Five Questions to ask before buying Life Insurance

Do I need Life Insurance?

People who buy life insurance often ask themselves: “Do I really need Life Insurance”? It is true that not everyone needs to have life insurance.

Before you decide to buy life insurance ask yourself these questions:

1.       Are you married?

2.       Do you have Children or you plan to have children?

3.       Is your family dependent on you for their financial needs?

4.       Do you have parents who you have to support financially?

5.       Do you have a Mortgage for Home, Loan for your car or an unpaid educational loan?

If answers to these questions is a NO Don’t bother. Life Insurance is not for you.  On the contrary if you have answered ‘Yes’ to any of the above questions, you should consider life Insurance.

Appropriate amount of Life insurance will ensure that your loved ones are not left with financial hardship should you pass away (All of us are going to go one day).

The question that arises next is how much life insurance do I need?

If you want to ensure that your family continues to have the same level of financial security in your absence, then the interest from your Life Insurance pay out should be equal to your monthly income. Given the interest rates in the country today, you should insure yourself for about 12-15 times your annual income.

How long should I have life Insurance?

This is a fairly simple question to answer. You should insure yourself for your entire income generating life; in plain English until the age of anticipated retirement. In India this usually up to the age of 60. If you intent to work beyond that you may want to ensure yourself beyond the age of 60.

Remember the older you grow more expensive it is to buy life insurance and your options are limited as well.  Bottom line is that buy Life Insurance as soon the answer to anyone of the questions above is yes if you don’t want financial hardship to befall your loved ones in your absence.

Amit KumarHeart

Health Insurance Policy Explained - Part II

Health Insurance policies have different built-in features, features that vary from company to company and from product to product. Features are those elements that are in-built into a policy, while covers are additional elements one can opt for. As an analogy, let us say you are considering a phone with a built in camera and an option to add a memory card for external storage. The camera is the “feature” in the phone and the external card option is the “optional cover”.

Let us discuss some features in Health Insurance policies today. Some are useful and some are quite superfluous. The decision to select these features must be based on your life situation and your personal preferences.  

Policies that Pay/Permit/Arrange Health Checks: Periodic health checks are useful in today’s context. Insurance companies pay for these checks. These are usually part of the features within a policy. However most companies will require continuous insurance for at least 2/3 years before one can avail reimbursement for a health check-up. Amounts reimbursed can be much lesser than what you would normally incur, hence it is important to know limits. Certain companies specify the hospital where you can get this done, the number of members who can avail this feature, and the kind of tests that you are eligible for. If pre-arranged, this option is especially useful because no cash need be paid up front. We feel this is a useful feature to look for in your policy.

Policies that Allow a Non-TPA Discount: Most insurance companies have tied up with third party associates (TPAs) to help them process claims. It is obvious that a fee needs to be paid to them by the company. Thus if you opt to not use the TPA’s services, and deal with the insurance company directly, you can get a discount in the premium. We are divided in our opinion on this issue: you may save some time if you use the TPA, however the TPA does not do any function which you personally cannot execute.

Policies that Permit Optional Deductibles: Insurance companies are happy to insure clients that have a skin in the game. If you opt for a deductible, which are usually fixed amounts, the insurance company will reimburse claims for amounts over and above the fixed deductible. For example, let us say that you have opted for a fixed deductible of Rs. 10,000. If you have a claim for Rs. 12,000, the insurance company will pay you Rs. 2000 only. If your expenses in hospital were Rs. 8000, there will be no reimbursement from the insurance company. Deductibles can be per claim or per policy. Choose deductible plans wisely, depending on your life situation. Premiums can be significantly lower; however claims could see you going out-of-pocket.

In our next blog, we shall discuss “nice-to-have” covers.

You can find the best health insurance policies for you   at www.policylitmus.com.

Amit KumarHeart

Critical Illness Insurance: Vital but under appreciated.

I have health Insurance. Is that not enough?

With the rising health care costs it is now well established that you will have some sort of health insurance; either on your own or provided by your employer. If you are one of those who is happy in the knowledge that your health costs are covered completely you may be in for some surprise.

