Mediclaim premium paid in cash not tax exempt

Published in Mint on 4th March 2014, Written By Kapil Mehta

Is it required to get third-party pet insurance? I have a German shepherd.
—Deeptiman

Third-party pet insurance is not mandatory. A few insurers cover third-party pet liability as an extension to basic pet insurance. However, I don’t find the extension useful because liability is restricted. The maximum limit I have seen is Rs.25,000 and that is paid only if a legal case is registered. I have a Spitz that snaps at passers-by. I have tried to address the public liability risk by training the pet (rather unsuccessfully) and keeping it on a leash in crowded spaces.

I met with an accident recently and my car suffered a lot of damage. Since I was hospitalized around the time of my premium payment for my car insurance, I could not pay the premium. Can I still claim for damages on my car?
—Jaydev

If the car was damaged after your policy lapsed, you cannot claim damages. Insurers will generally not get into the reason for non-payment. From an insurer’s perspective, they typically send renewal reminder notices a month in advance of the due date.

How can one assess the value of belongings for getting a householder’s policy?
—E. Shakuntala

There are two approaches. First and the preferred one is to declare the actual purchase price. Ideally, you should have supporting invoices for bigger items. The second option is on an agreed value basis. In this case, you agree on the value of each item upfront without necessarily having invoices. At the time of making a claim, you will need to demonstrate exactly which items were stolen and the agreed price will be paid.

I have two insurance policies for my car from two insurers. I want to cancel one of them. Someone told me that it is better to cancel the policy that was issued later. Why is that so?
—Piyush Jha

You don’t really have a choice in the matter. The Indian Motor Tariff specifies that in case of duplicate insurance, you need to cancel the insurance that was issued later. If both policies were issued by the same insurer, then you will get a complete refund of premium. Else, the cancelling insurer will return premium on a pro-rata basis.
An exception is allowed if a bank or financial institution writes to the insurer to cancel the first insurance. In any event, premium will be refunded only if there has been no claim in either policy.

Will I get health insurance tax benefit if I pay premium by cash or demand draft?
—R. Satwan

You get a tax benefit if payment is through cheque, credit card, debit card or a demand draft issued from your own bank account. Cash payments do not get a tax benefit.

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