Insurance, Term Insurance & Mediclaim

Term Insurance

Life Insurance is not about putting value to your life.Life is priceless

While doing our financial planning we must consider 2 aspects, what if we live longer or if our life is too short??

Life is so unpredictable and hence we must do ours and our family’s protection planning properly

First and foremost,Let us understand about the Term insurance

What are the important features of Term Insurance?

Term Insurance is Pure Insurance: This insurance is for your protection hence you should not expect return on the investment. It is a precautionary measure. This is to protect your family during any untoward incident happens to you. Hence only the nominee or beneficiary get the sum assuredin case of death of the policy holder. This helps in supporting the survival of the family like monthly income, loan can be repaid, school fees, rent etc. can be utilized with sum assured received by the beneficiaries

Term Insurance offers Affordable Premium: The best part of the term insurance isthat it can give a huge coverage with a lower premium. For example, if you are 30 years old,you can get a sum assured of Rs. 1cr at a premium of only Rs. 40/-payable per day

Woman can and Should take Term Insurance: Its not necessary that only the male member of the family take the term plan. We suggest it should be taken also by the female member of the family. It is not restricted only to bread earner; infactit can be taken by the home maker too. Working women contributes to the family income and there can be a financial loss to the family if she is not there, hence every working women also should take a Term Insurance.

Fastest Claim settlement: Term Insurance is known for fastest claim settlement.The beneficiary gets the claim or sum assured within 7 days of submission of the claim documents.Provided all the process is followed properly.

Riders: Over and above all these features Term Insurance also offers riders. You can add Critical Illness and Accidental insurance as riders. It can give sum assured money in case of accident and diagnosis of critical illness. The rider can provide the benefit of waiver of premium in both the cases.

What are the BENEFITS of Term Insurance

Lump sum amount in Natural or Sudden death: It always gives shock when we hear the news of death of our loved ones and nothing can substitute the loss of the person. However, money received from the term insurance can assure that at least the same life in future. Money is extremely important in such situation to support the expenses, study, loan repayment and to fulfill financial goals if any.

Financial Security for family – This is an important aspect of Term Insurance. Due to the sum received from the term insurance the family does not have to be dependent on anyone for any need. This keeps the dignity of the family intact and gives a sense of financial freedom as the family can live a respectful life even if you are not there physically to support them.

Lumpsum amt in case of Accidental death – The term insurance also provides the same kind of benefit (as provided in natural or sudden death) in a situation of an accidental death. The sum assured is received by the nominee or the beneficiary in case of any untoward incident.

PREMIUM CHART:

 TAX BENEFIT

UNDER SECTION 80 C PREMIUM PAID TOWARDS THE TERM INSURANCE POLICY IS ELIGIBLE FOR TAX DEDUCTION

UNDER SECTION 10 (10D) DEATH BENEFIT RECEIVED UNDER TERM INSURANCE POLICY IS TAX EXEMPTED

How much Term Insurance you  should take: It is especially important to consider 4 main parameters while calculating how much term insurance you should take:

1)Monthly expenditure

2) Loans

3) Life Goals

4) Spouse Future. Let us understand with an example:

1. If you monthly expense is Rs. 50000 . It should be minimum 15 times of your expenses. So, that’s 90 lacs.

2. add Loans– say – 40 lacs,  add that to 90 lacs , which makes it 1.30 Cr

3. Life Goals: If you have started investing for life goals like children higher education or marriage etc. say – 70 lacs. , add that, and now the amount is2 cr.

4. Lastly It is necessary that you should secure the future of your spouse , say 50 lacs – so How much Term Insurance to take ??? – 2.5 cr

It also depends on your age:For ex: if you are 20 years old and have no dependents then obviously the Sum Assured will be less and if you are 50 years old and debt free , with reasonably life goals have been achieved then again the Sum Assured can be lesser.

How to choose the best Term insurance?

Don’t buy a term insurance on the basis of only the sum assured or suggested by your friend or advisor. It is important to consider some points before opting for term insurance.

