My employer offers me a health plan of 5 lakh that covers me and my wife. Should I also invest in an independent health plan?

—Raghav Sarkar

You should buy an independent health plan to supplement your employer’s sponsored coverage. The amount of 5 lakh is inadequate for most major surgeries and critical illnesses. A thumb rule is to get coverage at least equal to one’s annual income or a minimum of 10 lakh. The employer-sponsored health cover is valid till you are employed with the same employer. When you change jobs, the coverage would stop and if your new employer doesn’t give you insurance, you would be left without a health cover. Buying an insurance then would mean the start of waiting period on pre-existing illnesses and specific illnesses. So, you will not be able to make a claim for these illnesses, if there is a need. The same is applicable at retirement as well. To save on premiums, you can consider buying a top-up health plan as well. This will have a deductible threshold where claims above the threshold will be covered. This is a cost-effective alternative to supplement your company insurance.

I invested in a pension plan when I was 40 years old. Now, I am 60 and in a few months the plan would mature. Can I withdraw the entire maturity benefit?

—Anisha Tokas

The main purpose of pension plans is to enable annuity payments. Only a portion, typically one-third, of the accrued corpus can be withdrawn as lump sum. The balance amount must be used to buy annuities. Insurers offer different types of annuities and you can choose one based on your requirements. A common annuity plan is to get pension for life. On death, the purchase price is paid to the nominee.

I have a personal accident plan. The sum insured is 10 lakh. I am thinking of buying a plan for my wife but she is not an earning member. How much sum insured would I be able to get for her?

—Nikhil Bhatt

Personal accident policy covers accidental death and disability. In case of death due to accident, the plan pays a lump sum to the nominee. The purpose is to provide an income replacement to the family. Your sum assured of 10 lakh would be inadequate; so get a cover of at least five times your annual income. In case of a non-earning member, insurers are generally reluctant to issue a high coverage, but they generally issue a sum insured of 15-20 lakh without asking for an income proof during underwriting.

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

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