1. Sounds too good to be true? HT Money takes a closer look at these products and tells you if it is worth it:

Low cost

Since the past one year, app-based taxis company Ola started providing insurance cover for ₹1.

“The premium is priced at ₹1 to make it affordable. It is to hedge risks associated with travelling on the road,” said a spokesperson from an Ola Cabs.

To buy the insurance, you have to pay ₹1 every time you take a cab ride. The in-trip insurance cover, in partnership with Acko General Insurance Ltd, within the city includes ₹5 lakh personal accident cover, ₹1 lakh hospitalisation benefit and loss of baggage. For outstation ride, the ₹1 insurance cover includes emergency hotel stay and home insurance cover as well. To file for claims, the customer must first select the ride that they wish to claim the insurance amount for.

“This feature is available in the ‘Support’ section,” the Ola spokesperson added.

Last year, Indian Railways Catering and Tourism Corporation (IRCTC) launched a premium cover for less than ₹1.

A circular released by the IRCTC states, “The premium, with effect from October 1, 2018, is 49 paise per passenger.”

After booking your train ticket, you will get the details of your insurance policy and you will have to update your nomination details on the insurer’s website.

“If nomination details are not filled, then the settlement will be made with the legal heir, if the claim arises,” the circular added.

The policy is compulsory for children less than five years of age, and covers death, permanent total disability, permanent partial disability and hospitalisation. The maximum cover is up to ₹10 lakh, in which you get a cover of ₹10 lakh for death and permanent total disability, ₹7.5 lakh for permanent partial disability, ₹2 lakh for hospitalisation expenses for injury and ₹10,000 for the transportation of mortal remains. For this, IRCTC has partnered with Bharti Axa General Insurance Co Ltd, Bajaj Allianz General insurance Co Ltd and Shriram General Insurance Co Ltd.

Apart from private companies and the Railways, the government also provides a life insurance scheme – Pradhan Mantri Suraksha Bima Yojana – priced at a premium of ₹1 per month and ₹12 a year, which is auto-debited from your linked bank account. Launched in 2015, it provides a cover of ₹2 lakh. You get paid a sum insured of ₹2 lakh in case of death, in case of loss of total and irrecoverable loss of both eyes or both hands or feet or loss of sight of one eye and loss of use of hand or foot and ₹1 lakh for total loss of sight of one eye or loss of use of one hand or foot.

Should you opt for it?

Firstly, ₹1 is a miniscule amount to spend for an insurance cover. But the question is should you even consider it? Firstly, an insurance cover that costs ₹1 can’t replace your comprehensive insurance cover.

“The ₹1 cover offered does not substitute the need for a personal accident cover,” said Anand Prabhudesai, founder of Turtlemint, an insurance web aggregator. Also it may not be adequate. “Their hospitalisation benefit of ₹1 lakh may not be enough,” said Suresh Sadagopan, a Mumbai-based financial planner.

In case of the IRCTC cover, did you know that it was included in the ticket and it is only recently that they passed on the cost to customers?

“The railway ministry is not essentially offering anything extra. Earlier such covers were in-built, but now you are being charged 49 paise. Even though the amount is negligible, the burden has been transferred to the traveller,” said Pawan Agrawal, founder of Invest Guru.

When it comes to the life insurance cover, ₹2 lakh is inadequate.

“Generally a term cover is advised to be 10 to 20 times your annual income based on your requirement. If you compare, ₹2 lakh is insufficient,” said Prabhudesai.

According to financial planners, such policies are not really required.

“If you can afford it, then you should definitely go for a more credible product because it is not a question of how much are you paying for it but what are you getting out of the product,” said Sadagopan.

It not how much you pay as premium, but how much cover you need.

First Published: Apr 09, 2019 10:58 IST