Why life insurance cannot replace home insurance

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Published: January 23, 2018 4:02:38 AM

Life insurance cannot replace home insurance

Life insurance policy, individual health insurance policy, family floater policy, NCB, No Claim Bonus, news on life insurance, Universal Sompo General InsuranceA family floater policy is designed to offer health cover to family members under a single sum insured. (PTI)

I have taken a loan and my bank insists I take a home insurance cover. Instead of that I want to take a life insurance cover to protect the loan. What would you advise?

– Aditya Singh

Life insurance policy ensures that in the event of the death of the borrower, financial assistance is provided to dependents so that dependent can pay the outstanding loan amount. In an unfortunate event—natural and accidental incidents like fire, earthquake or destruction of house due to riots, home insurance policy will provide financial assistance for losses or damages caused to house and household contents, which not only gives peace of mind but also extends support to get back to normal daily life. Some insurers provide package policy which covers critical illness, personal accident, loss of job and fire cover under single policy. Home insurance and life insurance are not replacements of each other, but the choice depends on what are your requirements.

I have an individual health insurance policy. My wife-to-be also has her own individual policy. After marriage, can I convert the two into a family floater and include my parents?

—Kunal Agarwal

Since you are about to get married, it is a good time to consider a family floater policy. A family floater policy is designed to offer health cover to family members under a single sum insured. Most family floater health insurance policy covers individuals, spouse and children. Some insurance companies also offer family health plans that cover dependent parents. You will get continuity benefits up-to your existing sum insured under existing health insurance policy but for others, it will be treated as a new policy.

How much discount wil I get when renewing my car insurance after one year and if there was no claim?

—Prabhakar Shah

The discount which is accumulated when you do not lodge a claim against your vehicle during the policy period is called No Claim Bonus (NCB), which is a discount of 20-50%. NCB increases with every claim-free year up to a maximum of 50% at the end of five claim-free years. As there was no claim made in the first year, you will be entitled to get the discount of 20%.

The writer is MD & CEO, Universal Sompo General Insurance. Send your queries to fepersonalfinance@expressindia.com

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