Published in Mint on 22nd July 2014, Written by Abhishek Bondia
I am 35 years old and as of now, I only have a term plan of Rs. 40 lakh. What health cover would you recommend for me?
You should not mix health and term covers, as these are unrelated. Term plan is a benefit amount received by your family after your death. Health plan will cover your out-of-pocket expenses in case of hospitalization. A rule of thumb is to take health cover of at least 50% of your annual income. Health-care costs vary significantly from hospital to hospital and the facilities opted in a particular hospital. For example, the cost of a cataract surgery almost doubles if you use an imported lens instead of a local one. Hence, quantum of health cover is closely linked to your income and lifestyle.
If you buy health insurance at a young age, it has an advantage of accumulating no-claim bonuses (NCBs). Current plans offer between 5% and 60% of sum assured as NCB. Once you have shortlisted plans with the desired benefits within your budget, choose the plan that offers maximum NCB. This will help you benefit from high cover in later years.
I have had a car for five years and plan to buy a new car. Can I transfer the NCB to my new car?
You can transfer the NCB to a new car by cancelling the old car insurance. Upon cancellation, you will receive an NCB retention letter from your current insurer. Present the NCB retention letter to the new car’s insurer to avail the bonus.
The insurer will ask for the following documents to issue the NCB retention letter:
– Request letter for policy cancellation
– Original policy copy and certificate of insurance (also called Form 51)
– Form 29 (notice of transfer of ownership of a motor vehicle)
– Form 30 (application for intimation and transfer of ownership of a motor vehicle)
– Photocopy of registration certificate book with name of the new owner
– Proof of delivery of car to the new owner
The last four documents are only required if you are selling your old car. Though technically, it is possible to transfer NCB without selling the old car. Several insurers insist on ownership transfer. I interviewed frontline executives of five insurers and got a different view from each. A transfer to a spouse or family member is considered valid. You can apply for a NCB retention letter within 90 days from the date of sale. The retention letter is valid for three years. So, do the paperwork much in advance before you actually buy your next car.