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GettingYouRich.com Presents

e-Guide on Insurance

Editors:

Rohit Shah Smitha Hari

Deepak Varier

Feedback: [email protected] Version 1.0 Published: June 2013 This e-guide includes analysis of various insurance covers available. This is compiled & edited from the various articles written on our personal finance blog. All rights reserved by GettingYouRich.com

of 38 e-Guide on Insurance GettingYouRich.com

CONTENTS

No. Topic Page

1 Health Insurance options for Senior Citizens 3

2 Health Insurance covers by Private sector players & National Insurers 7

3 Health Insurance – Group Policy cover by Nationalized Banks 12

4 Top Up - Health Insurance Plans 18

5 Life Insurance – On Line Term Plans 20

6 Critical Illness Insurance 24

7 Personal Accident Insurance 28

8 Home Loan Insurance 34

9 Disclaimer & Disclosure applicable for this e-Guide 35

10 Testimonials for our Financial Planning services 36

11 Special Offer : Comprehensive Financial Planning Services 37

12 Contacts 38


With medical expenses growing at a rapid pace, it is

important that every individual has a health insurance policy

to meet unexpected expenses. This becomes all the more

relevant as one becomes old, as health care expenses are

bound to increase substantially when you approach old age,

and there is also a fall in income. Although the Indian health

insurance sector has matured with companies coming out

with specific products for senior citizens, it continues to be

an under-serviced segment, with a majority of players still

preferring to service the population under 60 years of age.

We have analysed 7 policies by both public sector as well as private health insurance companies,

based on various parameters. When you choose a policy, you must look at various factors like the

scope of cover, premium charged, exclusions, co-payment clause, pre-existing diseases waiting

period and salient features offered. Let’s look at these factors in the policies we analysed:

Scope of cover: As you grow older, chances are that you will need a higher cover to protect yourself.

Most public sector players offer a very low Sum Insured cover for senior citizens, with the maximum

being Rs.3 lakhs by United India Insurance. Private players like Star Health, Bajaj Allianz and Apollo

Munich offer up to Rs. 5 lakhs cover, but this is still on the lower side compared to other policies these

companies offer to the young. Max Bupa, on the other hand, offers very high coverage, with up to

Rs.50 lakhs cover on its Platinum plan option.

Premium charged: Despite offering options of high Sum Insured coverage, Max Bupa’s plan for

senior citizens is extremely expensive, compared to other plans. Senior citizen plans by other private

players are also on the costlier side. Attractive premiums are charged by state run players like

National Insurance and New India Assurance.

Co-payment Clause: All senior citizen plans come with a co-payment clause, wherein the policy

holder will have to contribute a part of the claim made. The lower this proportion, the better it is for

you. Plans by National Insurance and New India Assurance require 10% co-payment, United India

Insurance, Bajaj Allianz and Max Bupa require 20% co-payment while Apollo Munich requires 30%

co-payment. Co-pay is highest for Star Health’s policy at 50% for pre-existing diseases and 30% for

all other diseases.

Pre-existing diseases waiting period: This is on the lower side for policies by National Insurance,

New India Assurance, Star Health and Bajaj Allianz, while it is higher for policies by United India

Insurance, Max Bupa and Apollo Munich.

Other salient features: Some policies like those of United India Insurance, New India Assurance,

Bajaj Allianz and Apollo Munich offer a small discount in premium charged if any family member is

included in the policy. There is also a cumulative bonus clause which some policies offer, wherein,

you are eligible for an increase in Sum Insured amount if you complete a claim-free year. Some

policies like Apollo Munich and Max Bupa offer value-added services like a free second-opinion from

a medical panel or a discounted value of health services and products. Evaluate the benefits you

receive vis-à-vis the premium you pay for these benefits.

Which is the best policy for Senior Citizens?

All health plans for senior citizens come with several conditions and restrictions, and are expensive

too. If you are okay with having a low cover, you can opt for policies by National Insurance or New

India Assurance as premiums are low and the co-payment clause is also low. However, these policies

may individually not be sufficient due to the ever-increasing medical expenses in today’s world.

Health Insurance options for Senior Citizens


Policies by Star Health and Bajaj Allianz have higher premiums compared to the public sector

counterparts; but can be considered on the back of the benefits offered. If you do not mind paying a

higher premium, you can look at these options as well.

It is better to avoid the policy by Apollo Munich due to the high co-pay clause as well as the high pre-

existing diseases waiting period. Similarly, Max Bupa’s policy can be avoided due to the prohibitive

premium rates. You can also avoid United India Insurance’s policy unless you do not have a pre-

existing disease history, as the waiting period is very high at 48 months.

If there are no pre-existing diseases, you can also consider health insurance policies offered by

nationalized banks. These come at a low premium and most policies have a high renewal age.

Policies by Indian Bank, Oriental Bank and Punjab National Bank have a high entry age as

well. Please click here for a detailed comparison of policies by nationalised banks. On the ground, we

observe that most of the companies deny the policy if you have pre-existing diseases instead of

issuing the policy with an appropriate waiting period. Insurance companies claim that they are within

their rights, but we doubt the same. You should always ask the insurance companies to give their

rejection in writing. Complaining to IRDA and using RTI may help in such cases.

