Ask Mint Money | Critical illness rider pays claim even if mediclaim covers bills

I am 28 years old and my parents and 16-year-old brother are my dependents. My monthly net income is Rs62,000. Should I calculate the amount of cover based on my income or on the number of dependents? Is insurance from a government-owned company better than that by a private one? If I get married in a couple of years, how can I increase the cover?

—Kishan Srivastava

Purchase a cover that is about 10 times your annual net salary, which comes to around Rs75 lakh. This will ensure that if you die prematurely, your family is financially secure for at least 10 years. At your age, a 30-year term plan will cost only about Rs8,000 per year. Term plans offered by private sector insurers are cheaper. Fill the claim form accurately and comprehensively.

When you get married, you can increase your cover by purchasing a new term policy for the incremental cover. If term rates continue to fall, then you can purchase a new policy for the entire amount.

I have a term plan with a sum assured of Rs40 lakh. Can I add the double accident benefit to my existing life insurance policy? How does this benefit work? When should one opt for it?

—Sreejith L

Accident benefit insurance covers death by accident. In addition, these policies could cover the following risks: total disability such as blindness, loss of two limbs; partial disability such as damage in one eye or loss of one limb; temporary disability when you are bedridden for some time; and permanent disability when the medical issue cannot be corrected. Buy an accident benefit policy that covers all the risks described above.

You should be able to add a rider to your existing policy on the policy renewal date. However, I would recommend that you buy a stand-alone accident policy from a general insurer. This cover is likely to be more comprehensive and will not lapse if you discontinue your term policy at any stage. A Rs40 lakh accident cover will cost about Rs6,000 per year.

My agent is asking me to take a critical illness rider with my life policy. I have a mediclaim for Rs1 lakh. Do I need the rider?

—Ashu

Yes. You should evaluate the critical illness rider. This rider has three benefits that supplement a regular mediclaim. First, the rider covers some diseases such as paralysis and cancer that may not require hospitalization and would not be eligible for mediclaim. Second, the sum assured in critical illness would be paid even if mediclaim covers the medical expenses. In such cases, this rider caters to loss of income during a critical illness. Third, the rider provides guaranteed premiums and benefits throughout the policy term. In contrast, mediclaim products are renewed annually and terms of renewal are not assured.

Kapil Mehta is a managing director & principal officer, SecureNow Insurance Broker Pvt. Ltd

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