Cover for terror

Publication: Business Standard, Mumbai; Date: Sep 9, 2008;    Section: Insurance;
Most life insurance policies cover terrorism. Even the process is often simpler.

In the last few days, terror has grabbed more headlines than anything else. The Mumbai incidents have left citizens badly hurt and many dead.

But after all the hue and cry about the incidents, one has to face reality. That is, an important member of the family is dead. In 2006 train blasts, there were a number of families who found themselves in deep financial trouble because their earning member was no longer there. Worse still, there were home and other loans to be paid. Many households realised rather late that they were not adequately covered for such contingencies.

Last week again, many victims’ relatives were left wondering whether their plain-vanilla life insurance policy covers terrorism or is there a separate policy that covers such incidents.

The good news is that any loss of life due to terrorism is covered by most life insurance policies. However, the insured will not get the advantage of riders like accidental death due to terrorism. This basically implies that if a person has a basic cover of Rs 40 lakh and, at the same time, an accidental death rider of Rs 10 lakh, the family will only receive insurance proceeds of Rs 40 lakh.

As far as standalone products go, an insurance broking firm, in association with New India Assurance, has launched a terrorism insurance policy that provides Rs 5 lakh cover for an annual premium of Rs 99 and is valid for 1 year.

When buying a life insurance policy, it would be a good idea to check the fine print. A lot of general insurance companies offer terror cover as an add-on to the main policy.

Remember that life insurance is an extremely important tool in transferring your risks. Every individual must not just look at life insurance, but also medical, disability, home and property. Though there are very limited options on the disability front, there are options on life, medical and property fronts. One must carefully evaluate one’s needs and ensure that there is sufficient cover to address the financial risks one faces.

At the same time, property insurance will cover any damage to property like the one that we have witnessed in Taj and Oberoi and could also cover public liability, which includes risk of death or injury to guests and people in the premises.

And it is also available for homeowners.

There are certain basic things you must do. These include ensuring that the details of your existing life insurance policies are known to your family members. For instance, they should know the type of policy, coverage and what must be done, in case of claims settlement.

Also, maintain a proper log of all the benefits under each policy. And, most importantly, maintain the documents along with copies that can be accessed at the time of need.

As far as the settlements procedure goes, there is a simplified claim settlement process.

After an event, such as the Mumbai terrorist attacks, insurance companies relax their norms and settle the claim at the earliest.

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