Another option for senior citizens to get a policy is when their children have a decent cover from their

employer. Most corporate health schemes cover parents with pre-existing diseases included, and you

can get a good amount of cover for your parents. It is expected that in sometime, porting from

company group health policies to private policies will be easier, although this is not clear at the

moment. However, it is always better to establish a secondary cover instead of solely relying on the

company cover for parents.

A detailed comparison is available below. If you prefer to download the excel file, please click here.

http://www.gettingyourich.com/1/post/2012/11/why-health-insurance-offered-by-nationalized-banks-is-an-attractive-option.html

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/health_insurance_sr_citizen_comparison_-_upload.xlsx


We are sure you all agree that medical expenses

have been continuously escalating. While dealing

with the stress of poor health is itself harrowing,

exorbitant medical bills can give you sleepless

nights. A health insurance helps you mitigate the

financial pressure by paying for your

hospitalisation expenses. However, the multitude

of options available in the market, offered by both

public as well as private players, often leaves one

confused as to which policy to choose. Individuals

sometimes make a wrong choice by choosing a

policy for which they may be paying a huge amount, but which may not even cater to their needs.

What to look for in a Health Insurance Policy?

One of the important things to look for in a health insurance policy is the age till which you can renew

the policy. The higher this is, the better it is for you; as healthcare costs tend to increase with an

increase in age. You should also look for the limits on expenses and co-pay clause. The more the

sub-limits, the more detrimental it is to you. Most private players do not have expense limits. While

premium should not be the sole consideration factor, it is needless to say that you should not end up

paying abnormally high premiums for a low coverage. Hence zero in on the coverage you need,

keeping in mind the needs and size of your family and also your premium paying capacity.

Before choosing your policy, it is also important to consider the claims settlement history of the

insurer. According to policybazaar.com, Oriental Insurance Company, New India Assurance and Bajaj

Allianz had high claim settlement ratios of 92%, 89% and 84% respectively in the second quarter of

2011, while Star Health, ICICI Lombard and Max Bupa had low ratios of 61%, 65% and 65%

respectively during the same period.

Important parameters in a Health Insurance Policy:

Age of insured: As mentioned earlier, the maximum age of entry and the renewal age are critical

aspects, as healthcare costs shoot up after you become 60 years. The policy by United India

Insurance has the highest renewal age of 80 years, while ICICI Lombard has no limit on the entry age

and renewal age. New India Assurance Company has the lowest limit on entry age at 60 years.

Sum assured: You have to decide the coverage you require based on the number of members in

your family, as well as your family needs. In today’s scenario, a family coverage of even Rs. 5 lakhs

or Rs. 10 lakhs looks low. However, most companies offer a maximum Sum Assured of Rs. 5 lakhs

only. Few companies like Apollo Munich and Star Health offer coverage up to Rs. 15 lakhs. Max Bupa

has policies with a Sum Assured value of up to Rs. 50 lakhs, which has a very high premium of nearly

Rs. 1 lakh per year. Therefore you must choose your coverage based on your premium paying

capacity as well.

Premium amount: Most companies offer premium based on the age of the insured. We analysed

premium amounts for 10 companies, for an individual aged 35 years, his spouse and 2 dependent

children, for a Sum Assured of Rs. 5 lakhs. It was found that the premium was lowest for United India

Insurance and Oriental Insurance at Rs. 8,971 and Rs. 8,120 (silver plan), while, it was the highest for

Max Bupa (Rs. 20,716).

Pre- and post-hospitalization time period: Generally, companies cover medical bills for 30 days

before the hospitalisation and 60 days after the hospitalisation. However, for HDFC Ergo and Bajaj

Allianz, the number of days read higher at 60 days and 90 days respectively. Apollo Munich offers a

higher time period coverage at 60 days and 180 days for pre and post-hospitalisation.

Understandably, the higher the time period covered, the better it is for you.

Health Insurance covers by Private sector players & National Insurers


Sub-limits and Co-Pay: Sub-limits mean expense heads have a capping, and you will have to shell

out beyond this limit from your pocket. Expenses limit are more stringent in Oriental Insurance. There

are no sub-limits in ICICI Lombard, Apollo Munich, HDFC Ergo and Reliance. Co-pay requires you to

bear a part of the claim, while the insurer will only consider, say 80% or 90% of the amount claimed.

This is usually characteristic for claims of people beyond a particular age. Companies like United

India Insurance, Oriental Insurance (silver plans), Max Bupa, Bajaj Allianz and Star Health have this

clause. If you fall under their criterion for determining Co-Pay, it is better to avoid such policies.

Major Exclusions: All policies give a list of items which are specifically excluded from coverage. All

pre-existing diseases are generally excluded for a period of 4 years from the policy start date. Policies

also specify an initial waiting period of 30 days (90 days for Max Bupa), during which all diseases are

excluded. Understand exclusions and see if you may need any of those exclusions in future (e.g.

maternity benefits); if yes, it is better to avoid such a policy.

