Personal Finance Queries For The Day (10-06-2019)

Vineet Arora - 10 June 2019

Rajat Mathur, Lucknow: How is buying insurance online different from buying insurance from an agent? What is better? When buying a policy online what are the important things to keep in mind?

For consumers who are tech savvy, buying insurance plan online will help to directly interact with the insurance company and get first-hand information on the features, benefits, terms & conditions around the product. One can also compare premiums through web aggregators and other reliable sources and evaluate the customer reviews before making an informed decision.

Incase the consumer is not able to ascertain the best product for themselves, a sales intermediary can outline the best coverage options available basis their insurance needs.

Customers should keep the following things in mind while buying an online policy:

· Select the right insurer - When deciding on the insurer, do some basic checks. Check for their claim settlement ratio, solvency ratio, financial background and market reputation

· Choose the right amount of cover

· Determine the policy period for the term cover

· Compare quotes offered by various life insurance companies

· Go through the policy terms & conditions carefully

Mohini Nagpal, Indore: I am 32 year old married. with an annual income of 10 lakhs. Also planning to start a family soon. How much sum insured should I take for adequate term life cover?

As a thumb rule a term cover of approximately 15-20 times the annual income is recommended. Term cover should financially enable the family members of the deceased to continue with their current lifestyles, take care of spouse’s old age requirements, children’s education fees & their aspirations. One should also cover against any liabilities to protect their family if something untoward happens.

Maitri Sarkar, Kanpur: I have health insurance, do I still need critical illness cover in my insurance plan?

A critical illness plan works differently from a Mediclaim health insurance plan. Critical illness plans pay a lumpsum amount on diagnosis of any covered conditions. Mediclaim on the other hand is an indemnity plan which reimburses the treatment expenses incurred.

Critical illnesses require specialized treatment & care. It can have a debilitating effect on both the insured as well as the family members, both emotionally and financially. It can also negatively impact an individual's earning potential.

Mediclaim plans may have certain in-built sub-limits which will restrict it from covering the entire medical expense towards treatment. In such cases, one might have to dig into their savings to bear the additional treatment costs.

A critical illness cover can adequately fill in that gap. Hence, it is important to supplement the mediclaim plans with a Critical Illness cover to provide a second financial buffer.

The queries are responded by MD and CEO, Aegon Life Insurance.