Low-cost insurance products in era of Covid pandemic

Low-cost Insurance products that are easily affordable are referred to as sachet insurance or bite-sized products. Think of small shampoo sachets costing Re1/-. You may prefer to purchase them rather than a big container of shampoo. This is a similar concept in insurance.

There are a whole range of products costing less than 50 paise or just a Rupee and going upto Rs. 1000/- annually. If you are aware of them, then you can give yourself the benefit of insurance protection both economically and conveniently

We can make the best use of these policies in the present pandemic-ridden times. They are also tailored to cover your specific needs. Some examples are given below.

Any reference or mention of third-party companies' products and/or services made in this article is for illustrative purposes only. Such reference or mention does not comprise an endorsement, or recommendation of the efficacy of any product or service.

Please obtain advice from a suitably qualified professional consultant based on your personal requirements.

The views, opinions or advice expressed in the article do not amount to professional, commercial or legal advice and the author accepts no liability arising directly or indirectly in connection with reliance on the use of the information provided.

Should one purchase these schemes?

It would always be advisable to examine all the terms and conditions and particularly the exclusions carefully, before purchase, to avoid unpleasant surprises at the time of claims. The available toll-free numbers should also be utilised to clarify doubts, if any. The claim settlement ratio of the insurer should also be verified, before entering into the contract.

Whilst this genre of low-cost schemes is affordable, well packaged and convenient to access, it would be prudent to remember that they are not comprehensive insurance covers. They may address specific needs conveniently and for a busy millennial or someone without any insurance cover, it is quite handy. They can also help to supplement existing insurance covers in specific areas. However, one should eventually move on to comprehensive insurance covers which provide more adequate insurance protection for your needs.

Some common attributes of Low-Cost Insurance products

Can they be accessed online?

Yes. All these products are marketed digitally and are dependent on a robust IT platform. You can even use your mobile phone for this purpose. Their claim procedures are also streamlined and supported by their digital platform. Some of the important players in this segment are insurance start-ups like Toffee Insurance, Digit Insurance, Acko Insurance and Mobikwik. Established insurers have partnered with them to sell their products. There are even some low cost government sponsored schemes.

Some examples of existing low cost insurance products:

1. Train Travel Insurance:

IRCTC (Indian Railway Catering & Tourism Corporation) provides travel insurance at an unbelievably low premium of 49 paise only, inclusive of all taxes, whilst booking tickets through the IRCTC site or through the mobile app. Coverage starts from the departure of train from the originating station and ends on arrival at destination station. The policy is for a Sum insured of Rs. 10 Lakhs for accidental death and permanent total disablement, Rs. 7.5 lakh for permanent partial disability, Rs. 2 lakh for hospitalization expenses in case of injury and transportation of mortal remains is covered upto Rs. 10,000.Only Indian citizens above 5 years of age can be covered. The insurers providing these covers are Bharti Axa General Insurance, Bajaj Allianz General Insurance and Shriram General Insurance.

2. In-trip insurance cover:

Cab aggregator Ola, in conjunction with Acko General Insurance and ICICI Lombard General Insurance, has launched an in-trip insurance cover named 'Chalo Befikar' at a premium of Re1/-.The premium can go up to Rs 15/- and the cover can go upto Rs. 5 lakhs. It is available for use for its users at major cities across the country.

The insurance purchase can be done while booking an Ola cab by the mobile application. It covers accidental death or disability, loss of baggage, backpack or laptops, missed flights, accidental medical expenses, daily allowance for hospitalization, ambulance transportation covers, emergency hotel requirement costs, fire and burglary at home etc. The claim process is also fairly simple with quick settlement and minimum documentation.

3. Back-pack insurance:

Many cannot do without their trendy and faithful backpack, especially the modern millennial.

Backpack Insurance is provided by HDFC Ergo through the insurance start-up Toffee Insurance, at a reasonable premium. The premium starts at Rs 25 and goes up, according to the value of the back-pack. Insurance is provided for duration of 6 months from the invoice date of purchase of the backpack/rucksack or laptop bag against theft. There is zero depreciation and a token deduction of Rs 250/- at the time of claim.

