An increasing number of people are recognising the need for insurance, and the smart ones go for a term cover, which is the cheapest and most efficient form of insuring one’s life. However, the question remains: Does the term plan take care of all your insurance needs?

An individual can sustain various risks such as hospitalisation, accidental disability and critical illness, besides death. It is, therefore, necessary to look beyond pure term cover

TERM INSURANCE

They promise to pay the sum assured when the policyholder dies. It does not offer any other benefit like bonus or returns. In fact, if the policyholder outlives the policy term, there would be no maturity benefits. Term insurance premiums have come down as life insurance companies offer products online in the backdrop of improved mortality experience. For example, now, a 30-year-old male life assured can get a pure term life insurance of 1 crore and for a term of 30 years, by paying a premium of below 10,000. But, this basic life cover would be of no help if the policyholder meets with an accident and loses, for instance, both legs. The only solution is to enhance the cover with accident disability covers.

ACCIDENT DISABILITY COVER

It is better to buy, by paying a little extra, an accident disability cover with the term plan. The rider kicks in if the life assured dies or is permanently disabled due to an accident. If the life assured losses legs, he is paid the sum assured. The basic life cover continues thereafter. But not all are enthusiastic about the accident cover rider offered with life insurance policies. The accident disability cover of general insurance companies offers wider benefits such as temporary total disability cover, loss of income cover, medical expenses cover and advanced benefits such as broken bones benefit. The premium payable for riders, excluding health cover riders, should not exceed 30% of the premium for the basic life insurance. This limits the accident cover you can buy with a life insurance policy. On the non-life insurance platform, enhanced cover costs 50% to 100% more than on the life insurance platform. It is better to buy an accident disability rider along with the life insurance policy due to the ease of purchase. But since, in life insurance, the sum assured for the accident disability rider is capped much below the sum assured offered for life cover, it is better to buy a general insurance policy also to enhance the cover.

HEALTH COVER

Like accidents, hospitalisation also takes a toll on an individual’s financial health. This is where health insurance policies come to your rescue. You may opt for a family floater option to extend cover to the entire family. Additionally, you can buy a hospitalisation cash policy that offers a fixed daily benefit to the insured individual upon hospitalisation, which can be utilised to pay for miscellaneous expenses not covered by the health insurance policy. If you still want to ensure more cover, you can add high deductible health insurance policy to your portfolio. This policy reimburses actual expenses incurred on hospitalisation and treatment above a pre-determined level. This can also help one save a lot in terms of premium. For example, instead of buying a 10-lakh medical policy, buy a 3-lakh policy and then a 7-lakh high-deductible policy, which pays for expenses over and above 3 lakh. Both put together offer a good solution for most medical insurance needs.

CRITICAL ILLNESS

Another demon that can play havoc on your savings . So check out the critical illness rider available with many term insurance products of life insurance companies. There are two types of critical illness riders on offer. First is the standalone rider, which pays if the life assured is diagnosed with a critical illness it covers. The sum assured is paid and the basic life insurance cover continues. The second is accelerated critical illness benefit rider. Upon diagnosis of a critical illness covered, the life insured is paid the death benefit available under the policy and the policy ends. Individuals with family history of a critical illness should ensure that they buy adequate critical illness cover at an early age. Critical illness cover is also available as a standalone product with general insurance companies. One can compare the critical illnesses covered under the rider and general insurance products before deciding on one. The premium payable towards critical illness rider under a traditional term life insurance policy remains the same throughout the term. But, in case you buy a general insurance policy covering critical illness, the premium rises with age. Sure, these so-called pure risk covers won’t bring you anything in return. But they offer you something more invaluable: peace of mind. Even if you have to face an unfortunate situation in life, you will not have hit the pause button. There will be no need to rush to break fixed deposits, liquidate investment or seek help from friends to fund the expenses to take care of the situation. All you have to do is to get well soon and restart your life in full steam.

To understand the nuances of different types of policies and its price, feel free to seek the help of InsuranceMall to select the right products based on your need. Or you can directly call them on +91-22-30503050

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