Look beyond life, health covers

Insure against other risks like fire, burglary, home appliance breakdown and so on.

When one talks about having an insurance most are aware only about cover against the risk of death (life insurance) or against cover for health risks. These two are very important aspects of financial planning otherwise your future planning can fall flat. However, there are other significant risks that one can face like loss due to fire or burglary. These, too, can wreak havoc.

There are insurance plans that protect you against these perils and are important to have. These plans are mostly in the general insurance or non-life insurance space.
 

MUST-HAVE POLICIES

• Burglary policy covers loss or damage caused to house and contents due to break-ins
• Appliance cover protects against loss or damage due to electrical or mechanical breakdown
• Fire policy covers risk of loss / damage due to fire, related perils
• Householders’ plan is a combination of all the above

For instance, householders’ policy. This is a package policy specially designed to meet the insurance requirements of a house owner by covering a combination of risks due to fire, burglary, personal accident, baggage and so on, under a single comprehensive policy. Here, you can land hefty discounts in premium if you’ve opted for multiple covers.

But, many who have this cover can want a separate cover for fire or burglary, to have a higher insurance. Such individuals can opt for burglary policies that most insurers offer due to the increased instances of burglary around us. This cover offered by insurance companies protect against the loss or damage to the house and/or property due to burglary. A burglary insurance policy, generally, covers the contents of business premises, against the risk of loss or damage by burglary and housebreaking.

The loss due to burglary is reimbursed by the policy. The property insured is covered only if loss or damage takes place in the insured premises and not in any other premises. The premium for a burglary policy is also very low. A burglary cover of Rs 5 lakh will come for a premium of Rs 2,000.

Then, there is cover against fire. It protects against loss or damage due to fire or special perils. The policy pays for the actual cost of repairs, replacement or setting up of the item lost or damaged.

But, claim settlements are subject to the market value of the property damaged at the time of loss, upon an overall limit of the sum insured. The premium for this cover can be very low --around Rs 2,000 for a cover of Rs 25 lakh.

You can also insure your home appliance. This cover protects against the risk of loss or damage to domestic appliances due to electrical or mechanical breakdown. Electrical and mechanical appliances, distinctly different from electronic ones, come under the purview of home appliance insurance.The premium charged for this policy is similar to that of the burglary policy --- Rs 2, 000 for a cover of Rs 5 lakh.

Critical illness covers are also one such plans, which can either be bought as an add-on with a life cover or can be bought standalone. It covers a pre-defined condition of illness only, defined in the insurance policy. It covers diseases like cancer, stroke, coronary artery surgery, renal failure (failure of both kidneys), multiple sclerosis, major organ transplants like kidney, lung, pancreas or bone marrow, paralysis and primary pulmonary arterial hypertension. Once established that the insured is suffering from a critical illness covered under his/her the insurance policy, the sum or benefits will be paid for by the insurance company, immediately. This cover primarily covers for the loss of income due to critical or terminal illnesses.

After the payment, the policy will cease to exist, though some insurance companies may offer to cover at a revised rate.

The annual premium for this policy for an individual aged 30 years may be Rs 4,000 for a sum assured of Rs 10 lakh.

As seen, most of these policies come at a low cost when compared to the risk(s) these cover. These offer a high cover protecting against several risks.

However, be careful when choosing one such cover as there are many conditions and exclusions that many seem to overlook at the time of buying these covers. Typically, there are waiting periods before which the policy comes into effect. So, buying ones such policy may not mean instant protection.

The writer is a freelancer