Do you know about all the free insurance that you already have?
Insurance penetration in India is at a dismally low level. Though the level improves with each passing year, the growth is small because India has the second-largest population in the world. According to IRDAI’s annual report for the financial year 2019-20, insurance penetration in India, i.e. the ratio of premium collected to the total GDP, stood at 3.76%. At the same time, insurance density, which is calculated as the gross direct premium collected against the total population, stood at a mere USD 78. Have a look –
One of the primary reasons for the low penetration and density is awareness. Many individuals do not understand the importance of insurance and shy away from it. Some don’t want to spend on the premium cost and so don’t buy insurance. But what if you were to have a free insurance cover? Would you like that?
Unbeknownst to many, there are various sources of free insurance coverage. Lack of knowledge about these covers keeps many of you away from enjoying their benefits. So, let’s have a look at the free insurance covers that you can unlock and enjoy –
Life insurance coverage under EDLI
If you are a salaried employee and have EPF benefits, you are in a unique position to enjoy free life insurance coverage under the Employees’ Deposit Linked Insurance (EDLI) scheme. Let’s have a look at what this coverage is all about –
Launched by the Government in 1976, the EDLI scheme was an employee benefits scheme intended to offer free life insurance coverage to employees of the private sector. The coverage is provided by the Employees’ Provident Fund Organisation (EPFO) and is a part of the EPF scheme. They require every organization that is registered with the EPF scheme to offer mandatory life insurance coverage to its employees under the EDLI scheme. If the employee’s basic salary is a minimum of Rs.15,000, the EDLI scheme would apply to him/her.
Under the EDLI scheme, the maximum coverage available is Rs. 4.5 lakhs, if your salary is more than Rs. 15,000, and an additional bonus of Rs. 2.5 lakhs. Thus, employees registered under the EPF scheme are eligible for maximum insurance coverage of Rs.7 lakhs. They pay this benefit if the employee dies any time during employment. However, if your basic salary is below Rs.15,000, the coverage amount would be calculated as follows –
(Average monthly salary over the last 12 months before death * 30) + Bonus of Rs.2.5 lakhs
So, if your monthly basic salary is Rs.10,000, the coverage would be as follows –
(10,000*30) + 250,000 = Rs.5.5 lakhs
You, as an employee, don’t have to contribute anything towards the EDLI scheme. In other words, for you, the coverage is free of cost. The employer contributes a minimum of 0.5% of the basic salary, subject to a maximum of Rs.75/month, towards the EDLI scheme. If, however, no other group insurance scheme is bought by the employer, the maximum contribution limit is enhanced to Rs.15,000 per month.
Insurance coverage with mutual funds
Recently, many bundled mutual fund products are being offered in the market that offers free insurance coverage with the investment scheme. This free insurance coverage is subject to the following conditions –
- You opt to invest in the mutual fund scheme as SIP
- The minimum investment horizon is 3 years
- You are between 18 and 50 years (usually)
- If you stop the SIP, redeem the fund, or make switches before the completion of 3 years, the coverage would stop. However, if you complete the period of 3 years, coverage would be available till the maximum coverage age even if you stop the SIPs but remain invested in the scheme.
The coverage is optional in nature. So, it all depends on you whether you want to avail of the free insurance coverage with the mutual fund investment. Funds from ICICI Mutual Fund have named the SIP along with Life Insurance as SIP Plus, Nippon India names it SIP Insure and Aditya Birla Sun Life names it Century SIP. Technically, these plans are group insurance plans which are provided completely free of cost by the AMCS to the SIP investors.
However, keep in mind that only some mutual fund schemes offer free life insurance cover. The coverage is not applicable for all schemes. So, if you are looking for protection from your mutual fund investments, you would have to find the specific schemes that offer such protection.
Free personal accident cover
Personal accident cover covers accidental deaths and permanent disablements. You can get this cover free of cost through your LPG subscription, in specific credit cards, and even in railway bookings done through IRCTC. Let’s delve into these coverages one by one –
1. Free coverage for LPG cylinder subscribers
Whether you use LPG cylinders offered by Hindustan Petroleum, Bharat Gas, or Indian Oil, you enjoy a free life insurance cover. Oil Marketing Companies have to opt for a public liability policy to cover all incidents arising out of LPG related accidents. You don’t have to pay any premium for the coverage. The coverage benefits are as follows –
- In case of accidental death–personal accident cover of Rs.6 lakhs
- In case of medical emergencies–coverage of Rs.2 lakhs per person. The maximum coverage is Rs.30 lakhs per event.
- In the case of property damage suffered by the authorized LPG dealer – coverage of Rs.2 lakhs per event.
So, with any LPG-related accident, contact your distributor and you could enjoy the claim.
2. Insurance coverage with credit and debit cards
Almost all credit cards offer free personal accident coverage to cardholders. The limit of the coverage varies across cards. Many cards also offer free life insurance, permanent disability and liability insurance coverage if your card gets stolen. However, there are attached conditions to the same.
For example, HDFC Regalia First Credit Card offers accidental death insurance of Rs 50 lakhs, medical emergency coverage of Rs 10 lakhs for any emergency hospitalisation during international travel, and card liability coverage against fraudulent transactions up to Rs 5 lakhs. The insurance is provided by HDFC ERGO General Insurance.
SBI Debit cards have complimentary personal accident coverage up to a certain limit based on the card limit, purchase protection insurance and some travel insurance benefits such as baggage loss as well.
Similarly, each credit and debit card have their own terms and conditions and benefits for insurance coverage which depend on the card limit, spends in the last 30 days to 1 year, etc.
3. Insurance coverage with IRCTC bookings
You can enjoy an optional personal accident cover with your railway ticket bookings. The coverage is available at a meagre cost of Rs.0.49 per passenger. To avail of the coverage, book your online tickets through the NGeT website and choose the insurance coverage when booking your railway tickets. Coverage is available only for passengers whose age is over 5 years. The contingencies covered include –
- Accidental death–Rs.10 lakhs
- Permanent total disability–Rs.10 lakhs
- Permanent partial disability–up to Rs.7.5 lakhs depending on the severity of the disability suffered
- Medical contingencies and associated hospitalisation expenses–Rs.2 lakhs
- Transportation of mortal remains-Rs.10,000
4. Insurance cover with your bank account
Banks also opt for group insurance plans, especially personal accident insurance plans. The premium is paid by the bank itself or is deducted from the customers’ accounts. However, in the latter case, you would have to give your consent for paying the premium for the cover. The premium is low and you can enjoy a good scope of coverage with your bank account. Many plans also opt for group health insurance plans for their account holders.
You can check with your bank about the insurance cover that it provides and whether it is free or not. Even if the cover is chargeable, the premium would be low and you can enjoy good coverage.
Pradhan Mantri Suraksha Bima Yojana (PMSBY) also offered as a group personal accident plan for bank account holders. The premium is just Rs.12, and the coverage is Rs.2 lakh for accidental death and permanent total disablement. For total loss of one eye or use of one limb, the coverage is Rs.1 lakh.
5. COVID coverage with travel insurance plans
Travel insurance plans allow coverage for hospitalisation because of COVID and the best part is that the coverage is free of cost. So, if you invest in a travel insurance plan, take a trip and then contract COVID, the hospitalisation costs incurred would be covered by the policy at the destination where you travel to.
How many of these free insurance covers did you know about?
Educate yourself about these covers that you have so that in an emergency, you can make a claim under these plans, if you are covered, and get the much-needed financial assistance.