Mind Exclusions Before Buying Policy

Queries

Abhishek Sharma, Allahabad

I am a 29-year-old software engineer. I got married a year and a half ago and currently reside with my parents. My company provides insurance only for me and my spouse. So, I am facing difficulties in deciding which kind of health insurance I should buy to cover my parents, my spouse, and myself. I would like it to cover critical illnesses as well as hospitalisation costs, as my father has a heart condition.

It is always a good idea to have personal coverage and not depend solely on employer-provided health insurance. While buying a health insurance policy, remember that price is not the only deciding factor. Be mindful of the exclusions, especially clauses that restrict claims payout through co-payments, deductibles, and sub-limits.

Additionally, some policies in the market cover non-payable items that are standard exclusions that can make up to 10 per cent of the claim amount, which you end up paying out of pocket. These are the basics you must get right from the point of price. There are also some policies in the market with in-built critical illness cover. Ensure these are comprehensive and cover the critical illnesses that standalone plans offer.

While considering including your parents in a plan along with your spouse, floater policies, typically, work better from a cost point of view if the age gap between the policyholders is not huge. Also, given that your father has a heart condition it may not be easy to get a health insurance policy or even a critical illness cover for him. Since you have not specified the heart condition, you may still want to explore the market as accepting a member with a heart condition is completely a call of insurers, basis their underwriting or selection criteria. There are some policies designed for customers with heart conditions, but they come with restrictive clauses.

When you explore these policies, ensure you understand the exclusions and cappings and compare them with a regular health insurance plan. Also, it is very important to disclose your health conditions honestly at the time of purchasing a policy.

Deepti Bhaskaran, Head, Strategic Partnership and Risk, Clinikk.com

Kavita Kaushik, Thane

I have an Employees’ Provident Fund (EPF) account, which was opened a few years ago. Should I now go for a Public Provident Fund (PPF), a National Pension System (NPS) account, or both? I am 25 years old and want to keep it as my long-term investment, separate from my existing EPF.

If you look closely, the aims of all three investment avenues—EPF, PPF, and NPS—are different and there are various levels of tax-free benefits available in these schemes separately.

EPF has a tax-free interest if the investment is up to Rs 2.5 lakh a year. The scheme is not applicable for non-employees and the rate of interest is always higher than PPF. PPF gives you the option to invest only up to Rs 1.5 lakh a year, interest is always tax-free and it has unlimited extension available. NPS is a product solely for retirement, offers an additional tax benefit of Rs 50,000, and gives you the option to invest in equity up to 75 per cent with some conditions.

My suggestion is to use all three avenues—EPF as a high-safety and high-returns investment while you’re working, PPF as a high-safety and fair tax-free returns avenue with no employment conditions, and NPS as your go-to retirement product. However, mutual funds also compete for this space provided you have the discipline for uninterrupted investments till retirement.

Col. Sanjeev Govila (Retd),  Sebi RIA, CEO, Hum Fauji Initiatives