Life cover as a job-seeker
Q. I am 26 years old and live with my mother (47), brother (18) and sister (23). I lost my dad a year ago and I am still studying for my civil services examinations. Our source of income now is my dad’s pension and he has not bought any life insurance plan for us. Which plan will be suitable for us?
A. I assume you are referring to family pension after your father passed away. Without an independent source of income, you will not be able to buy a life insurance policy as the concept of insured value is based on the economic value of your life. You could try to buy a policy based on the assets you own, but insurance companies will need to know you have the income flow to keep paying premiums.
As for your family members, you can buy insurance on their lives if their death will set you back financially. This is called insurable interest. You should also be able to quantify that loss, which determines the sum assured. And again, your ability to keep paying premiums.
Once you start earning, you can buy a policy on your life and make your family members beneficiaries thus securing their future.
Higher health cover for seniors
Q. My wife and I have a joint health policy. It has ₹2.5 lakh cover for hospitalisation and ₹5 lakh for personal accident (PA) for me and ₹3 lakh and ₹5 lakh respectively for my wife.
I am 73 years old and she is 72. Given our age, companies are unwilling to enhance the cover. My son has been taking health insurance cover of ₹2 lakh for each of us through his employer.
Can we have the benefit of the combined amount offered under both the policies if the hospitalisation bill exceeds the limits of one of the policies? If so, how do I make the claim.
Alternatively, do you suggest we take a new policy with higher cover from any insurance company, provided they agree, considering our age?
If the total premium is more than ₹50,000, can both of us claim tax benefits, each up to ₹50,000?
A. Hospitalisation policies are indemnity policies which means you can make claims only against actual expenses as evidenced by the bills. So, you can choose the policy you want to make the claim under and then, for the excess amount, make the claim under the other policy.
As for higher coverage, please opt for it if you can get it. Here are some more efficient and less costly options.
Maintain one of your two policies as your basic hospitalisation cover. For additional cover, replace your second hospitalisation policy with a top-up or super top-up policy. This will cost less for the same sum assured. You can read about this in greater detail in Cover Note published in the May 5, 2019 edition of The Hindu. (https://www.thehindu.com/business/Industry/want-extra-cover-on-your-policy/article27035752.ece).
Ensure that your current benefits, like having completed your waiting period for pre-existing conditions, stay intact. You should be able to appeal to the logic of your insurance company and talk them into it!
You can supplement this with a critical illness policy and/or a major surgery policy. These are benefit policies, meaning you can make a claim for the sum assured on the occurrence of the insured peril (the diagnosis of the illness or requirement for surgery) with no reference to actual expenses.
You can also claim under your hospitalisation policy against bills for actual expenses.
Income tax benefits are only for the first insured. In this case it is ₹30,000 as both of you are senior citizens. The ₹50,000 deduction you mention is only if dependent, senior citizen parents are covered under the same policy.
(The writer is a business journalist specialising in insurance & corporate history)