Some top-up plans get upgraded to normal health policies

Published in Mint on 21 April, 2015, Written by Abhishek Bondia

I am a professional scuba diver. Will overseas travel insurance cover me for accidents due to diving?
—U. Dave

Overseas travel insurance typically excludes professional or hazardous sports. However, if you have an accident unrelated to diving, it will be covered. So, in that sense, you should buy overseas travel insurance even if scuba diving is excluded.

Can one take a householder’s policy if living on rent? If yes, what is the process and what are the documents one needs to produce?
—Ankita Saroda

You can take a householder’s policy while you live in a rented accommodation. However, the coverage would be limited to your own contents. The process of taking the policy varies by insurer. The best practice to cover contents is to list out all the assets with their make, model, serial number and value, and have it acknowledged by the insurer. This removes any ambiguity about the coverage of the assets.
An insurance contract requires insurable interest, i.e., in case of a mishap the insured should suffer a loss in sync with the value of the asset. As a tenant, you cannot cover the building under a householder’s policy. You can, however, purchase a third-party liability policy that covers damages to rented property by your actions or omissions.

I have a medical cover provided by my employer of Rs.5 lakh, which covers me as well as my wife. Should I take a separate health insurance?
—Bhaskar Trivedi

You should take a health insurance cover apart from the one provided by your company. I recommend this for three reasons. First, the coverage provided by most employers is in the range of Rs.2-5 lakh. This becomes insufficient to cover any critical illnesses such as cancer. Second, in case of a job change or even a change in the company’s policy, you may end up with lesser or no coverage. Third, purchasing insurance at an older age, say, after retirement, is increasingly becoming difficult.
I recommend you start with a plan that has a small sum assured but a high no-claim bonus. There are several health insurance plans available that double the sum assured in a couple of years. As you grow older, you should gradually increase your base sum assured as well.
Some insurance companies also allow you the flexibility to buy a top-up with an upgrade option. Under such a scheme, you initially start with a top-up plan, which is considerably cheaper than a normal plan. After a few years, you can upgrade the plan to a normal health insurance plan. For the first few years, when all the waiting period is applicable, you only pay the top-up premium. So, with such plans, you benefit from low cost as well as guaranteed issue.

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