Additional benefits: It is best to choose a plan which is comprehensive and covers the maximum risk

possible. Even if the sum insured is the same, there are other benefits you must check, which include

OPD cover, maternity benefits, personal accident-death benefits, health check-up and domiciliary

hospitalization benefits. Maximum benefits are available in Reliance, Apollo Munich, HDFC Ergo and

Max Bupa. While maternity benefits are available in Max Bupa and HDFC Ergo, day-care treatment is

available in New India Assurance, Max Bupa, Reliance, ICICI Lombard, Star Health and Apollo

Munich. Some policies like Apollo Munich and Star Health restore your Sum Assured to the original

levels, even if you claim this amount during the year. No-claim bonus is available in United India

Insurance, Reliance, New India Assurance, Star Health, Apollo Munich, ICICI Lombard, Bajaj Allianz

and HDFC Ergo.

Health Insurance - Which policy to choose and which not to?

We have analysed health insurance products of 10 companies on the basis of several parameters.

United India Insurance and Oriental Insurance can be chosen for the high entry age and low premium.

However, these policies are plain-vanilla and do not have much added benefits. If you wish to stick to

a low premium, these two policies are ideal. You can also look at Bajaj Allianz as premium is low and

historical claim settlement ratio is high. If you do not mind paying a slightly high premium, you can

look at Apollo Munich, as the policy offers several benefits and is a comprehensive one. Same is the

case with Reliance. Star Health can also be considered for its benefits and low premium; but beware

of the historical low settlement ratio.

Policies like New India Assurance and ICICI Lombard can be avoided as the premium paid is high

compared to the benefits offered. Max Bupa and HDFC Ergo have very high premiums in our

comparison set, and hence may be avoided, even though these policies offer some good benefits.

A detailed comparison is available below. If you prefer to download the excel file, please click

here. For more details, refer to individual company’s prospectus. This analysis covers offerings from

major insurers only. This is not an all-product comprehensive comparison.

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/health_insurance_comparison.xlsx

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/health_insurance_comparison.xlsx


With health costs escalating at a rapid pace every

year, it is important for every individual to have a

health insurance policy. There is a plethora of

options available in the market offered by both

public sector and private players.

However, we noticed that health insurance

products by private players were more popular in

the market, with even online comparison portals

displaying products only by private players. On

the other hand, many nationalized banks offer

health insurance products in tie-up with health insurance companies like United India Insurance

Company Ltd, National Insurance Company Ltd, New India Assurance Company Ltd and Oriental

Insurance Company Ltd. Bank mediclaim policies, though attractive in many ways, are not popular

and well-researched. Keeping this in mind, we have presented a few options offered by nationalized

banks.

Why should you go for a health insurance policy by a nationalized bank?

Buying a health insurance policy from a bank is pretty simple. The only pre-condition is to be an

account holder in the bank. The most important benefit is the unbelievably low premium rates to cover

your family, as compared to a private player. To put it in perspective, a family floater policy (account

holder, spouse and two children) for a sum assured of Rs. 3 Lakhs with Punjab National Bank costs

Rs. 4,536 per year, compared to Rs. 11,390 per year (without sub-limits) and Rs. 8,542 per year (with

sub-limits) with ICICI Lombard. This vast difference in premium works out to a huge amount over the

long term. Policies also come with no medical tests and have a high renewal age. You also have the

option of adding your parents in your policy in many banks. This can be especially beneficial if your

parents do not have a medical policy of their own, as buying individual mediclaim for parents is

expensive.

Most banks tie-up with public sector players. More than one bank can work with the same insurer.

Before choosing your bank, it is important to consider the claims settlement history of the insurer as

well. According to www.policybazaar.com, United India Insurance and New India Assurance have

high claim settlement ratios of 95% and 93% respectively in 2009-10, with Oriental Insurance clocking

88% for the same period. Among public sector players, National Insurance Company has a lower

claim settlement ratio, at 74% in 2009-10.

What are the drawbacks in a health insurance policy by a nationalized bank?

The biggest problem in taking a health insurance policy from a nationalized bank is the poor service

quality. If you do not mind some hiccups in service quality and can work through the bank’s system,

you can consider a bank mediclaim policy on account of the low costs. Some bank mediclaim policies

also have a portability issue, as they lack portability to retail mediclaim policies.

We have analysed health insurance products of 10 nationalized banks on the basis of several

parameters, as under:

Type of policy: All banks offer a family floater policy, covering the account holder, spouse and two

dependent children. Some banks like Andhra Bank, Bank of Maharashtra, Canara Bank, Indian Bank

and Indian Overseas Bank offer plans to cover the primary account holder’s parents as well, for an

additional premium.

Age of insured: The maximum age of entry is a critical aspect, as healthcare costs shoot up after 60

years. Policies by Indian Bank and Punjab National Bank have the highest maximum entry age of 80

Health Insurance – Group Policy cover by Nationalized Banks


years, with Oriental Bank pegging this at 79 years. The renewal age is up to 80 years for all policies in

our analysis, except Corporation Bank, which is much lower at 70 years.

Sum assured: The minimum sum assured is as low as Rs. 50,000/- for most bank mediclaim policies.

