I have recently started using a credit card. The issuing bank representative says I must buy credit card insurance. What is that, and is it mandatory?

—Kanu Unniyal

Credit card insurance is not mandatory. Such insurance would indemnify you for losses suffered due to credit card theft or fraud. Losses covered include those due to online fraud, and misuse of your card without your consent. There are insurance policies that need not be limited to one credit card or a bank. It can work as a floater policy that can cover multiple credit cards, debit cards and ATM cards.

I am 31 years old. I am unmarried and have only my parents as dependants. I earn 80,000 a month. I want to take a life insurance policy. Please advise.

—Ramesh Uppal

The first life insurance policy that you should buy is a term plan. You should take a sum assured of at least 1 crore. In a standard term plan, if the insured dies, the nominee gets the sum assured as a lumpsum. There are some plans that offer staggered payments as well. An insurer may offer both plans. However, the nominee is generally better off with a lumpsum payout.

You should select an insurer that has claim settlement of at least 90% to ensure a hassle-free experience for nominees. Take a term of 30 years that will ensure coverage for your active working years.

Is it compulsory to de-materialise insurance policies? can it affect the claims process?

—Rishi Uniyal

It is not compulsory to get insurance policies issued in demat format. This is an optional facility to make policy administration easier. In fact, insurers offer the option to re-materialise the policy, in case you want a physical copy of the policy.

Whether the policy is issued in physical or demat form has no bearing on the claim.

We are planning to have a baby soon and I want to take care of the hospitalisation expenses. What kind of cover can I take? What all will the policy cover?

—Raman Mehta

There are two types of claims linked to a new born baby i.e., delivery-related expenses and health issues, if any. The traditional mediclaim plan excludes maternity delivery-related claims. Several new health insurance plans now offer maternity benefits as an additional benefit with a sub-limit. Most of these plans would have a waiting period of 3-4 years. Only a handful of plans have a waiting period between 9 months and 2 years. You should look at the waiting period specifically for maternity and then select a plan.

In the traditional plan, a new born is not covered for the first 90 days. A few plans that offer maternity benefits, also cover the new born from day 1. There is a sub-limit though. You should prefer a plan that provides a higher coverage for a new born, ideally the full sum insured.

To read more queries, go to livemint.com/askmintmoney

Abhishek Bondia is principal officer and managing director, SecureNow.in.

Queries and views at mintmoney@livemint.com

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