You can enjoy the benefit of a term insurance policy even after you emigrate

I will be moving to Canada with my family soon. I have a term life insurance plan in India. I don’t plan to come back. Will it make sense to discontinue the policy? If all goes well, I could be taking up Canadian citizenship. Will this plan still be effective if I do?

—Name withheld on request

When you move to Canada or take up Canadian citizenship, there would be no effect on the term insurance policy. You can continue the policy to its term to enjoy coverage. Even if you do buy a term plan in Canada, you may find the Indian term insurance relatively cost-effective and worth continuing. There are no benefits to discontinuing your term the policy because you would not get any paid-up value or surrender benefit and you would lose all the benefits of the policy. Do keep in mind that the Indian term plan will pay the death benefit only in Indian rupees.

I am 40 and covered under my employer’s health insurance policy of ₹3 lakh, which also covers my wife and daughter. I have also bought individual plans of ₹5 lakh each for myself and my wife, and am planning to buy a top-up cover for both of us. I want to know what would be the best deductible. Should it be ₹8 lakh (sum of the two policies) or should it be ₹5 lakh? I also want to know what amount of top-up I should buy.

—Rohit

Since you have an employer sponsored health insurance plan and an independent health plan for ₹3 lakh and ₹5 lakh respectively, the deductible under the top-up policy should be ₹8 lakh. Claims of up to ₹3 lakh can be met by the employer’s health policy, while claims exceeding that amount can be met by the independent health plan. If the claim exceeds ₹8 lakhs, you would need additional coverage, and this is where the top-up health plan would help cover the costs. So, a deductible of ₹8 lakh is ideal.

However, when you evaluate plans, you may find out that the incremental cost for a lower deductible is not too much. For example, for a top-up sum assured of ₹20 lakh, the cost difference between a deductible of ₹5 lakh and ₹8 lakh is around ₹2,000.

The advantage of a lower deductible is that even if your company were to withdraw the health insurance benefit, you would still not have to pay out of pocket for a large claim.

The sum insured of the top-up policy should be sufficient to cover the expensive medical treatments which one would incur in a medical emergency. A rule of thumb rule is to have an aggregate sum insured equal to one’s annual income. A ₹20 lakh family floater top-up with a deductible of ₹5 lakh, will cost around ₹7,100 plus taxes.

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