Free insurance covers on offer

Indian Railway Catering and Tourism Corporation (IRCTC) for the first time is offering free insurance cover of up to INR2.5m ($35,250) to passengers travelling on the Lucknow-Delhi Tejas Express which started operations this month. The insurance plan includes INR100,000 cover against theft or robbery during the travel. IRCTC is one of many organisations in India to offer free insurance.

Uber has announced free personal accident insurance for all those who ride in its cabs. Bharti Airtel has been granting a life insurance cover INR400,000 with a INR249 prepaid mobile plan. OYO Rooms announced a complimentary INR1m personal accident insurance and baggage loss cover for all the guests staying in Oyo Rooms, Oyo Homes and other stay facilities of the group, reported Moneycontrol.

Also offering free insurance is ICICI Bank with its complimentary INR100,000 critical insurance cover encompassing 33 critical illnesses for a period of one year for all its fixed deposit (FD) holders that have fixed deposits with a term of two or a more years. Additionally, ICICI Bank has also been offering a product called ‘FD Xtra' that offers a complimentary life insurance cover for a period of one year for those who invest in FDs of INR300,000 or above for a period of at least two years.

Several debit and credit cards too offer a complimentary personal accident or purchase protection cover. The hope of the insurance industry is that through such small-ticket complimentary insurance covers, people would get a taste of insurance and would opt for better and holistic covers in future.

However, experts warn that these covers might make people believe that they have protection, when such covers are in effect inadequate. “While the complimentary covers are good to make individuals aware that such covers exist, they are not reliable. Blindly relying on group insurance covers offered with other products or even employers alone is dangerous,” said Mr Suresh Sadagopan, founder of Ladder7 Financial Advisories.

In addition, the free insurance offered with a non-financial product often comes with usage and validity conditions, and failure to meet the terms makes the insurance claim invalid.

For example, SBI specifies that for a claim to be valid for the personal accident insurance it offers with its debit card, the card must have been used at least once for either a financial or non-financial transaction during the 90 days prior to the date of the accident.

Source: Asia Insurance Review