Accident insurance policies provide worldwide coverage

Published in Mint on May 10 2016, Written by Abhishek Bondia

What is a cost of living rider? Can this be added to my health insurance policy?

—Anshita Sharma

There are two kinds of cost of living riders. The first is a benefit to account for inflation. Several health insurance products factor this in by giving a no-claim bonus. These no-claim bonuses can vary from 10-50% each year, and will partially address the high medical inflation of 15-20%. This rider is a partial solution because if you have to make a claim, the no-claim benefit will be withdrawn. Also, there is a ceiling—typically 50%—beyond which your sum assured cannot increase. The best solution is to buy more health insurance or a top-up plan over time.

The second type of rider is where a benefit is paid if you suffer a critical illness. This kind of accelerated benefit is more common in life insurance. You can buy a stand-alone critical illness plan, which will help manage your cost of living in case of a serious illness.

What is kidnap and ransom insurance? What is the process to get such a plan?

—Pankaj Ahilya

A kidnap and ransom policy provides cover for illegal detention of an individual. Kidnap, extortion and hijacking are covered. The policy pays for expenses linked to the event, including hiring of specialist consultants to mitigate the situation, negotiate and evacuate. Ransom, up to certain limits, can also be covered.

High net worth individuals or companies can buy this coverage. You will need to fill an application form with details of your income, work, past experience of such situations and travel details. Insurers would scrutinize your application and suggest if a cover should be issued, and at what price. Such policies are generally not highly publicised and are issued with high discretion.

Is my accident insurance valid when I travel abroad? Does the purpose of travel matter?

—Karthik J.

Most accident insurance policies have a worldwide 24 hours coverage. The coverage is valid for either business or leisure travel. Therefore, the location and timing of an accident is irrelevant in determining claim admissibility. But you should be mindful of exclusions in the policy such as accidents under the influence of alcohol or risky adventure sports.

The claim for accident insurance has to be made with the issuing insurer in India. All claim documents are to be submitted to the local issuing office. The payment is done in rupees.

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