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News & Views

Monday, Dec 7, 2015

Expert advice on how to pick the right health investment plan

[Source : The Economic Times]

I wish to convert my life insurance policy into demat form. How do I go about it?

To dematerialise an existing policy, you can call up the customer services team and request for details. The insurer will share the list of e- repositories they have tied up with.

Choose the repository, fill up an application form to get your policy converted into e-format. The cost for this is borne by the insurance company.

I have a term cover of Rs 50 lakh, but I want to boost my protection portfolio with personal accident and critical illness insurance. Should I look at buying rider benefits from my existing insurer or should I opt for such covers from general insurers?

There are different types of health covers available.

Indemnity products:This is popular and called mediclaim which cover expenses related to hospitalisation. The claims are settled by the insurer either on a cashless basis through tie-ups with hospitals or by reimbursing expenses on submission of bills. You pay regular premiums which are non-refundable. The policy will lapse if you fail to pay premiums.

Riders:These are simple addons to your existing life insurance policy. At a small premium, you can increase protection cover by taking riders like critical illness, accidental death, disabilities, etc. Some insurers allow this at the time of policy purchase and in some cases you can buy this during the course of the policy.

I would recommend that you check if your current insurance policy allows an add-on.

Benefit-based plans:These are now picking up as they pay a fixed amount on diagnosis of a particular disease and can be used as substitute for loss of income due to ill-health. These plans do not require any bills to be submitted as the full sum assured is paid out on detection of the covered critical illness. This ensures that the family has adequate funds to meet the unplanned medical expenses and get the best possible treatment.

With fewer burdens of increased out-of-pocket expenses, you can focus on recovery instead of expenses. To ensure that you are completely prepared to meet all financial challenges, it is advised to opt for a fixed benefit plan along with an indemnity based cover or riders as they take care of different aspects. While the indemnity plan or a rider would pick up hospitalisation bills, the benefit policy will take care of the recovery expenses through the guaranteed sum assured.

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