The maximum sum assured amount is Rs.5 Lakhs for all policies, except for Indian Bank, which is at

Rs. 10 Lakhs.

Premium amount: Most banks offer a flat premium not linked to the age of the insured. This can be

useful, as you will have to pay a lower premium even with an increase in age. Banks like Corporation

Bank and Indian Overseas Bank have different premium rates for different ages. In comparison with

peers, this can work out costly if you fall in the higher age bracket. Premium charged by Andhra Bank

is the highest among banks in our analysis. Cheap premium plans are available with Bank of Baroda,

Bank of India, Punjab National Bank and Oriental Bank of Commerce.

Pre-existing diseases coverage: All banks have a 3 year waiting period for pre-existing diseases

except Corporation Bank which requires 4 years. Generally, it is required to have 3 claim-free years

with no hospitalization during that period.

Sub-limits: Expense limits are more stringent with Andhra Bank, which caps expenses on room,

nursing, ICU charges and Pre and Post hospitalization charges.

Major Exclusions: All policies give a list of items which are specifically excluded from coverage.

Maximum exclusions are specified by Andhra Bank, Corporation Bank and Canara Bank. Pregnancy

related benefited are excluded from Andhra Bank, Bank of Baroda, Canara Bank, Corporation Bank,

Oriental Bank and PNB, while domiciliary hospitalization benefits are excluded from Andhra Bank,

Bank of Maharashtra, Corporation Bank and IOB.

Additional coverage: It is best to choose a plan which is comprehensive and covers the maximum

risk possible. Even if the sum insured is the same, there are other benefits you must check, which

include OPD cover, maternity benefits, personal accident-death benefits, health check-up and

domiciliary hospitalization benefits. Maximum additional covers are available in policies by Bank of

India, Indian Overseas Bank, Bank of Maharashtra and Canara Bank.

Which policy should you buy and which should be avoided?

If you are not looking at coverage for parents, you can consider Bank of India which is both low on

premium and has other important benefits. You can also look at Bank of Baroda, Oriental Bank of

Commerce or Punjab National Bank if you are not looking at coverage for parents and maternity

benefits. You can also go in for the policy by Bank of Maharashtra as it covers all important benefits.

However, if you are above 65 years, you will have to get a medical check-up done. Canara Bank is a

good choice if you are not particular on domiciliary hospitalization benefits.

It is best to avoid policies by Andhra Bank and Indian Overseas Bank as the premium is high

compared to the other banks we analysed. Corporation Bank can be considered if you fall in a lower

age bracket; however, if you are in a higher age bracket (above 45 years), it is best to avoid this as

well.

As it can be seen in the comparison table below, most banks offer similar benefits and features but for

minor differences. Apart from the outliers mentioned above, you can choose a policy from a bank

which is most easily accessible to you, as you will need to maintain an account with that bank. For the

purpose of comparison, if you prefer to download the Excel file, please click here

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/health_insurance_nationalized_banks_comparison-upload.xlsx


In today’s world where healthcare costs are

increasing rapidly, a normal health cover of Rs.

3-4 lakhs for the entire family, which most

people opt for, may not be sufficient. This

nominal health cover may fall short of your

actual expenditure if there are multiple ailments

by more than one family member or even if a

single family member is required to undergo

hospitalization many times. You may have to

disturb your savings in such a situation. A top-

up health insurance plan can be used in this

case.

Meaning

A top-up policy is an additional insurance, providing coverage above an existing health insurance. In

other words, when you purchase a top-up cover, you get coverage over and above what is available

in your original policy. You can purchase the regular policy and top-up policy from the same or

different companies. A top-up policy has similar benefits and conditions as a normal health insurance

policy. A top-up policy usually works out to be cheaper than taking a new policy or enhancing limits of

your existing policy. But wait, everything cannot be positive about this. There must be a catch

somewhere.

So, what is the catch?

The main criterion is that a top-up plan can be used only if expenses you claim are beyond a certain

limit, known as the “deductible”. This limit is decided in advance and premiums are calculated

accordingly. So a top-up plan with a higher deductible has a lower premium. Further, a top-up plan

usually works only on a single occurrence of hospitalisation. In effect, you can use the top-up plan

only if your medical bills exceed the deducible during a single hospitalisation by a single member.

Working

It is seen from the examples on next page, that when you buy a top-up policy, you can avoid or

reduce the outflow from your pocket if hospitalization expenses are very high. However, it is seen that

in Cases 4 and 5, when there is more than hospitalization by the same member of your family or if

there are multiple hospitalizations by different members of your family, the top-up does not get

triggered, and you will have to bear the shortfall from your savings.

Given the restrictions, are top-up plans good for you?

A top-up plan is an economical and simple option to augment your health-cover. Top-up plans are

useful only when you already have an existing policy and expect that to be insufficient. In the example

above, if you feel Rs. 2 lakhs is not sufficient to cover your entire family, you can opt for a top-up plan

which works out cheaper than a new policy. Additionally, when you already have a health insurance

policy, you should not buy a top-up plan which has a deductible higher than the existing plan’s

coverage. So if you have a health insurance policy with a cover of Rs. 2 lakhs, then do not buy a top-

up plan with a deductible higher than Rs. 2 lakhs. It does not make sense to opt for top-up plans with

high deductibles or if you already have an existing policy with a very high cover.

