Free Insurance Cover in India You Should Know About

Free Insurance Cover in India You Should Know About

As they say “Ignorance is Bliss” but it does not always hold true, sometimes knowing the hidden part is equally important. There are various products or services which are loaded or have inbuilt free insurance cover but most of these are not known by the buyers. However, they have certain limits but they are available absolutely free or at very cheap/affordable rates. Let’s have a look at the list of services or products provide free insurance cover in India.

List of Free Insurance Cover in India

Bank Deposits

Investment in Fixed Deposits, Recurring Deposits, Savings account and Current Account of all banks, including foreign banks operating in India, regional banks and co-operative banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) and is liable to pay each depositor through the liquidator within two months of the receipt of the claim list from the liquidator.

Under this free insurance cover, each account holder is entitled to insurance tune to Rs.1 lakh each bank (all branches inclusive) in the event of the bank being unable to pay back due to merger, liquidation or cancellation of the banking license. This limit includes both principal as well as accrued interest thereon. However, if a customer is having any dues with the bank, then this cover gets reduced by that amount.

If you have ₹ 50,000 FD in two branches of SBI and total interest accrued is ₹ 14,000 then the insurance cover is limited to ₹ 1 lakh only but if you have invested ₹ 1 lakh (interest included) in two different banks and having some dues say ₹ 30,000 with one bank then you are eligible for the insurance cover of ₹ 1 lakh with one bank and ₹ 70,000 with another bank.

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Home Appliances aka White Goods

White Goods such as Washing Machines, Fridges, Television, Air Conditioners etc. comes with a free insurance covers against mechanical and electrical breakdown. This insurance cover is different from the replacement warranty.  You are eligible to claim insurance if any damage occurred due to the breakdown in the home appliances. The premium cost of this insurance is included in the cost of the product and are often offered as an add-on feature at the festive season by the dealers.

Mobile Phone

Mobile Phone manufactures offer group insurance to their smartphone buyers through retailers. This free insurance cover is restricted to mobile phones lost or damaged due to burglary, theft, riots and accidents. For instance, Nokia has tied up with New India Assurance to cover mobile handsets against loss or damage due to theft or accidents. Similarly, mobile network operator, Telenor India Communication, has recently come out with a free insurance cover up to ₹ 50,000. Some insurers such as Tata AIG offer SIM insurance against misuse in case it is lost or stolen at a very nominal charge.

LPG Free Insurance Cover

If you a registered gas consumer of any Government Oil Marketing Companies (OMC) namely BPCL, IOCL and Indian Oil then you are insured against the risk of accidents/explosions from gas cylinders at the registered address. The cover is for all family members and the premium is borne by the dealer to the OMC. If any unfortunate event occurs, then the customer needs to File First Information Report to the local police station and also inform the distributor in writing within a few days. The maximum coverage is Rs.40 lakhs however there are few caveats under this free insurance cover:

  1. All the accessories such as lighter, gas stove, regulator and gas piper should be ISI marked.
  2. You need to get maintenance checks at regular intervals from your gas dealer.
  3. The gas cylinder should be used at the registered address of the gas consumer. Else the claim under this free insurance cover is not tenable.

Train Journey

Indian Railway Catering and Tourism Corporation offers free insurance cover for the baggage while booking e-tickets (online). The passenger can make a claim in the event of the loss or theft of the baggage. Further valuable goods such as laptops, tablets, mobile phones are also covered under this insurance policy.

IRCTC has also started offering paid travel insurance with as low as for ₹ 1 per passenger. The maximum coverage under this scheme is ₹ 10 lakh and is paid at the event of death or for the permanent disability within 12 months from the date of the accident, maximum of ₹ 7.50 lakh for permanent partial disability and ₹ 2 lakh for hospitalization. However, children below the age of 5 years and foreign nationalities are not covered under this insurance scheme.

Pradhan Mantri Jan Dhan Yojana and RuPay Card

The account holder of Zero balance savings accounts under Pradhan Mantri Jan Dhan Yojana provides a free insurance cover for accidents for Rs.1 lakhs and for life insurance for ₹ 30,000 for free of cost. However, the life coverage was offered only for the accounts opened till 26th January 2015 but insurance cover against accidents is still offered to all.

RuPay Card is a replacement of Visa and MasterCard debit card and credit cards developed by India. The usage is similar to visa and MasterCard i.e. at every ATM, for shopping at POS machines and on e-commerce websites. The RuPay Card offers free personal accidental death and permanent disability insurance coverage up to ₹ 2 lakhs.

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Mutual Funds Cover

Various fund houses such as ICICI Prudential Mutual Fund, Reliance Capital Asset Management Company and Birla Sun Life Mutual Fund have come out with insurance wrapped mutual fund schemes. The fund house provides a group life insurance policy with certain conditions like SIP tenure should be for a minimum of 36 months and the SIP amount should not be less than ₹ 1,000 and that too for selected mutual fund schemes.

The caveats are in case of multiple holders only a first unitholder will be covered under free insurance cover and the maximum sum insured is 30 times of the SIP amount for example if SIP is ₹ 10,000 per month for the first year than the life cover for the first 1st year would be ₹ 1 lakh. The insurance cover ceases when the investors attain the age of 55 or 60 years of age (varying fund house to fund house) or at Partial withdrawals, stopping of SIP and full exits from mutual fund scheme.

Employees Deposit Linked Insurance (EDLI)

All employees covered under EPF are automatically covered under the EDLI scheme. Subscribers of EPF are insured up to ₹ 6 lakhs under EDLI for the financial protection of the family after the death of an employee irrespective of the death occurred in working hours or non-working hours. The premium for this insurance cover is included in the employer’s contribution towards EPF i.e. 0.5% out of 12% from employer’s contribution goes towards EDLI premium.

The insurance amount that the heirs of a deceased employee get is calculated as 30 times the average monthly salary in the last 12 months of employment. The maximum average monthly salary of an employee is capped at ₹ 15,000, So, 30 times the salary comes to be around to be 30 x ₹ 15,000 = ₹ 4,50,000. A bonus amount of up to ₹ 1,50,000 is also paid to the claimant under this scheme. Thus, the total amount payable under this scheme to the beneficiary is ₹ 6,00,000.

Zero Liability Cards

Various banks offer Zero Liability Cover to protect Debit and Credit Cards cardholders which means that if customers prove the transaction is unauthorized and he is not at fault. Any misuse of the reported stolen or theft card, the cardholder will not be liable for any transaction made on it. The transaction is reversed in case of credit card and the amount is refunded to the customer in case of debit card. The transactions which require two way/step authentication or PIN for authorization are not covered under this free insurance cover.

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Air Travel

Similar to the travel insurance provided by IRCTC, most airlines offer legal liability cover under which passengers are compensated for the loss of valuable items such as baggage, gadgets etc. The award liability is settled as per Montreal Convention which states the maximum compensation for the loss is SDR 1000 per passenger for loss/damage/delay of baggage. The Special Drawing Rights (SDR) is the currency used by the International Monetary Fund and the current value is ₹ 96 which fluctuates with the market.

Report to the airline at the earliest and keep the reference number for future correspondence. Please keep in mind to claim the damage or loss of baggage within a few days of the incident. Also, make sure to keep supporting documents ready if you carry any expensive stuff in the baggage. The claim amount under free insurance cover is to be paid by the airline, not the insurer.

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