1. Consider your life stage and coverage: It is important to consider your age, liabilities and the number of dependents you have,before buying a term insurance.
2. Be Specific about Coverage Period: It is always necessary to understand that till what age the term insurance can give you coverage. Even after the retirement,untoward incident cannot be predicted.
3. C S R: The claim settlement ratio of an insurance company is very important aspect while selecting the Term Insurance. Take a term insurance from a company which have at least 95% and above claim settlement ratio. Which means out of 100 application received, the insurance company has cleared more than 95 applications and Sum Assured has been given on time to them
4. Take Inflation into account: In India, the medical expenses are increasing approximately at the rate of 15% every year. It is necessary to increase the sum assured amount every 5 years. Step up is very important which means whenever your salary increases you should increase the Sum Assured too. So automatically due to the increase in sum assured the inflation is is taken care of
5. Compare the premium payable of various term plan: Not necessary the costliest term plan is the best ; nor the cheapest is good. Hence comparison between the various premiums is important

4 Cs in Life Insurance:Creation, Consumption, Continuity, Conservation

While you Create, you Consume…For Continuity you Create….

When you stop Creating you need to Conserve what you Create….

Things to be considered:

• Get adequate Insurance Cover
• Evaluate term insurance every 5 years
• Disclose all the information correctly
• Always add the nominee name
• Add riders to Term insurance, if required
• Disclose all your Existing Policies
• Tell them if you are smoker or alcoholic
• Don’t hide your health information
• Don’t hide your family health history
• Check the policy papers once you get it , read the fine prints properly
• Communicate to your family

I think I have almost covered major features and Benefits of Term Insurance. Now let us talk about MEDICLAIM POLICY. However, before that let us compare some important points between Term Insurance and Mediclaim Policy.

COMPARISON

MEDICLAIM POLICY:

If someone you love relies on your income, you require Mediclaim policy for you and for them.

Every year, as many as 122 people per 1Lac in India die due to poor quality of health care. This number is alarming. Hence it is necessary to take Mediclaim Policy so that you and your family gets a proper health care facilityfrom the best hospitals.

The life is so fast and competitive that a sudden illness or accident are unpredictable. This might be a small incident but can come with a huge expense. Hence having Mediclaim will give you the support by providing you the amount necessary for such situation.

What are the features of Mediclaim Policy?

The best way to cover your hospitalization expenses is to opt for Mediclaim.

It manages the hospitalization expenses in case of accident, sudden illness, or any surgery.

Always opt for a Mediclaim Policy which covers not only self but also your family. Take a floater Mediclaim Policy which can cover the hospitalization expenses of self and family.

The minimum coverage for a family with self, spouse and 2 dependent children should be 12 to 15 lacs. It depends on you whether you want to increase the coverage.

What are the BENEFITS of Mediclaim Policy?

Cost Effective Health Care: Taking a Mediclaim Policy always ensure that the expenses of any kind of hospitalization wholly is not burden on oneself. The maximum cost is taken care by the insurance company. However, there might be some minimal expenses which you would require to bear.

Fix Premium for Longer Term: Being young when you take the Mediclaim you have an added advantage to fix the same premium for a longer period with same kind of some assured. When you are young you are healthy and no complications so the premium amount is comparatively less and you can block it for longer duration

Reduces Financial Burden: As I said most of the expenses are taken care by the insurance company. The financial burden is less, and you don’t require to depend on anyone.

Enable Peace of Mind: It is never a peace of mind when your loved one is admitted in a hospital. However, opting for a Mediclaim, reduces the expenses on oneself and gives some peace of mind, at the same time one don’t have to compromise on the quality of treatment, doctors and hospitals

Cashless Hospitalization: The most important aspect of Mediclaim is that you don’t have to pay any advance money to be admitted in the hospital. Cashless is a hospitalization ensures that you don’t have to shell penny for any kind of medical expenses. All the expenses are borne by the insurance company.

Medical Expenses: Medical expenses are properly managed by the insurance company.