Who pays for out of hospital costs and loss of Income?

While the typical health insurance policy covers hospitalization costs, there may be significant costs that you may have to incur before you get back to work.  Beyond these costs there may be loss of income while you are recovering.  For the typical salaried person these costs add you very quickly.  You may think that there is very little likely hood of extended period of recuperation. Think again. One out of three Indians will suffer from a critical illness like Cancer, Heart attack, Kidney Failure. In event of such an illness, there will be costs involved that will go well beyond what your regular hospitalization policy will provide.

Enter Critical Illness Insurance Policy

There is a way to get protection or at least compensation in event you are stuck by a critical illness. A critical illness policy provides you with a lump sum Amount in the event that you suffer from one of the listed critical illness. The six most common Critical Illnesses are:

1.       First Heart Attack

2.       Stroke (Cardio Vascular Accident or CVA)

3.       Cancer

4.       Kidney Failure

5.       Major Organ Transplant

6.       Heart By-pass Surgery

Some critical illness policy pay upon diagnosis of the illness. Some of them require you to survive a period of days (typically about 30 days) after diagnosis for payment.

Here is a table of the Best Critical illness policies in India for a male aged 35 for a Sum Insured of 10 lakhs.

Insurer	Annual Premium	Payment Criteria
Bajaj Allianz	3,000	30 days after Diagnosis
Max Bupa	3,089	30 days after Diagnosis
HDFC	3,371	30 days after Diagnosis
Chola	5,698	Upon Diagnosis
Reliance	3,075	30-60 days depending on the illness.
Tata-AIG	8,892	Upon Diagnosis

You can see that policies that pay upon diagnosis are expensive but in my opinion they are worth it.  Also undertake a detailed comparison of Critical Illness Insurance Policies before you buy. Check out all the conditions covered and the policy terms.

Amit Kumar

7 Step guide to selecting the best Health Insurance policy for you.

Okay, so you have decided to be a financially savvy person and agreed that you need health insurance. If you are like the many other people I know, the next steps are pretty vague. Of course there are innumerable agents/advertisements/companies that will project that they have the best solution. But spend a few minutes with me and you are on your way to choosing the best Health Insurance Policy in India for you.

Health Insurance plans in India are available provide compensation for hospitalization plus various optional add-on covers and features. They come in 2 varieties: Family Floater and Individual. As the names suggest, Family Floaters are for families (no points for that) and Individual for individuals (who else!).

STEP 1: FAMILY FLOATER OR INDIVIDUAL?

What decision that confronts you is whether you should buy a family floater policy or an Individual policy?

FAMILY FLOATER POLICY: These policies have a Single Sum Insured that can be used by any member of the family up to any extent within the overall sum insured. If the senior-most member in your family is aged less than 45, consider a family floater policy. If the senior-most member in your family is aged more than 45, buy individual policies with graded cover for the members of your family. The reason for this is in a family floater policy, premium is based on the age of the senior most member who is most likely to fall ill and use the sum insured.  Companies may allow between 2 to 4 children.

INDIVIDUAL POLICY :  An Individual policy is purchased by an individual or by a group of individuals who are part of a family (Spouse, Children, Dependent Parents, and Parents-in-law). Each member has his own Sum Insured. Once he exhausts his sum insured, he cannot claim any further hospitalization expenses.

Family Floater Policy: One Sum Insured shared by All

Individual Policy: Separate Sum Insured for each member. Sum Insured cannot be shared.

STEP 2: SHOULD YOU BUY CRITICAL ILLNESS

CRITICAL ILLNESS COVER: Sedentary lifestyles and stress is causing an increase in critical illnesses like heart and kidney disease, cancer, diabetes, hypertension and so on. If you are less than 35, it makes sense to opt for a Critical Illness cover in your health plan. Critical illness cover would give extra compensation if you are diagnosed with one of these illnesses. This is over and above your sum insured for hospitalization. Critical illness policies are available as add-ons to health insurance policies or a separate Critical illness policies.

