BackShould I buy new car insurance from my dealer or elsewhere?
When renewing the policy, make sure to consider adding key features such as zero depreciation and engine protection coverage
PremiumMy car insurance renewal is around the corner. Should I continue with the dealership’s insurance or check online?
—Name withheld on request
There are multiple options for renewing car insurance, both through online aggregators and directly with insurance companies. It’s advisable to compare rates offered by the dealer with those available online.
When renewing the policy, make sure to consider adding key features such as zero depreciation and engine protection coverage.
My daughter has taken a home loan. As parents, we are the co-borrowers since we are also co-owners of the property being purchased. Now my daughter has applied for insurance in her name against the home loan. The insurer’s representative has said that in the event of any default by my daughter due to any unforeseen circumstances (such as death or permanent disability due to an accident), co-borrowers will not be liable to pay the remaining loan. That liability vests with the insurer. This, however, is not explained explicitly in the insurer’s brochure or policy document. Despite this insurance, will we still be liable to pay the remaining loan? We are retired and have no earnings.
—Name withheld on request
When offering a home loan, most lenders advise buyers to purchase term insurance coverage at least equal to the loan amount. The lender is then made the beneficiary of the policy through a process called assignment. In the event of the insured’s death, the proceeds from the policy are paid to the lender, which helps settle the outstanding loan balance.
As a co-borrower, your daughter can purchase term insurance for the entire loan amount, and it is not necessary to limit coverage to only her share in the property. If a claim is triggered, the complete loan will be paid, and the lender cannot ask for further payment from other co-borrowers. Moreover, this insurance can be enhanced to cover permanent disability through a benefit rider.
I have a family history of hypertension. Do I need to do a medical check-up for purchasing a term insurance policy?
—Name withheld on request
A family history of certain illnesses generally does not trigger a medical check-up. However, you are expected to disclose such history in the proposal form. You should also declare all your existing health conditions. Insurers usually require a medical check-up irrespective of your health conditions or family history.
The sum assured offered under term insurance is linked to your annual income. The usual limit offered is 10 to 15 times of one’s annual income and depends on the age and the current annual income.
Abhishek Bondia is principal officer and managing director, SecureNow.in.
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