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A terror attack can leave you and your family debilitated. It makes sense to cover this risk, too

Terror struck once again at the heart of the country last week, laying bare the vulnerable security infrastructure in the country. Since it comes close on the heels of the 13/7 blasts in Mumbai, people are livid about the lack of preparedness on the part of intelligence agencies and the administration. While the concern, anger and frustration may be justified, it is also time to assess the measures they have taken to secure their families' interests in their absence. Given the magnitude of the risk, it is best to provide for your dependants financially by buying adequate insurance.

SAFEGUARDING YOUR FAMILY'S INTERESTS

And insurance doesn't necessarily mean life insurance alone. While it is a must for any earning individual with dependants, you also need to consider beefing up your family's protection framework, as also that of your own, with other covers, too - like health insurance and personal accident covers, for instance. "There are not many policies that provide cover to an individual from the consequences of terror attacks only. However, personal accident and health insurance covers provided by most insurers also cover the risk of terrorism," says Sanjay Datta, head - customer service, health & motor, ICICI Lombard. Moreover, if you wish to cover your property against the financial impact of terror, you can look at adding the terrorism rider to your home insurance policy. "Home Insurance or any other property insurance will require you to take a separate rider, which is charged separately. People who insure their homes should ensure they have a terrorism rider in their policy. The cost of a terrorism rider is just . 50 per lakh value of the property," says Mahavir Chopra, head, e-business, medimanage.com.

PURE HEALTH INSURANCE

Any health insurance policy will cover all medical expenses arising out of such incidents. This includes medical expenses during the insured's stay at the hospital as well as post-hospitalisation expenses incurred, if any, up to 60 days after discharge. "A standard health insurance policy only excludes coverage on war or act of foreign enemy, which is different from terrorism that is defined as 'an act that involves the use of force or violence by any person(s), whether acting alone or on behalf of any organisation, committed for political, religious, ideological or similar purpose'," says Chopra. However, with a health cover, the sum assured is not given to the family if the insured dies. Also, a victim disabled by such attacks will not be eligible for any compensation under a pure health policy.

ADDITIONAL PROTECTION

Thus, a life or health insurance cover will not be able to make good the loss of income in case blasts leave the victim temporarily or permanently handicapped. Therefore, there is the need to spruce up your protection portfolio with personal accident policies, say experts.

"A terror attack can cause disability or dismemberment or loss of life in addition to the medical expenses that may be incurred for treating the same. A person needs to have both personal accident cover for death and disability and medical expenses cover to provide for both the eventualities," says Datta of ICICI Lombard. This especially holds true if you happen to be the sole earning member in your family. Adds Chopra: "Go for a standalone personal accident policy, instead of a rider in a life insurance policy. Ensure this policy comprehensively includes all kinds of disabilities, including temporary total disability, which provides for a weekly fixed compensation when one is temporarily bed-ridden due to an accidental injury." Certain personal accident policies also provide for transportation of mortal remains, cost of modification of vehicle or residence for disabled persons, etc. This apart, many employers cover employees against such risks under group accident policies. However, one shouldn't assume that your employer's group accident cover will plug such gaps.

"Even if you are covered under a group accident policy, it does not necessarily mean that it will be extended to your spouse or other dependants. The common industry practice is this coverage is extended to the employee only. Therefore, ascertain the policy's scope of coverage and buy an individual personal accident policy for your family, if required," says Kanchana TK, executive director, Vantage Insurance Brokers.

THE IDEAL COVERAGE AMOUNT

Once you have identified the policies that are capable of replacing your income and cover your liabilities as well as assets and critical to ensuring complete protection for your family, you need to estimate the right amount of insurance required. What would be the ideal cover for a 35-year-old individual with a non-earning spouse, a school-going kid and dependent parents, in a metro?

"Such a family can look at small individual sum insured for all individuals in the family, plus a family floater. Ideally it should be in the range of . 5 lakh or more," says Shefali Chhachhi, director, marketing, Max Bupa. Health insurance cover, however, varies for people based on their and their families' healthcare needs, Chhachhi points out. "You should look at a cover of about 10 times your yearly household expenditure for accidental death and disability. You should review and upgrade the cover every 3-4 years," says Chopra of Medimanage. "If you are the only earning member in the family and you have a kid, you should also factor future expenses for higher education into the plan. There are some personal accident products providing a child education fund for dependent children, in case of accidental death or permanent total disability of the earning member, subject to the terms and conditions of the policy."