HOUSEHOLD GOODS INSURANCE

Which household goods can be insured? How is the premium amount decided by insurers?
You can cover all household goods, including furniture and fixtures, jewellery and other valuables by taking a householder’s policy from any general insurance company. The list is exhaustive and generally covers all goods. For the purpose of this policy, household goods are assessed at their market value or the value of a similar new item after deducting deprecation for its usage. This means that in case of loss of any item, you shall be paid the value of a new item that could replace it, less depreciation for the usage of the lost item. Jewellery is valued at its market price and as its value does not depreciate, depreciation is not normally taken into account.

RETURN THE POLICY

A friend of mine sold me a unit-linked insurance plan (Ulip) three days back. I bought the policy but don’t want it anymore. Can I get it cancelled at this stage? Will I be charged for it?

As per the rules set by Insurance Regulatory and Development Authority (Irda), it is mandatory for all insurance companies to give the insured a free look period of minimum 15 days to re-examine the policy. The insured can surrender the policy during this period and the insurer is obliged to refund the amount collected. Since you don't want the policy, you should inform the insurers immediately.
The amount of refund, however, differs from company to company. Some insurers pay the full amount collected from the insured while some deduct some charges like stamp duty or medical examination.

FACTS OF INSURANCE POLICY

Most insurance policies have a clause in which the insured person states that all the facts have been fully disclosed. What are these facts?

The facts that need to be disclosed while taking an insurance policy are any circumstances which would influence the insurer in accepting or declining a risk, or which could change the amount of premium, or terms and conditions of the insurance contract. Any factor that has the potential of increasing the risk exposure, previous losses and claims under similar policies, special conditions imposed by previous insurers, and facts relating to the description of the subject matter of insurance needs to be disclosed.

HEALTH POLICY CLAIMS

My wife has a health policy. She recently underwent an operation and made a claim for it. Now, she needs to go for another operation. Can she make another claim?

The sum insured under a health policy signifies the total amount insured for the policy period. If a claim is made, the sum insured reduces to the extent of the claim. Health policies are taken for a specific period, usually 12 months, and have to be renewed after that. The maximum claim amount is fixed when the policy is bought. Suppose a person has made a claim of Rs 1.5 lakh against the sum insured of Rs 2 lakh, only Rs 50,000 will be available for any claim which may arise during the remaining policy period. The sum insured can be restored by paying extra premium. Also, the premium would be higher next year as you made a claim last year. Sometimes insurers also put a restriction on the number of claims a person can make in one year and the time gap between two claims. You need to go through your policy to find out the exact conditions.

CHILD INSURANCE PLANS

What are the advantages and disadvantages of child insurance plans?

Child care plans are essentially saving plans specially designed to meet the increasing costs of a child’s needs like education. These plans insure the life of the parent, or the child and the benefits are available as lump sum payments when the child reaches a certain age. Also, in most policies if the parent dies or suffers a disability during the tenure of the policy, it will continue even if the annual premium is not paid. Moreover the sum insured for the parent is also paid. The disadvantage is that these plans are not self-sustaining, that is, if the premium is not paid for any reason other than the death or disability of the parent, it will lapse. Therefore, once you commit to a child care plan, you have to ensure that the premiums are paid on time. To avoid this you can consider the Ulip version of such plans.

AM I COMPLETELY COVERED

I want a cover of Rs 20 lakh as I feel my insurance is inadequate. Should I split the cover, with one half in a term plan and the other half in a Ulip?First, you have to understand your need for an insurance plan—is it purely for insurance, or is it a saving instrument, or both?

Term insurance plans would best cover your need for protection if you feel you are not adequately insured. These plans are generally for one year and have to be renewed every year. The sum assured is payable on death only, and that too if the death occurs during the specified term. The insured will not receive anything if he survives the term. As this is the most basic kind of insurance, all insurers have similar premiums. Also, the premium is lowest for such plans since it offers no other benefit.
Ulips, on the other hand, offer both insurance and savings, but require long-term commitment. The premium for the same amount of cover would be higher as it offers returns also. Investments in Ulips are subject to market risks and the amount accumulated at any time depends on the market value of units.

Minor Insurance Riders

I had bought a Ulip in my son’s name. At that time, I wanted accident and medical riders, but the insurance company turned down the request, saying my son was a minor. Now, my son has
crossed 18 years of age. So, I asked the company to include the accident rider. But the company rejected the application, saying I should have opted for it when I took the policy. What should I do?

Riders in a life insurance policy are generally taken at the time of issuance of the policy and its addition at a future date can only be done as per the policy terms of the insurer. Riders in a life policy have a limited scope and for a wider cover you can consider taking separate health and personal accident policies.