STEP 3: MATERNITY COVER:

MATERNITY COVER: If you are in the procreation years you must consider this cover in your health plan. Most companies have a 3-year waiting period before you can claim; hence it makes sense to plan much in advance. Maternity costs are rising and buying insurance is a wise idea. Check out the insurance policies with maternity and new born cover. 

STEP 4: CHECK FOR ADDITIONAL COVERS

ADDITIONAL COVERS:  If one of the insured is a child below 10 or aged, you may want to consider nursing care or convalescence benefits. If you are a firm believer in alternative medicine, you may want to buy AYUSH (Ayurveda/UNANI/Homeopathy) cover. Transport by Ambulance is becoming a necessity in today’s world, and you may want to opt for it. 

STEP 5: CHECK FOR PRE-EXISTING DISEASES

A pre-existing disease means an existing health disorder for which you will take or will need to take treatment. Since these will most certainly lead to hospitalisation claims, insurance companies are careful in selecting clients with pre-existing conditions. Advancing age will imply pre-existing diseases. Most companies will cover pre-existing diseases only after 48 months of continuous coverage. Most companies also insist on pre-acceptance medical tests if the applicant is aged 45 or more. Some companies are more liberal and conduct such tests at 50, or 55 or even 60. You may want to check these out if you wish to avoid medicals: remember such companies will be expensive or even restrict cover offered.

STEP 6: DO YOU HAVE A PREFERRED HOSPITAL

PREFERRED HOSPITAL: Do you wish to take treatment in a particular hospital? Check if this hospital is on an Insurance company’s list. If it is you will probably get cashless treatment, which means that you will not need to pay any cash up front. If your preferred hospital is not on an insurance company’s list, you may have to pay up to 20% of the bill yourself.

STEP 7: COMPARE BEFORE YOU BUY

HOW TO COMPARE AND BUY: Follow this simple process:

·         Log onto www.policylitmus.com

·         Click on Health Insurance Quotes

·         Choose Family Floater or Individual (refer to discussion above for help).

·         Customise your policy by choosing the covers you need.

·         Compare Service standards and Price from the options displayed using the “Sort” Button

·         Select a policy of your choice

·         Buy.

Amit Kumar

Our Health Insurance Policy Explained - Part I

If you have bought a Health Insurance policy, chances are that you are aware that the insurance company will pay your bill for hospitalization of atleast 24 hours.

Just like mobile phones have lots of features and options, health insurance policies too have features that you may not know. Plus there are  features  that may be optional and can be added . If you are buying a policy or have already bought a policy it is possible that:

You may not have features you need, or Have some features that you may rarely need, but have already paid for.

Let us look at some covers that you must necessarily have:

Ambulance Cover: This provides for costs of the ambulance for transportation of the insured patient to the hospital. Insurance companies will limit this to cost to 500-2000 rupees depending on your policy. 

Day Care Procedures: Typically Health Insurance will pay your bills only if you have been admitted in hospital for 24 hours or more. This cover provides for expenses incurred on named surgeries requiring less than 24 hours of hospitalization. These can be expensive procedures, and more and more procedures that previously required hospitalization is moving into this list. This is therefore an important feature to have in your policy. The number of covered procedures varies from company to company; hence it makes sense to check.

Pre-Hospitalization: This cover provides for expenses for a set number of days prior to the period of hospitalization. Surgeries and procedures often require preparatory admission, and this cover provides for those expenses.

Post Hospitality: This cover provides for expenses for a set number of days from the end of the period of hospitalization. Middling to major surgeries require convalescence periods and this is a good cover to have.

The next 2 covers are for a specific life stage: for those people in the procreating years.

Maternity Cover: Most health insurance policies do not ordinarily cover hospitalization for maternity related conditions. If you are in the procreating years it makes sense to opt for this cover. Please remember that there is a waiting period of (usually) 3 years before a claim can be made under this cover. Plan in advance.

New Born Cover: Normally, babies are covered from 3 months onwards. This cover allows a new born to be covered from birth. After 3 months, the baby can be added to the existing policy.

These according to us are the essential covers that your Health Insurance policy must have. In our next blog we will talk about the covers you may want to buy or give a miss depending on your personal situation.

Amit Kumar