The terrorist attack in Pune last week claimed at least nine lives and left several injured. A little more than a year ago, but imprinted on our memories, the Mumbai terrorist attack sent shock waves throughout the country. Clearly the urban mass affluent is a target for the terror attacks. And that means you.
We can’t stop living in fear of the terrorists, but having at least the financial lives of those who depend on us and our own medical expenses covered can give some small feeling of comfort.
There are five insurance covers you need to have in place to take care of the financial damage caused by a bomb that could rip your life apart. The first three will help you cover the financial implications in case of loss of life and the other two would cover your assets.
This one is a must-have to secure the future of your dependants. Financial planners recommend that your sum assured should ideally be seven to 10 times your annual income. If you have a debt burden, such as a home loan, you should factor that in too and bump up your cover.
Go for a pure term insurance to get the biggest bang for your premium buck. If you are already with a unit-linked insurance plan (Ulip), then make sure you stay in the plan for its entire term. Still, assess your insurance needs and, if required, bump it up with a term plan.
Says Poonam Bharadwaj, senior vice-president and head (underwriting and claims), ICICI Prudential Life Insurance Co. Ltd: “Typically, all life insurance policies cover death arising due to a terrorist attack. A term plan is the most essential to cover your dependants.”
How to make a claim: Keep your beneficiary in the loop when you buy a life insurance policy. She should know where to retrieve the policy papers from, or at least the policy number. In addition to the policy certificate, insurers would insist on documents such as a death certificate, post-mortem report and a first investigation report in case of death due to an accident. Many insurers may waive off these documents requirement. Says Bharadwaj: “During a terrorist attack, we only insist on a policy certificate, know your customer documents and death certificate.”
Now most health insurers accept claims made on account of a terrorist attack. But it’s best to ask your insurer or check the exclusion clause before buying a policy.
A basic individual health cover should just be a stepping stone. Relying solely on policies, such as a critical illness plan, could prove disastrous.
How to make a claim: Keep your third-party administrator’s (TPA) number or your insurer’s toll-free number handy. Ideally, you should always carry your health insurance card with you. Most policies offer the cashless facility, which means you walk into a network hospital and get treated; the hospital will settle the claim amount with your TPA. Show your TPA card in the hospital and fill the authorization form. The hospital will then coordinate with your TPA to settle the claim.
Some policies, however, reimburse your hospital bills if you get treated in a hospital that is not in the insurer’s network.
Personal accident cover
This cover gives you a financial compensation against an accident that may leave you permanently or temporarily crippled. The idea is to provide you an income stream that you lose on account of a handicap.
Typically, a personal accident policy covers you against death, permanent disability, permanent partial disability and temporary total disability. For death or permanent disability, it pays you lump sum compensation. For temporary disability, it pays you a weekly compensation of around 1% of the sum insured for up to 104 weeks.
Says K.G. Krishnamoorthy Rao, CEO and managing director, Future Generali India Insurance Co. Ltd: “This policy offers you a cover of up to 120 times your monthly salary and the premiums that you pay depend upon the occupation category you fall under.”
However, check with your insurer if claims out of a terrorist attack are covered. You can also get a personal accident cover as a rider with your life insurance policy. But you will lose the benefit if the policy lapses, the cover will be available only up to the policy tenure and, most importantly, it may not cover your claim on account of a terrorist attack.
How to make a claim: In case of death, formalities are similar to that of a life insurance policy. However, for permanent or temporary disability, a doctor needs to certify the nature of disability and make appropriate recommendation. Says Rao: “The doctor needs to specify the extent of permanent disability so that the percentage of sum insured can be paid accordingly. In case of a temporary disability, we need doctor’s certification. Compensation is then paid on monthly or quarterly basis.”
If you own a house, this is a must for you. A basic householder’s policy, which is primarily a fire insurance cover, covers your house and its content against fire and allied perils such as flood, earthquake, lightening and storm. However, to terror-proof your house, you will have to pay out a little extra—terrorism cover comes as an add-on to this policy.
Says T.A. Ramalingam, head (underwriting), Bajaj Allianz General Insurance Co. Ltd: “Terrorism cover costs about 10 paisa per Rs1,000 of sum insured in case of a residential property and about 20 paise in case of a shop.”
How to make a claim: You need to submit the claim form with a rough estimate of the losses that you have suffered. The insurer will appoint a surveyor to assess the damage. The claim is settled once the surveyor submits his report.
In addition to taking a third-party cover, which is mandatory, you need to cover your car against any damage. A comprehensive car insurance policy covers not only your liability towards a third party but also pays for the damages to your car and to the passengers in case of death.
How to make a claim: If your policy is cashless, then you only need to pay for depreciation, whenever required, and the claim is settled between the dealer and the insurer. For a non-cashless policy, you pay for the damages and then claim reimbursement.