Things Not Covered By Insurance: Read The Fine Print
The fine print in your insurance contract matters. If you are not familiar with the insurance terms and conditions in your life insurance policy, you might be in for a surprise. Read on to know more.
By V Saravana Kumar
When Donelan Andrews, a schoolteacher from Georgia, USA, bought a travel insurance policy, little did she imagine that it will make her richer by $10,000. No, it was not a claim amount! According to an article published in USA Today, she won this as a special prize from the insurance company for doing something most policyholders don’t – read the fine print of the policy document. The insurance company had made an announcement of this prize, secretly hidden within the terms and conditions of the policy. And Donelan was the only person to spot it, just because she was the only one to read through the document!
Why read the insurance fine print?
Reading between the lines of the fine print in an insurance policy will help you in more ways than you think. You may not win a jackpot as Donelan did, but you can at least be assured that you have chosen the right policy that suits your requirements. And that your insurance claim will not be rejected.
Different types of insurance policies come with their own set of clauses. So, to understand this better, let’s take a closer look at some of the important conditions and clauses that feature in insurance policy documents.
Reading between the lines – What to look out for
Here is a compilation of some vital factors that are normally given in the fine print, in an insurance policy document:
Health insurance policy:
- There are some diseases that come with a waiting period, which means, coverage will start only after a certain period from the activation of the policy. Pre-existing diseases such as hernia and cataract are covered only after a waiting period of three or four years.
- Most health insurance policies do not cover congenital disorders such as Down’s Syndrome or some genetic diseases like cystic fibrosis.
- Not all insurance policies cover diagnostic tests done even during hospitalisation. In some cases, they come with a waiting period.
- Maternity expenses are not covered by all policies.
- Alternative therapies such as acupuncture and naturopathy are not covered.
- Certain policies cover pre-hospitalisation and post-hospitalisation expenses only up to a particular period.
- Most policies have limitations on hospital room rent and other additional services such as specialist doctor charges.
- Items such as cotton bandage and bedpans are not covered under the policy.
Personal accident insurance policy:
- Injuries caused due to intentional activities like self-harm are not covered.
- Accidents caused due to drunken driving are not included.
- Accidents caused due to unsafe and dangerous sports activities at unauthorised places are not covered.
- Becoming disabled due to internal injuries caused in an accident has a coverage period of 12 months in certain policies.
Motor insurance policy:
- The policy doesn’t cover damage to the vehicle’s engine due to oil leakage.
- Adding a zero-depreciation cover to the policy takes care of the damage caused by wear and tear.
- Non-accidental failures or malfunctions of a vehicle engine are not covered in most policies; the vehicle needs an additional ‘engine protector cover’ to bring it under coverage.
Home insurance policy:
- Any house/building that remains unoccupied for 30 days without the knowledge of the insurance company is not eligible for coverage.
- Most policies cover burglary, which involves breaking into the house for stealing. However, they exclude theft, which doesn’t necessarily include a break in.
- To get the full sum assured in case of a fire accident, the property should be insured based on reinstatement (replacement) value.
Tips to read the fine print
Reading through the fine print that usually runs for pages together can be a tedious task. Here are some useful tips to do it without much trouble:
- Begin with checking the declarations page that usually has all the basic details of the policy including the policy period, coverage limits and premium amount. This will give you an idea of the overall value of the policy.
- Check for major features such as cashless hospitalisation and pre-existing coverage in a health insurance policy.
- Once you are through with this, move on to the little details of the coverage, including things like value-added benefits and add-on features.
- Check out the vital details like waiting period for claims, waiver of premiums, survival benefit, free-look period, revival period, grace period and surrender value.
- Read the insuring agreement pages thoroughly, as they have vital information about what all the insurance company agrees to do.
- Carefully go through the list of insurance exclusions; there might be hidden details that everyone normally tends to overlook, such as flood damage in home insurance, pre-existing conditions in health insurance, and damage due to wear and tear in motor insurance.
- Understand the claim process of the policy thoroughly.
- Ask your insurance agent or insurance advisor to help you in understanding the policy agreement. He/she will have a thorough knowledge of insurance terminology (which we all find confusing) and the conditions and clauses listed in fine print, and hence, will be able to give you a clear idea of the policy.
"Insurance for your child
It is better to buy health cover within 30 days of a child's birth. If you are an employee, you can add your child under the current policy. The earning member (parent) should take a term insurance cover for a certain amount (10 times of annual CTC or Rs 25 lakhs, whichever is lower) for a duration of 30 years. Giving education to children is a primary responsibility of the parent and this will help towards that.
Insurance for your home
When you buy a home, buy a term insurance for the loan amount for the loan tenure (say 10 or 15 or 20 years). If you stay in a rented place, you can purchase insurance that covers household items like TV and sofa.
Insurance for your family
If you are the primary earning member, purchase insurance that is 10 times your annual CTC or Rs 25 lakhs term cover, whichever is lower, for a period of 30 years. This will ensure your family is covered in case anything happens to you. When you retire, buy an insurance policy for yourself and your spouse for a sum of Rs 3 lakhs. If you are working, you can take a floater policy for Rs 5 lakhs, with a deductible of Rs 2 or 3 lakhs."
— A V Senthil, Finance Expert
You buy an insurance policy to help you and your family during tough times. You also invest your hard-earned money, expecting good returns when there is a need. So, you should spend some time in reading through the fine print of the policy, and clearly understand how it will benefit you. Be vigilant and stay protected!
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