Frequent travellers should buy annual overseas travel insurance

Published in Mint on 18th March 2014, Written by Kapil Mehta

How does one get an overseas mediclaim policy? Is it advisable to get one?

—Nilofer

Overseas mediclaim is meant for Indian residents who travel for short periods abroad. A variant covers Indian students studying overseas. It’s an absolute must-have because medical treatment overseas is expensive. It is best purchased online or from your travel agent. You will need to provide your age, passport details, country of travel and travel dates.
The cover is primarily meant for accidents and emergencies. Deductibles are set at $100 or higher to prevent routine medical check-ups overseas. Pre-existing diseases are excluded from these insurances.
If you are a frequent traveller, you should buy an annual overseas travel insurance. This is applicable each time you travel overseas provided each trip is restricted to 30 or 60 days, depending upon the insurance. For about Rs.4,500, a 40-year-old can buy annual overseas cover of $500,000.
What is a no-claim bonus and what are its benefits?
—Ankita Saroda
The concept of no-claim bonus is used in several individual insurances. It is an incentive for policyholders to not file small or frivolous claims. It is most common in motor insurance where you get substantial discounts on standard rates if you have not had a claim in the previous year.
The incentive works extremely well. For example, my father has a 60% discount rate on his car insurance. Consequently, he will not file even his moderate-size genuine claim because he does not want to lose the substantial no-claim benefit accumulated over the years.
The concept is also common in medical insurance where the sum assured is increased if there is no claim. Typically, the sum assured can double through no-claim benefits.

 
I have two insurance policies for the same asset. Can I claim under both these policies?
—Abhra
A fundamental principle of insurance is indemnity. This means that you will be paid only for actual loss incurred and cannot profit on an insurance claim. If you claim under both policies, each insurer will make a part-payment to you such that you recover the asset cost only once.
Also, you may find it administratively easier to file the claim with one insurer. That company may then invoke the principle of contribution and ask the other insurer to pay its fair share of the claim. Insurers will know that you have another insurance because of declarations made in the proposal or claim form. They may also determine this when they do a survey at the time of claim.
The larger issue is: why you bought two policies for the same asset? In a sense, you paid double the cost with no incremental benefit.

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