Friends, colleagues and family members run questions about buying insurance past me now and then.
Responding to questions, doubts or problems teaches me more about insurance and its buying process than isolated reading and research. So here goes what I learnt from a friend’s question on Corona Kavach and Corona Rakshak, policies that were discussed in Cover Note in edition dated July 20.
[These two are standard policies to cover costs of Corona treatment designed by the Insurance Regulatory and Development Authority of India (IRDAI), the insurance regulator. Insurance companies are mandated to offer them.]
If the terms and coverage are standardised, why the huge difference in premium between one company and another for the same quantum of coverage?
The difference had surprised me as well when I was writing about the policy. Taking the lowest quote, you could find companies quoting up to 50% more for the very same policy.
Arogya Sanjeevani
The case of Arogya Sanjeevani, the standardised hospitalisation cover designed by IRDAI, was even more stark. All general insurance companies were mandated to offer it from April 1. Here, I found that the premium rate variance could be 300% and even more!
So, there you have the simplest reason for a standardised cover. You can compare apples to apples instead of getting into a major, mixed fruit, jam!
The latest in the line of standardised covers that IRDAI has designed and mandated insurers to offer is a term life insurance policy called Saral Jeevan.
When you think of buying an insurance policy, the numerous questions and confusions that arise are somewhat addressed by a standard policy.
Apart from being comparable across every insurer that offers it, you can think of it as a building block.
If you have a Saral Jeevan and add Benefit A to it, how much would such a policy cost and who will offer it? What about adding Benefit B? Or both?
Making a comparison
When the policy reflects your wish list and you want a higher sum assured, how does such an offering compare across companies in terms of premium?
Such options, details and benefits will be numerous, and more confounding, in the case of hospitalisation insurance. Sub limits, daily cash benefits, size of the affiliated hospital network, exclusions, all can be chopped and changed using the standard policy as the basic building block.
Standardised policies don’t just serve as comparison sounding boards; if you are in a hurry to get a hospitalisation policy for whatever reason, maybe year-ending to avail of tax benefits, and don’t have time to go through the detailed terms and conditions, opt for the standardised policy.
In the case of hospitalisation policies, you can migrate to a different cover and even to a different insurer at the time of renewal. Take the case of CK and CR. A standardised policy is best in times of panic so that prospective insurance buyers can just grab and go, ensuring protection!
So, whether you want to buy in a hurry or agonise over and analyse your purchase, start with the standardised policy. It would be basic, but life is all about discovering that the basics are not so basic after all!
(The writer is a business journalist specialising in insurance & corporate history)
