Corona Pandemic – Life and Health Insurance

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Greetings from PenguWIN,

                                            The corona pandemic has impacted lives of everyone of us. It has made us sit back and seriously think about the welfare of our dependents. Forget creating wealth for them, their livelihood will be affected if proper planning is not done, especially young families where the spouses have (or one of them) a comfortable salary and their family would be dependent on this. Lives of young people were taken away. The official count itself is 4 Lakhs and this number is always disputed (expected to be higher)

Providing a safety net to our beloved ones is not a humongous task and can be done with 3 simple tools:

Life – pays a lump-sum or periodic payments to dependents on death of the insured,

Heath – when you or your family members are sick and hospitalised which happened to many during the pandemic and

Critical illness – when you get diagnosed with serious ailments that require huge expenses like Cancer, Chronic Liver or Kidney or Lung diseases, Coma, Parkinson.

Most of you might already have some or all of these through the companies that you are employed (group insurance). Professionals and small and micro entrepreneurs who are not formally employed and on their own will have to ensure that they have these in place.

People who already have all the three, life, health and critical need to review their adequacy of coverage. Without going into the calculation of coverage, a life insurance cover for a young family of  30 years old bread winner who makes a lakh per month, spouse who is a home maker and small kids, 50 lakhs cover will be too less, if the children need to be provided for studies upto a bachelor’s degree.

Similarly, a middle management employee who has been provided 5 lakhs of floater health cover by their company would have struggled if any of their family members would have been hospitalized for over a week due to Corona as the bill would run to a lakh of rupees per day in a Grade A hospital.

In health insurance you have an option of taking a super top-up, where the basic coverage will be done by your main insurer and anything over and above will be taken up by the top-up provider. Say, your Corona bill had run to 8 lakhs and your company health insurance has a limit of 5L, the first 5 lakhs of the bill would be taken by the company provided insurer and the additional 3 L will be taken up by the top-up provider. If the claim was only 5L or less then there is no claim for the top-up insurer and hence this policy works out cheaper than a overall base policy of say, 8 Lakhs.

Please make sure that elderly people (50+) buy a cover at the earliest as the insurance premium goes up with the age (and risk premium is higher with age) and in case of lifestyle diseases like BP, Diabetes, Heart problem, some insurers can even refuse providing insurance cover.

If you have any questions, please feel free to reach out to me.

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