Top Up - Health Insurance Plans


A Term Insurance plan is the best form of life

insurance compared to endowment plans or

ULIPs, as you can get a high cover for a low

price. This is because the entire premium you

pay goes towards covering the risk and there

is no investment component. The popularity of

term plans has increased in the recent past,

with online channels also gaining importance.

The following are some parameters to be

considered when you purchase a term policy.

Quantum of cover: This is one of the most

important things you must determine. The life insurance you take in your name should be sufficient to

take care of regular expenses of your family in your absence in addition to taking care of important

liabilities and goals for your family. Remember to take into account the inflation factor. The amount

you think is sufficient today will not be enough 20 or 30 years hence. Therefore, choose the Sum

Assured amount carefully. The e-preferred term plan by Kotak gives you a Step-up option, where you

can choose to increase or decrease your Sum Assured, based on your needs, by paying a small

fee. There are various methods to calculate the quantum of cover. You can use Need based

approach, economic value replacement or thumb rule approach. The calculators available on leading

personal finance website can be used. Alternately, you can engage a Financial Planner.

Time period: This is another critical question. Generally, you must have insurance till the time you

intend to work. It doesn’t make sense to take a policy only for 10-20 years, till you are in your 40s, as

those are relatively non-risky years. Insurance companies offer plans for fixed terms of maximum 30

years in most cases. Some plans by companies like Aviva and Aegon Religare offer higher terms of

35 and 40 years respectively. Companies also specify the maximum age of the insured at the policy

expiry, which is generally 70 years. Some companies like Aviva, Aegon Religare and ICICI specify

this as 75 years. Higher this age, the better for the insured. Since the premium is normally higher for

higher tenor, be careful going in for highest tenor. Insurance is a needed to meet your financial

liabilities in your absence. If your financial assets can take care of the liabilities, then you do not need

insurance. This logically means, in many cases, as you will build your wealth in the years to come,

your need for insurance will come down.

Medical Test Applicability: Most companies require a medical test to be done before granting a

policy. ICICI Prudential offers plans which both require medical tests, as well as not require medical

tests. However, it is better to get a medical test done, rather than face the problem of having a claim

rejected later, on medical grounds.

Premium payment term and modes: Companies offer flexible premium payment modes of yearly,

half-yearly, quarterly or monthly. In comparison to a yearly payment option, a half-yearly payment

option will work out slightly more expensive. For example, for policies by Bharti AXA and DLF

Pramerica, half-yearly premiums are 0.52 times the annual premium. Most companies also offer a

single payment option. However, this means, your premiums are front loaded, and in case of an early

death, the premium for the remaining term goes waste.

Claim Settlement Ratio: This is by far the most important aspect to be considered. Claim Settlement

Ratio gives an idea of the past claims settled by the company in relation to the total claims received.

Therefore, higher this ratio, the better it is for the insured. Companies like HDFC, ICICI, Kotak and

Bajaj Allianz have relatively higher ratios among peer set. DLF Pramerica, Aegon Religare and Future

Generali have the lowest ratios at 24.46%, 66.06% and 68.06% respectively for 2011-12.

Life Insurance – On Line Term Plans



We have analysed pure term insurance policies of 11 companies on the basis of the above

parameters. Of the companies analysed, you can look at Bharti AXA’s Life eProtect and Aviva’s iLife

policies for the low premium and high settlement ratios. HDFC’s Click2Protect is another good policy

with low premium and high settlement ratios. But the maximum age at entry and policy expiry is

comparatively lower than other policies. ICICI’s iCare is a good policy on the back of high settlement

ratio and high age bracket. Although the premium for this policy is among the highest, the benefits are

good for this price. Kotak’s e-preferred plan can also be looked at for high settlement ratios and high

entry age.

It is best to avoid Aegon Religare’s iTerm plan due to the low settlement ratio, despite it having

among the lowest premiums. Also avoid PNB Metlife’s MetProtect, Future Generali’s Smartlife and

DLF Premedical’s Uprotect due to high premiums.


For more details, refer to individual company’s prospectus. This analysis covers offerings from major

insurers only. This is not an all-product comprehensive comparison.

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/term_insurance_comparison.xlsx


Assume that your close friend suddenly suffers

a major heart attack and he needs to be

operated. He has a health insurance, but this is

insufficient to cover the treatment cost. In

addition to the operation cost, his family will

also have to incur the hospitalization bills and

other related medical expenses. While bearing

such a huge expense may be difficult, your

friend’s family can arrange for the funds by

liquidating some investments. However, this will

harm his financial planning for the future. Then

what can be done to meet the expenses without

harming the returns from your investments? In such a situation, a critical illness insurance policy

comes in handy.

Why a critical insurance policy when you already have a health insurance policy?

