The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
Why should I invest in a health insurance? Why should one buy a health plan when the same is available at lower rates from a general insurance firm?
Health problems have become increasingly common and growing medical expenses can make a huge dent in your savings. Health insurance plans secure your future against such medical emergencies. In some cases, it can also act as an investment tool as in the case of a health insurance bought from a life insurance firm. The key difference between a health policy bought from a general insurance firm vis-a-vis a life insurance firm is that the general insurance firm reimburses the actual expense in case of a claim, subject to the insured amount, while the life insurance firm usually offers fixed benefits that can help you meet additional expenses. Some life insurance firms also offer a maturity benefit.
In case I decide to invest in a child policy, how would it be different from investing in a regular term insurance plan?
A term policy purely offers protection in case of any unfortunate event. On the other hand, a child plan not only fulfils the investment objective, but also provides protection in case something unfortunate happens to the parent. This is the only product that ensures that the corpus that you have planned to save for your child’s future is available when your child is 18 or 21 years old. The choice of product, however, depends on the risk appetite of parents.
Various child plans are available with options such as premium waiver, so that the policy continues even in the case of the parent’s death, disability or critical illness (if the rider has been opted for), while the sum assured is paid out. Such plans also provide regular income (if the rider has been opted for) to meet the child’s everyday expenses in case of the parent’s death. On maturity, the child gets the fund value.
Readers are welcome to write in with their queries to firstname.lastname@example.org. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is T.R. Ramachandran, managing director and CEO, Aviva India.