4. Dengue Insurance:

Vector borne diseases have taken a heavy toll in India, especially in the Metro cities. HDFC Ergo is offering Dengue Care Policy through insurance start-up, Toffee Insurance. It covers hospitalization expenses due to Dengue for a sum Insured of Rs 1 lakh for a year, for an annual premium of Rs. 682/-. Even if hospitalization is not required OPD expenses upto Rs. 10,000 are payable for Dengue treatment. There is a 15-day waiting period for claims, in the first year. It is available for persons in the 18 to 65 year age profile and is renewable lifelong.

5. Health Insurance:

The Daily Cash Plan offered by HDFC Ergo through Toffee Insurance is a handy cover for taking care of only daily expenses during hospitalization. If you have a plain vanilla health insurance or a corporate cover, the odds are that this add-on will not be available for you, as part of your existing health plan. You can then buy this Plan to supplement your existing health insurance.

The annual premium is just Rs 449/-. Hospitalization of more than 24 hours is required for a claim pay-out Rs. 1000/- per day, for a maximum of 30 days in a year. This is enhanced to Rs 2000/ per day, in case of admission to an ICU for a maximum period of 15 days.

There is a waiting period of 30 days in the first year. Pre-existing diseases are covered after 48 months of continuous coverage.

6. Delayed flight insurance cover:

Start-up Digit Insurance is providing a low cost domestic travel cover. It is a fixed-benefit cover for only domestic flight delays at a premium of Rs. 49/-, for a single flight. An amount of Rs.1000/- is payable for a delay of 90 minutes or more during the travel months of February to November.

For delays of 120 minutes or more during the travel months of December and January, there is a benefit of Rs. 750/-. Sudden and uninformed delays are covered and not delays communicated in advance. The claim process is mobile phone oriented and simple and hassle free.

The claim amount is credited to the account of the Insured and can be used for any purpose that he deems fit.

7. Personal Accident Insurance:

Pradhan Mantri Suraksha Bima Yojana or (PMSBY) is a low cost personal accident insurance scheme. It covers accident insurance for Rs. 2 lakhs at just Rs. 12/- per annum, regardless of economic criteria. Death and Permanent Total Disablement (PTD) are covered for Rs. 2 lakhs. Permanent Partial Disablement (PPD) is covered for Rs. 1 lakh. PTD is total disability due to the total and irrecoverable loss of both eyes or loss of use of both hands or feet or loss of an eye and loss of use of a hand or a foot. PPD is partial disability due to the total and irrecoverable loss of an eye or loss of use of a hand or foot. This scheme is available to persons between 18 years to 70 years of age. This scheme is available online (on identical terms) in all public sector banks and most private banks who have tied up with various insurers for this purpose. The applicant requires an Adhaar card linked savings account and a mobile number. The claim procedure and documentary requirements are also streamlined for convenience. You could even avail of this scheme yourself or enable your domestic staff and others to cover themselves, as a social security measure.

8. Life Insurance:

Pradhan Mantri Jeevan Jyoti Bima Yojana or (PMJJBY) is a low cost life insurance scheme. For an annual premium of Rs. 330/-, irrespective of any economic criteria, an applicant can cover themselves against the risk of either accidental or natural death (except suicide) for an amount of Rs. 2 lakhs.

It is a plain term insurance cover and there is no provision of any survival benefit or money-back in case of survival. It is available to persons between the ages of 18 years to 50 years and can be renewed upto 55 years of age.

This scheme is also available online (on identical terms) in all public sector banks and most private banks who have tied up with various insurers for this purpose. The applicant requires an Adhaar card linked savings account and a mobile number.

The claim procedure and documentary requirements are also streamlined for convenience. You could even avail of this scheme yourself or pay the premium as a gift to enable your domestic staff and others to cover themselves, as a social security measure.

Writer is former manager at National Insurance Company Ltd.