A critical illness insurance plan covers major illnesses like cancer, heart attack, coma, stroke,

paralysis among others. When you contract a critical illness, the loss is not simply restricted to the

expenses you incur. It is much more severe as it can hamper your capacity to earn resulting in a loss

of income. You may also end up with total or partial disability causing a change in your lifestyle. The

insurance company pays a lump sum amount to the insured if he is diagnosed with any such critical

illness which is covered under the policy, irrespective of whether he is hospitalized or not. A health

insurance policy usually has several sub-limits and restrictions, which sometimes will not even

compensate you completely for the expenses you incur. In such a case a lump sum payment gives

you the freedom to spend it as you wish. Hence the importance of a critical illness policy cannot be

over-emphasised.

How to pick the right policy?

While choosing a critical illness policy, choose a policy which covers the maximum number of

illnesses. If there is a family history of a particular illness, make sure the policy covers this illness, as

you are more susceptible to getting this. Also consider the extra benefits and features which policies

offer. When you evaluate a cover size, don’t forget to consider the average cost of treating major

critical illnesses, taking into account the inflation factor. Understand the exclusions under the policy

and choose a policy with a high renewal age limit, as you are more likely to fall sick when you grow

old. Last, but definitely by no means the least, choose a policy with a comparatively lower premium for

similar benefits offered by a player with a higher premium.

Salient Features of a Critical Illness Policy:

Critical illness policies have different options of Sum Assured, ranging from as low as Rs. 1 lakh to

Rs. 50 lakh (Bajaj Allianz policy). The policy is generally required to be renewed every year by paying

the annual premium. However, companies like ICICI Lombard offer policies for 3 and 5 years as well.

As discussed earlier, the mode of compensation by the insurer will be a lump sum, when the illness is

diagnosed, even if you are not hospitalized. Once the benefit is paid, the policy usually ceases to

exist.

Most companies specify a survival period of 30 days after the illness is first diagnosed and makes the

payment only after this period. Only ICICI Lombard’s policy does not have this waiting period and you

can receive the benefit immediately on diagnosis. There is also a waiting period of 90 days from the

inception of the policy, during which period the illnesses are not covered. This period is 60 days for

Bharti Axa critical illness policy. In addition to the lump sum payment, some policies offer periodic

payments, reimbursement of hospitalization expenses, etc.

Critical Illness Insurance


Some companies like Reliance General, Max Bupa and Bharti Axa offer a renewal bonus or a

discount in premium while the policy is renewed every year. This can bode well for you, as an

increase in Sum Assured makes you eligible for a higher compensation. ICICI Lombard also

compensates death and permanent total disablement due to accidents under this policy.

While medical check-up is not needed by most companies, there are a few policies which require a

medical check-up if the insured is above a particular age limit (usually 46 years). Another feature of

the critical illness policy is that pre-existing diseases are not covered under the ambit of the critical

illnesses specified in the policy document. Only policies by Bharti Axa and Max Bupa cover pre-

existing diseases, but that too, after 48 months of the policy’s original start date. You get a tax benefit

under Sec 80D of the Income Tax Act for the premium you pay for your critical illness cover.

Should you take a standalone critical illness policy or opt for a critical illness rider?

Critical illness covers are available both as standalone policies and as riders along with life or health

insurance policies. Generally while this policy is taken as a rider or as an add-on to the existing health

insurance policy, it may be difficult for you to increase the Sum Assured limit at the same premium

levels. The Sum Assured in such a case is generally 50% or 100% of the basic Sum Assured. The

comprehensive health policy by Bharti Axa can work out to be an inexpensive option for you, as the

benefits you get for the premium paid is high. While features of both a standalone plan and a rider are

more or less the same, a standalone plan offers greater flexibility in choosing the Sum Assured limit.


We have analysed critical illness insurance products of 9 companies on the basis of several

parameters. Of the companies we analysed, it is best to avoid Star Health and Tata AIG due to the

exorbitantly high premium levels. The premium on the critical illness policy by ICICI Lombard also is

relatively high; however, this policy covers accidental death and disablement benefits which will be

beneficial to you if you are frequently exposed to accidental risks. You can also avoid the critical

illness policy by National Insurance Company as the number of illnesses covered is low.

If you do not mind a low Sum Assured, you can opt for the comprehensive health policy by Bharti

AXA, which brings with it a host of benefits. Other policies which can be considered on the back of

low premiums and marginal benefits are Reliance General and Max Bupa. If you are not keen on the

extra benefits which some policies offer, you can also choose HDFC Ergo and Bajaj Allianz policies

as premium is low.


http://www.gettingyourich.com/uploads/1/2/0/5/12058968/critical_illness_insurance.xlsx


Imagine that you are the sole breadwinner of your

family and you meet with a serious accident. You

end up dying or with a disablement which results

in a loss of income which can range from a few

weeks to several years. What happens to your

family in this case? A term insurance protects

your family in case of your death and a health

insurance compensates you for hospital expenses.

But what happens in case of disablement? This is

where a Personal Accident Insurance can help

you.

A Personal Accident Insurance covers a person from accidental death and disablement. The

disablement includes permanent total disablement, permanent partial disablement and temporary

total disablement. Personal Accident Insurance policies offer comprehensive cover, which is better

than the accidental riders usually available with other forms of insurance.

