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Should you buy bundled insurance products?

Bundled insurance products can offer you ease of purchase along with benefits of lower pricing. But never buy a bundled product just because it is easy to buy, instead buy only if you need one.

August 28, 2015 / 02:46 PM IST
Saroj Satapathy
Ideal Insurance Brokers

Bundling insurance policies broadly happens as product bundling or price bundling. In other words, it means that you are buying more than one insurance cover from a single company or getting discounted premium by choosing multiple products. Also known as the multiline policy, these kinds of products have become common in the recent years. However, many have tried to mislead by designing and refurbishing product and bundling with services thereby creating a perception of lower premium or value added service. Thus, the regulators (IRDA) have come down heavily on tying and bundling of product with other goods and services.

Options and benefits

In Indian insurance markets, product bundling proposes a higher value to the base insurance component and price bundling gives multiple related products at a reduced price. Additional benefits like waiver of the premium with life policies or health floater covers are good instances of product bundling and riders like accidental death benefit and critical illness are good examples of price bundling in India. Bundling of insurance product can save money for customer. For example, a package policy for household has sometimes 10 different sections and depending on number of section insurer offers good discounts. Another benefit of bundling your insurance product is that it gets convenient for an individual to manage their portfolio. To have one policy document for multiple products or covers can come in handy during the time of need, as it is very unlikely to miss out on some tricky covers and may not be available in the market for a value you desire to have as a standalone cover. Insurers also find it healthy as they need not look for policies and easily manage the portfolio at a much lower cost. You are also saved from keeping track of numerous insurance policy renewal and one single out go of premium.

A fine example of packaged or bundled insurance can be life insurance and income protection due to accident. This product covers you for death and also covers you for an income stream in case you get disabled. Another most sought after bundled product is life Insurance and income protection combined with critical illness insurance. In addition to the above (life insurance and income protection) the critical illness pays a lump sum amount to your family in case you are diagnosed with some serious illness. Bundled insurance products are available under various heads, apart from life insurance policies, for home insurance, package policy for shopkeepers and household insurance and various others. When bundling the insurance products for a small shopkeeper the offer is termed as the package policy. The policy is issued as a single cover taking into consideration the various insurance requirements of a shopkeeper. The policy can cover loss or damage due to fire and allied perils, burglary and house breaking, money insurance, personal accident, fidelity guarantee, loss in profit and public liability etc.

Even after such amazing advantages of bundling your insurance products, it may not be suitable for one and all.

The drawbacks

Bundling may cause you to miss, made to order policy or policy of your choice. A thorough research will allow you to take an informed decision of the most attractive discounts / terms and conditions prevalent in the market. A good example is to avail a floater sum insured under your health insurance. In case you are covered under the floater health plan then there is a risk of one member availing the entire benefit of the policy leaving the others high and dry for the balance period of insurance. A bundled product may constrict your flexibility in having coverage of your choice and availability in market. Bundled products also may have limitations as regards cover, exposure etc.

Devil in the detail

It should always be your endeavor to check on details and not fall for any trap by bundling any insurance product with any other services and also advisable to seek insurance which you need rather than it is available at a lower cost or bundled with another product. Stand alone insurance covers will always help you address your requirement and can be designed by insurers if required under the ambit of policy wording.

The best way is to look into the details before finalizing your insurance product. When bundling your product you need to make sure that you are not paying extra for any coverage. Compare various policies, look for the best offer and take an informed decision. In case you are not aware of the product it is always advisable to seek professional help.

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