PREMIUM CHART:

TAX BENEFITS:

SECTION 80D DEDUCTIONS

SELF AND FAMILY: RS. 25000/-

SELF, FAMILY AND PARENTS: RS. 55000/-

SELF, FAMILY AND SENIOR CITIZEN PARENTS: RS. 60000/-

SELF (SENIOR CITIZEN), FAMILY AND SENIOR CITIZEN PARENTS:

1. 65000/-

How much Mediclaim to take??

There is no fixed rule for how much Mediclaim one requires. However I  would suggest a cover of Rs 5 lakh for people earning up to Rs 20 lakh, 10 lakh for people earning up to 50 lakh and Rs 20 lakh for people earning Rs 50 lakh and above.

How to choose best Mediclaim?

We always feel that the group Mediclaim which we receive from our company or private Mediclaim which we have takenis sufficient for our protection. Have you ever thought that we take insurances to provide support to our family and dependents and not always for self?So, it is very important to choose the best Mediclaim. Let us see how:

1) Cashless Tieup: Always choose a Mediclaim which has a cashless tie ups with the hospital nationally or internationally so that you or your family doesn’t have to wait to get the treatment. Out of 50000hospitals,  only 8000 hospital have cashless facility

2) Room Rent: It is important to know that what percentage of sum assured is covered under room rent expenses or there is no cap.Perday bed charges is very aspect while choosing the Mediclaim policy. Single private room should be allowed. Rs 5000/- as of today per day is must because the entire quality and line of treatment depends on which room occupancy is done by the patient

3) Pre & Post Hospitalization expenses: Check always whether it covers the treatment expenses after diagnosis , before hospitalization and the treatment expenses post discharge till the time it is cured.Usually 30 days pre and 60 days post is good

4) Sub Limits: Sometimes in Mediclaimpolicy there is a sub limit for a specific treatment. For example: If you go for a kidney stone treatment which requires hospitalization, the Mediclaim only covers for a specific amount for this treatment. If the treatment costs you Rs. 1 lac, the sub limit of your coverage will be only Rs. 40000, so you will have to shell Rs. 60000/- from your pocket. So be aware of the sub limit in Mediclaim

5) KWP(Key Waiting period)is the waiting period for preexisting illness. Usually it varies from 2 to 6 years. Lesser the KWP better the policy.

6) No claim bonus is an amazing benefit. The NCB is the bonus money added to your sum assured for every claim free year. This increase the amount in sum assured which you have already taken.

7) Restoration benefit is a benefit wherein the insurance company restores the original sum insured after it gets fully exhausted for the treatment of the illnesses. So, even if you consume the entire sum insured, you need not worry as you have this benefit of restoring the entire amount which you can use it in the future.

8) Premium Comparison: Always compare the cost of the premium given by insurance company. You must check which insurance company is giving the maximum benefit with a lower premium.

9)Claim settlement Ratio, As I said earlier always take Mediclaim from an insurance company which have atleast 95% & above claim settlement ratio.This means the insurance company is having a good track record of settling the claims.

10) Always prefer inhouse claim settlement instead of TPA’s (Third Party Administrators ),

11)Health insurance is a “promise” so who is promising you? Is extremely important. You must be comfortable with brand and the insurance company should have good past track record , as these are all long-timecommitments.

Things to be Considered

• Claim Process
• Selecting the right insurance amount
• Network hospitals
• Avoid TPA prefer in house claim settlement
• Pre/Post Hospitalization
• Free medical check up
• Don’t hide your health information
• Don’t hide your family health history
• Check the policy papers once you get it
• Communicate to your family 

I think this was an exhaustive detail on the features and benefits of Mediclaim. I also explained what are the important factors while choosing the Mediclaim.

Let us now move to Critical Illness Mediclaim. Mediclaim Policy covers only the hospital expenses. But it is also important to protect the major organs of the body, which can be insured under Critical Illness Mediclaim. Let me show a comparison between Mediclaim Policy and Critical Illness Mediclaim.