Family health insurance or separate plans? Answers to your personal finance queries

Q. I’m working in a multinational corporation at Manesar in Haryana. My company has tied up with a general insurance firm with all accident and death maturity benefits.

Death cover is approximately ₹70 lakh. Currently, my annual income is ₹70,000.

If I take an another term insurance policy with a cover of ₹1 crore, then, in case of death, what is the amount that my family will get? I heard that my nominee will get only ₹1 crore from both the insurers, that is, company-paid policy and self-paid policy. Is this correct? If so, is it okay to take a term plan with ₹30 lakh cover?

A. Your company-paid health cover is with a general insurance company and hence, it is likely to be an indemnity policy with a death benefit which will be payable if there is also a valid hospitalisation claim.

You use the word death maturity cover, please verify this as the word maturity is used only in life insurance covers and a general insurance company cannot give a life insurance cover.

Coming to the term policy you want to buy, any life insurance policy that is in force offers coverage regardless of other policies held by the same insured, including the death benefit cover in a health policy. The reverse also holds true. The insured amounts do not matter in this combination of policies.

A health policy’s death benefit will apply if it is part of a valid hospitalisation claim.

Your objective appears to be to ensure a ₹1 crore death cover as a protection for your family. You could ensure that by buying a term policy for ₹1 crore as you say. This way, any death claim from the health policy will be payable separately.

Q. I’m looking to buy insurance for my in-laws. They are in their 60s but healthy overall. Should I get a single, family-floater plan or separate plans for each of them?

A. Choosing between a floater and fixed sum insurance plan depends on how much coverage you want versus the premium you can pay.

Very important, it should be based on your perception of the expenses you will incur.

If you take a floater cover of say ₹5 lakh, then, this is the total amount available between the two of them for the one-year policy period. So, if one of them is hospitalised and this exhausts the sum insured, and if the other one also requires hospitalisation, then you will fall short.

Separate covers of ₹5 lakh each — though they will cost more — will give them access to that amount for each of them. The likelihood of these possibilities is hard to guess. The other factors that you can take into account are their relatively young age and good health.

But the caveat here is that health status can change momentarily and you can be left high and dry without coverage and unable to buy new or additional coverage after a claim.

You can take a floating cover now and shift to separate covers in a few years.

Please remember that in the first four years or so of a new policy, many pre-existing conditions are not covered. Similar is the case for an increase in sum insured.

(The writer is a business journalist specialising in insurance & corporate history)

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