Policy features: We have analysed personal accident insurance products of 10 companies on the

basis of several parameters, as under:

Coverage and the Sum Assured: Most companies offer policies which cover accidental death and

the above mentioned disablement. The Sum Assured is generally dependent on the type of cover you

opt for, i.e.: only Accidental Death, or includes one or more types of disablement. Few companies like

Bajaj Allianz and Tata AIG take the occupation, age and income into consideration while determining

the Sum Assured amount.

Premium: One unique factor about premium calculations under Personal Accident Insurance is that it

primarily depends on your occupation and location, and not on age, unlike other insurance policies.

This is because your nature of occupation determines the extent of risk you are exposed to. The

premium to be paid for such policies is much cheaper than a term policy or health policy. It usually

ranges between Rs. 750 and Rs.1500, depending on the company and additional covers you opt for.

Future Generali offers the least premium, while HDFC ERGO charges the highest premium among

the players we have compared.

Family Cover: All companies offer coverage for the individual and an optional cover for his spouse

and dependent children. While most companies offer a discount of 10% in premium rates if you take a

family cover, Star health offers a lower discount of 5%. HDFC ERGO and ICICI do not offer any

discount on family packages.

Death Cover: In case of death due to accident, companies pay 100% of the Sum Assured to the

nominee of the insured person.

Permanent Total Disablement: This refers to a permanent total disablement due to accident, which

can include loss of 2 limbs (both hands and both feet), one hand and one feet, loss of sight of both

eyes and speech or hearing of both ears. Generally companies compensate 100% of the Sum

Assured. Some companies like Bajaj Allianz give 125% of the Sum Assured. There are other

companies like Apollo Munich and New India Assurance which compensate 50% or 100% of the Sum

Assured, depending on the nature of the disablement.

Permanent Partial Disablement: This also refers to permanent disablement, but the disablement is

only partial and not complete. Instances of this include loss of one finger, loss of arm, loss of leg, one

Personal Accident Insurance


eye or hearing in one ear. Coverage generally starts from 5% of the Sum Assured and goes up to

100% of the Sum Assured in some cases, depending on the disablement.

Temporary Total Disablement: This covers disablement due to an accident, which may be

temporary and total in nature, which affects the insured person’s ability to earn income. The

temporary disablement usually will need to be certified by a doctor. The compensation given is in

terms of a weekly benefit, and this is given for a period of 100 weeks (104 weeks in some cases).

Some companies like National Insurance Company and Royal Sundaram specify limits on the weekly

benefits which can be given.

Cumulative Bonus: Similar to health insurance, personal accident insurance policies also offer

bonuses on claim free years. For most companies this is 5% per claim free year, subject to a

maximum cumulative bonus of 50%. Some companies like Future Generali, Royal Sundaram and

Tata AIG have a lower cumulative bonus limit of 25%. HDFC ERGO and ICICI do not offer this bonus.

Remember to check the policy document for actual eligibility, as this feature is sometimes not

available for death only policies and permanent disablement policies.

Other Benefits: Apart from covering basic benefits of death and disablement, companies offer a

variety of other benefits when you take a personal accident insurance. The most common among

them is the education fund - the child’s education is sponsored in case of death or permanent

disablement of the insured parent. Generally, the limit for this head is Rs. 5000 per child, up to a

maximum of 2 children. Some companies also give this as a % of the Sum Assured amount. Note

than HDFC ERGO and ICICI do not offer this benefit. The other common benefit offered by most

companies is reimbursement of accident medical expenses. This is usually an additional cover, which

can be purchased by paying a higher premium. Some companies offer this without charging any

additional amount. Other benefits include emergency ambulance benefits, family transportation

benefits (expenses of transporting one family member to the hospital where the insured person is

admitted), transportation of mortal remains to the residence of the insured person from the accident

site, hospital cash allowance if the insured person is admitted in a hospital given on a per day basis.

Some companies like Future Generali and Tata AIG also compensate for any modification to be

carried out in your vehicle or house as necessitated by a permanent total disablement.


Most companies offer similar features on personal accident policies. If you are not keen on the

cumulative no-claim bonus amount, you can opt for Future Generali Accident Suraksha, as this policy

has a low premium and has more add-on benefits compared to peers. If you are looking for a high

Sum Assured, you can consider Tata AIG (Sum Assured up to Rs. 1 Crore). But this policy also has a

low bonus benefit. If you are looking for a pure death cover, you can consider Apollo Munich Personal

Accidental Standard. Similarly, if you are looking at Permanent Total Disablement insurance, Bajaj

Allianz Personal Guard is the best choice, as it offers 125% of the Sum Assured. Other policies which

can be considered are personal accident policies from National Insurance Company and Star health

Accident Care.

It is best to avoid personal accident policies from HDFC ERGO and ICICI, as premium is high and

benefits are far lesser than other players in the market. Policy from New India Assurance can also be

avoided as the accompanying benefits are few. You can also avoid Royal Sundaram Personal

Accident Insurance as there are sub-limits in Sum Assured for family members and cumulative bonus

is low.

