Most health insurance policies restrict cover to Indian territory

My mother-in-law is a Nepalese citizen living with us in India and stays at home. She has an Indian permanent account number (PAN). Can I buy health insurance for her from an Indian insurer?

—Gyanendra

Yes, health insurance can be bought for your mother-in-law from an Indian insurer. The nationality of an individual is of limited consequence to the insurer to underwrite a health policy. However, most plans restrict coverage to Indian territory only, and the claim will be paid in Indian rupees only.

I will turn 35 in August. I earn ₹20 lakh a year and have three dependants—my wife and my parents. I want to buy a life insurance policy. How should I zero in on the right one?

—Suresh Kumar

Among various life insurance plans, your priority should be to buy a term insurance plan. The first step for you to fix the sum assured and term of the plan. A rule of thumb is to buy coverage equal to 10 times your annual income. This should be further enhanced in case of any outstanding financial liabilities such as a home loan. The term of the plan should cover the prime income earning age. Coverage till 65 years is generally adequate. Note that the longer the term of the plan, the higher would be the premium.

The second decision to make is on the payment type for the plan. There are several options available, including annual regular payment, single one-time pay plan, limited term payment plan, and return of premium plan in case the insured survives at the end of policy term. I recommend sticking to the annual regular payment variant. This works out to be the most economical, and best serves the purpose of term insurance.

Next, you have to shortlist insurers. Standard coverage of term insurance is common across insurers. So, there are limited differences to evaluate. Filter insurers that have more than 95% claim settlement ratio. It is an indicator of the insurer’s track record on claims paid.

Finally, from this shortlist, you can select the insurer that offers the lowest premium.

Abhishek Bondia is principal officer and managing director, SecureNow.in. Queries and views at mintmoney@livemint.com