How to save on insurance premium during the pandemic
The pandemic has caused a lot of chaos and suffering. The problem has been aggravated by job losses, pay cuts and in some cases, by the loss of the bread winner of the family. Such situations call for a thorough review of the finances of the family and defaulting on insurance premium payments often seems to be an easy way out. But this would be a big mistake, since insurance covers contingencies which could wipe out the remainder of your hard-earned savings. Please note that it is possible to cover your essential risks even with limited funds at your disposal. To find out how, do read on......
• Premium payment in instalments
Where possible, pay your premium in instalments. It is easier to pay small amounts regularly than a large down payment. Say your annual life insurance premium is Rs. 36,000/-. It is easier to pay Rs. 3000/- per month rather than Rs. 36,000/- up-front. That life insurance premium can be paid in monthly instalments is known to many.
But do you know that your annual health insurance health insurance premium can also be paid in instalments? Convert annual or biannual premium payments into convenient monthly premium instalments or Equated Monthly Instalments (EMIs). You can now pay your health premium on monthly, quarterly or half-annual basis. This may lead to slightly increased premium payments annually, but it is not significant.
In case of a health claim after say only 2 premium instalments, the insurer will process your claim but you will either have to pay the remaining premium upfront or it will be deducted from your claim.
Purchase health policies with this provision or check with your insurer and make the necessary changes at renewal. Even if due to paucity of funds, you default on one monthly payment or have inadequate available funds at that time, you can also avail of a grace period of 15 days to revive your cover with the accrued benefits such as No Claim Bonus and waiting periods. Read your insurer's rules carefully in this respect and try to keep your life and health insurance covers alive, for your family's security.
• Reduce your motor insurance cover and get a saving on premium
If you have a car or two-wheeler and it is largely idle during pandemic-times because you are working from home, then you can go in for only the compulsory third party insurance, without which it is illegal to use the vehicle in a public space. All general insurers with a motor portfolio issue third party covers so getting just a third party cover is not difficult. Eliminating the own-damage part of the premium will amount to a considerable saving for you.
If you wish to increase your insurance protection beyond the essential then you could also add just the Fire and Burglary cover to your Third party insurance to avoid losses due to these perils. That will increase your insurance coverage without a sizeable premium outgo. Most general insurers with a motor portfolio will allow third party insurance with fire and burglary covers so this should also be easy.
• Avail of low cost government insurance schemes
When funds are low do not hesitate to avail of low cost insurance covers which are freely made available by the government.
For example, if you are thinking of a low cost life insurance cover and are within 18 to 50 years of age nothing could be better than the PMJJBY or the Pradhan Mantri Jeevan Jyoti Bima Yojana with an annual premium of Rs.330/- only for a term cover of Rs 2 lakhs. Almost all public sector banks and most private sector banks have partnered with life insurers and are participating in this insurance scheme. This scheme is available for all Indians within the aforesaid age profile of 18 to 50 years, irrespective of income. This premium is conveniently auto-debited from your savings bank account, which has to be Aadhar Card linked, before 1st June every year. The cover is for 12 months and terminates on 31st May, of the next year. In case of the death of the policyholder, the beneficiary or nominee will receive the amount payable directly in their bank account. The paper work and claims procedure are simple and streamlined and claims are settled within specified time-lines.
Similarly, you can also avail of a cheap personal accident policy, such as the PMSBY or the Pradhan Mantri Suraksha Bima Yojana at an annual and unbelievably low annual premium of Rs 12/- per head, if you are within 18 to 70 years of age. It provides accidental death and disability coverage for an amount of Rs. 2 lakhs, per head. In case of the death of the policyholder, the beneficiary or nominee will receive the amount payable directly in their bank account.The premium collection procedure is similar to what have been mentioned in the aforesaid para on PMJJBY.
What is noteworthy is that these policies do not lapse in case the insured is unable to pay the premium amount. The policy will terminate if the balance in the associated bank is insufficient. However, the insured can reinstate the scheme after paying the outstanding premium amount.
• Avail of low cost insurance covers from bite-sized insurers
Are you aware of a new genre of insurers selling low cost customised products geared to specific needs? They are economical, convenient and available on digital platforms. Premium for some covers can vary from Re 1per cover to Rs 20 a month and go upto Rs 800 a year. Rather than go in for a costly comprehensive cover when you are facing a liquidity crunch you could purchase just a hospital cash policy or a mobile phone insurance cover.
A low cost hospital cash plan cover can be very useful to supplement your existing health insurance, during the pandemic, if you do not have this add-on. This type of health plan offers a lump sum amount in case of hospitalization. Under such a plan, you receive a fixed amount for each day of hospitalization irrespective of your actual expense. For example, if you have opted for a hospital cash plan which pays Rs. 2000 for every day of hospitalization, you will receive this amount even if your actual expense is Rs. 1000 per day. The money can be used for meeting additional expenses that are not covered by health insurance or for even compensating the loss of income during the period of hospitalization. Toffee Insurance and Phone Pe are some examples of entities offering such plans in partnership with different insurers.
Mobile phones are a necessity now and help us to perform diverse functions ranging from conference calls to online banking. They are prone to damages by accidents, theft or liquids falling on them etc. We would be quite immobilized without our handy mobile phones. In addition to putting a protective cover one can also go in for just a low cost mobile insurance covering screen damage, liquid as well as accidental damage and theft, depending on the plan variant rather a comprehensive home insurance plan. They are available online such as the Xiaomi mobile phone insurance cover from Go Digit General Insurance. Even in the WFH ( work from home) situation this cover can be of great use.
You could use this for the short term when your finances are low for the essential insurance protection and move on to a more comprehensive cover when you are in a more financially sound position.
• Avail of free insurance covers
If you are alert you will be aware of plenty of free insurance covers. Take stock of them and do your necessary paperwork to avail of the benefits.
You can avail of free life insurance covers with the mutual funds and fixed deposits. Don't avail of mutual funds and fixed deposits just to avail of these covers. But if these are thrown in with your financial savings, don't hesitate to make a note of them, do the necessary enrolment and inform your family about your nomination. For example, a free life insurance cover starting from Rs 3 lakhs is being given by ICICI Bank depending upon the value of the FD, upto a maximum of Rs 50 lakhs.
Many states have introduced free and cashless health insurance covers for all their residents, without any income criteria. Swasthya Sathi in West Bengal, Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY) in Maharashtra and Chiranjeevi Yojana in Rajasthan are some examples. Enrol yourself and your family in these schemes, if you haven't done so and familiarise yourself with the procedures and avail of the benefits in a health contingency.
You may also have noticed that your Credit Card or Debit Card may have a free in built Personal Accident Cover. You don't even have to enrol for it. Opening an account in the bank and the issuance of a Credit/ Debit/ATM card normally allows you this privilege, automatically.
To give a personal instance, my Axis Bank ATM cum Debit Card requires me to only make a purchase with it every 180 days to keep the insurance cover alive. I am thus getting the benefit of a Personal Accident cover automatically without any premium or formal enrolment.
This can be of great use to my nominee in case of my accidental demise subject to their rules. So, check your assets and find out if you have any such covers which are going unnoticed and add it to your insurance portfolio.
So, don't despair because of a reduced cash-flow but continue with your insurance coverage even with a cash crunch during the ensuing pandemic.
The writer is retired Manager, National Insurance Company Ltd.
