I am an Uber driver and my income is not fixed. I don’t have a full health cover but I do have personal accident insurance. My bank is offering me a hospital cash policy which will give me ₹2,000 a day if I get hospitalised. Should I go for it?
Hospitalisation leads to two types of losses. First is the medical expense—during, before and after hospitalisation. Second is the notional loss of income for the period for which a person is not able to work. For freelance and daily wage workers, the second component is very important, as they don’t have the provision of paid leaves from an employer. Still, it makes sense to cover out-of-pocket hospitalisation costs before protecting loss of income. A daily allowance of ₹2,000 will be insufficient to cover medical costs linked to hospitalisation. Since you do not have any health cover, buy a standard health insurance first.
A standard plan for a 30-year-old will cost about ₹6,000 for a sum insured of ₹5 lakh. Such policy will cover hospitalisation costs for a range of treatments, including viral infection, heart attack and cancer. For a few of these treatments, the length of hospital stay may be between three to five days. But the cost of treatment may still be upwards of ₹2-3 lakh. A hospital cash policy costs about ₹1,300 to give a benefit of ₹2,000 per day of hospitalisation. This will hardly be enough to cover hospitalisation expenses. Also, the policy requires a minimum of 24 hours of hospitalisation. So, there will be no payout for day care procedures. So, buy a regular mediclaim first and then a hospital cash plan as a supplementary cover to compensate for the loss of income.
My daughter is getting married in May. She has a health cover of ₹8 lakh. What is the right time for her to buy a life insurance policy?
—Name withheld on request
Now is the right time for her to buy a life insurance policy. At younger ages, premiums are low, and gets locked for the duration of the contract. So, the sooner she buys, the better it is for her. She should initially start with a sum assured of 10 times her current annual income. As her income grows, she should increase her cover. In case she acquires any financial liabilities such as a home or car loan, she should enhance the sum assured further. Premiums of term plans vary substantially by the plan duration. She should buy a plan that will protect her till the age of 60 or 65 years.
Abhishek Bondia is principal officer and MD, SecureNow.in.