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Build an emergency corpus rather than buying job-loss insurance

LiveMint logoLiveMint 25-06-2017 Abhishek Bondia

I work for an information technology company, and it seems that this industry is not going through the best of times. The probabilities of layoffs are being increasingly talked about. Can I take an insurance for job loss. What are its premiums? Is it a wise idea?

—Dhawal Shenoy

Job loss insurance is generally offered as an add-on and not a stand-alone cover. Plans such as home insurance and critical illness, which are bundled with home loans, offer this coverage. Job loss covers in such plans pay the equated monthly instalments (EMI) for 3 months. It is essentially meant to provide coverage for loan repayment while you look for another job.

Conditions for availing a job-loss cover are stringent. Job losses due to non-performance or voluntary resignation are not covered. Typically, insurers would specify that job loss only in case of lay-offs linked to a merger or acquisition is covered. If you are unable to demonstrate this, your claim would not be admissible.

Typical premiums are around 4% of the coverage amount. Given the limited situations where the policy could provide coverage, I think you are better off building a good emergency corpus.

The rainy season has started and this year’s dengue menace is just around the corner. Does it make sense to buy a dengue-care-specific cover? Can I cover my entire family under it?

—Nikesh Sarkar

Dengue-specific plans would cover only medical expenses arising from dengue. Such plans are offered as both individual and family floater plans. Generally, such plans have a low sum assured, up to Rs1 lakh only. This could be insufficient for any complications arising out of dengue: for example, organ failure or prolonged hospitalization. Its advantages over a traditional health insurance plan are limited. For example, some plan may offer OPD expenses linked to dengue. The sub-limit for such OPD expenses is around Rs10,000. A few plans are also offered as fixed benefit plans, that is, a lump sum is paid out in case dengue is diagnosed and certain conditions are met. This can complement the traditional health insurance plan and you can make a claim in both the plans. I do not recommend substituting traditional health insurance plan with a dengue plan. Traditional plans are more comprehensive. Dengue plans are best used as a supplementary plan. And, among the dengue-specific plans, I prefer fixed benefit plans better than the traditional indemnity plans.

My grandmother has been bedridden for a some time. While she is not paralysed yet, she can walk only with great difficulty. We have appointed a private nurse to look after her needs. I want to know if there are health insurance policies that cover the salary of the private nurse, at least partially if not fully. We pay the nurse Rs20,000 per month for 10 hours of service every day.

—Manisha Kulkarni

Individual health insurance policies would cover future occurrences of an insured event. So, any existing ailment or illness will not be covered. Typical waiting period for pre-existing ailments is between 2 to 4 years. Moreover, most health insurance policies are focused on hospitalization cover. Domiciliary hospitalization, as you have described, is payable in specific situations, such as, either the condition of the patient is such that she cannot be moved to the hospital or there is lack of accommodation at a hospital. Even in such situations, treatment for a number of ailments is not covered. Some of these conditions are: arthritis, gout and rheumatism.

Instead of insurance, you may want to explore options of long-term care management with healthcare service providers. They may be able to offer some savings on nursing and allied services.

What factors should I consider while choosing an insurer for motor insurance?

—Kinshuk Vardhan

Motor insurance has two components: own damage and third party liability. Third party liability premiums and claim settlement processes are similar across insurers, so this section does not influence insurer selection. For the own damage insurance, you may want to consider the following points. First, the add-ons offered by the insurer. You should opt for a plan with maximum number of add-ons. Especially, consider zero depreciation and engine protection cover. Second, you should consider the number of years for which the insurer offers the add-on cover, if the insurance is continuously renewed with it. The longer the better. Some insurers offer add-ons for up to 10 years. Third, evaluate the price differences. The terms and conditions of standard own damage cover are the same across insurers.

Abhishek Bondia is principal officer and managing director, SecureNow.in

Queries and views at mintmoney@livemint.com

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