A detailed comparison is shown in the charts below. If you prefer to download the excel file, please

click here

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/personal_accident_insurance_1.xlsx

http://www.gettingyourich.com/uploads/1/2/0/5/12058968/personal_accident_insurance_1.xlsx


You risk profile changes greatly when you take a

home loan, as it is one of the longest debts in

your life, requiring a long term commitment. Let’s

see how home loan insurance reduces this risk.

Why is home loan insurance required?

The loan will need to be repaid by your family

members if you die during the term of the loan. If

the loan is not repaid, the lender can take

possession of your home. Home loan insurance will eliminate your family’s burden to repay the loan

as the insurance company will pay the outstanding loan amount.

Eligibility criteria-

Most companies specify the minimum entry age of the borrower as 18 years and the maximum entry

age as 50 years (some banks extend this to 60 years). The maximum age of the borrower at the

maturity of the policy is also sometimes stipulated. Some banks also cap the maximum sum assured

and have minimum and maximum policy term requirements. Kotak has fixed the maximum term as 30

years while HDFC Life has fixed the maximum sum assured as Rs. 30 lakhs.

Working-

Home loan insurance is similar to a term life insurance, except that in the case of the former, the sum

assured is equal to the outstanding home loan amount and it is not a fixed sum. So, in effect, the

insurance cover you get under a home loan insurance reduces when you pay your EMIs.

Example: Raj has taken a home loan of Rs. 20 lakhs and repays Rs. 4 lakhs of the principal over the

next 5 years. After 5 years, Raj expires, leaving Rs. 16 lakhs of outstanding loan. If he has taken

home loan insurance, the insurance company will pay Rs. 16 lakhs to the lender.

In some cases (for example, the Home Safe Plus scheme of ICICI Bank), insurance cover is available

on a flat basis instead of a reducing basis. In this case, the fixed amount is paid to the beneficiary.

Cost-

Premium towards home loan insurance depends on the age of the borrower, amount and tenure of

the home loan and the borrower’s medical record. You can either make a single premium payment

(generally insisted) or pay the premium periodically.

Claim-

The insurance is taken in the home loan borrower’s name, and in case of death of the borrower, the

family members should file for the claim. The claim amount is paid directly to the lender or in some

cases, to the family member.

What you should watch out for-

In most cases, your home loan lender will have a tie-up with an insurance company, from where you

will be asked to purchase the insurance. In this case, the lender pays the premium upfront, bundling

this with the loan and including it in the EMI amount. This will work against you, as you will be paying

interest on the premium amount as well.

Example: Suppose your home loan is for Rs. 20 lakhs and insurance premium is for Rs. 2 lakhs. The

premium is paid by the lender to the insurance company. Your new loan amount will now be Rs. 22

lakhs, which will be spread out as EMIs over the tenure, resulting in you paying interest on the

premium amount also.

Home Loan Insurance


Disclaimer 1. The e-Guide is offered complimentary to all visitors of GettingYouRich.com without any financial

liability or obligations on us. 2. While we have tried our best to be as reasonably accurate as possible, due to dynamic nature of

our evolving financial products, we cannot assure you regarding the concurrent validity of the contents we have presented.

3. The analysis that we have presented was carried at different point in time during last 6 months. The insurance companies reserve the right to amend their offering at any point in time without prior intimation.

4. While, we have tried our best to provide you the latest information, we do not assert any warranty to the accuracy of the information provided in this e-Guide.

5. Our advice or recommendations are not insured in any manner. 6. Errors & Omissions expected (E&OE). 7. Insurance companies reserve the right to issue the policy based on their assessment.

Disclosure 1. This e-guide includes analysis of various insurance covers available. This is compiled & edited

from the various articles written on our personal finance blog in about last six months period 2. The supporting information for carrying out the analysis has been obtained from various sources

available in public domain. 3. All rights reserved by GettingYouRich.com 4. On 21-January-2013, SEBI has published new regulations for Investment Advisers. This is

effective from 21-April-2013 & there is a six month period from the effective date to comply with the norms. We will be applying for the appropriate registration in the due course of time.

5. If you take our execution services or buy any financial product (e.g. Mutual Fund, Online Term Plan and Estate Planning) through us, we may earn a fee or a commission. We firmly believe that in this business, our integrity is our biggest asset. We keep your interest ahead of ours. The recommendations made in your plan are genuine and in the best interest of yourself.

6. There is no obligation on you to take any product or services through us. 7. Directors of the Company managing GettingYouRich.com are IRDA Certified Insurance Advisors

& NISM Certified Mutual Fund Distributors. We are associated with ICICI Prudential & HDFC Standard Life for Life insurance. We are associated with Apollo Munich, Max Bupa, Bajaj Allianz and ICICI Lombard for Health Insurance. We believe our recommendations are un-biased, to the best of our knowledge.

8. The images used on the website and in Financial Plan, Brochure, Flyer & other places have been purchased by Shah Rohit Financial Services Pvt. Ltd., via a non-exclusive license through www.imagedb.com and www.imagesbazaar.com. Rarely, we may also use "free to use" image(s) from these sites and / or from public domain.

Disclaimer & Disclosure applicable for this e-Guide

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on your household expenses, in order to maintain the same lifestyle, you will need about Rs.

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