The times which we are living in at the moment has only proved that life can be very unpredictable and vulnerable, wherein getting out of homes and meeting people who be considered risky. With coronavirus, it has become essential that today more than ever before people recognize the requirement for insurance and adequately provide for it.
The importance of insurance really comes into the forefront when we end up in some unforeseen time but that is not the time to opt for an insurance plan to get coverage. With coronavirus, experts say today more than ever before it has become essential that people recognize the requirement for insurance and adequately provide for it. The times which we are living in at the moment has only proved that life can be very unpredictable and vulnerable, wherein getting out of homes and meeting people who be considered risky. Kamlesh Rao, MD, and CEO, Aditya Birla Sun Life Insurance, says “Uncertainties can come knocking at the door at any point in life and in any form. So, it is only prudent to be prepared.” He shares his views on how individuals should use insurance cover on the impact of Coronavirus, in an exclusive interview with Priyadarshini Maji.
1. Why is it essential to be covered under a pure protection or term plan at all times?
Uncertainties can come knocking at the door at any point in life and in any form. So, it is only prudent to be prepared. The primary objective of a life insurance plan is just that – it protects an individual’s and his/her family’s dreams and goals, taking care of future financial requirements. It is, therefore, crucial to understand the place of pure protection products better known as term plans. Such a plan works as an income replacement tool and eliminates the financial burden of a family in case of an untimely death of the earning member. Hence, for any earning individual to have a term cover at least until his/her age of retirement is important. It is also pertinent to ensure that an individual is covered at all times and has an adequate sum assured to cover all future financial needs and sustain the living standard of the family. It is vital to identify one’s financial goals in different stages of life.
Insurance products in the market offer pure protection options customized to the needs of an individual- basis the age, life stage, premium amount, and coverage sought. One should first evaluate his/her annual income, savings and investments, medical condition, lifestyle and future financial requirements to opt for the appropriate life insurance policy and adequate sum assured. Thumb rule says that an individual requires insurance cover that is 10 to 15 times of one’s annual income. One can also opt for a life insurance plan with an increasing sum assured that will increase the insurance cover every year by a said percentage and make sure that the policy always remains relevant providing complete financial protection to the individual and his/her family at any given moment.
2. If an existing life insurance cover is inadequate, how can a policyholder enhance it?
The sum assured amount of a life insurance plan gets fixed at the time of purchase and cannot be changed later. In case an individual feels that the cover is inadequate, the person can either opt for a new life insurance plan or upgrade the existing one with the help of riders. Life Insurance riders offer additional benefits and coverage to a primary life insurance policy at a low premium. There are various kinds of riders available today offering a host of benefits. Some offer coverage against accidental death and/or disability while some offer risk coverage against critical illnesses. There are riders that wave off premium in case one is unable to pay them owing to job loss or a specific illness. There are many more that pay hospital cash, surgical cash, etc. The choice of a suitable rider solely depends on an individual’s needs. Therefore it is important for a person to first evaluate his/her existing covers, risks, and financial requirements before opting for an appropriate rider which can add up to the existing policy and can offer added benefits.
3. Are COVID-19 related claims covered by life insurance policies?
Yes, all the claims reported on account of COVID 19 infection are being settled swiftly basis submitted hospital records. All policies where hospitalization is covered under the life insurance products are also being settled. The life assured needs to be diagnosed with coronavirus by a certified medical practitioner and needs to be treated at the nearest designated isolation center. To register the claim, the policyholder needs to submit treatment records which should include a copy of indoor case papers, admission and discharge summary as well as diagnostic tests conducted, and the claim will be processed.
Life Insurance companies are honoring reimbursement for the cost of admissible medical expenses during the treatment of coronavirus as well, wherever applicable. All claims with reported death due to coronavirus is assigned to a dedicated claim relationship manager who would facilitate quick and speedy settlement.
4. What are the various layers of financial protection one should opt for?
Life insurance coverage needs to be tailored to one’s financial needs and goals. There is no one size that fits all policy. While the choice of a policy should be basis the financial risk an individual is trying to hedge, the current situation demands that every individual is protected with adequate life cover. There can be primarily three layers of protection. Single layered protection is the simplest and offers death benefit only. In case of an unfortunate event of the life insured, the nominee receives a lump sum amount equivalent to the sum assured and the plan gets terminated. In case of double protection, while the nominee receives a lump sum, the remaining premiums get waived off and the policy continues until the premium paying term. On maturity, the proceeds are paid to the nominee. Such plans ensure long term security for an insured’s family.
There are some life insurance policies that offer triple benefits of protection and provide holistic financial cover. In case of an unfortunate event, the nominee receives a lump sum amount, plus a guaranteed monthly income for several years along with compounded bonus at the end of the income benefit term. Such a plan provides complete protection to one’s family ensuring long term continuity of financial benefits and monthly income so that the family’s monthly financial needs along with long-term goals are taken care of. Thereby, an individual can assess his/her financial responsibilities, the corpus required to secure the same, thus opting for an appropriate protection solution.
5. Can life insurance ensure financial protection to a child’s future milestones?
We all work towards building a corpus to finance our child’s future needs like education, marriage, etc. In an event of uncertainty, while all other life goals can take a beating, but a child’s future cannot be compromised. Life Insurance plans can help one achieve such goals in the desired manner. Child plans are life insurance solutions that are specifically designed for this need, serving the dual purpose of insurance along with savings.
While the child receives a corpus post the policy term is over, what makes such plans special is that in case of any eventuality of the premium paying parent, death benefits are paid to the nominee and the rest of the premium is waived off. There is no lapse in the policy and the child gets maturity amount at the end of the policy term. In case you want to leave a financial legacy to your child and grandchild, certain life insurance policies can help you achieve the same. Therefore, as soon as your child comes to the world, it is prudent for you to start financial planning and purchase an insurance plan befitting the needs. A child insurance plan helps one save the desired sum for the kid’s future financial requirements, hedging all uncertainties.