22 Oct 2016

Insurance Companies Should Offer 'Everything Insurance'

There are many types of insurance one may need to buy: life insurance in case one passes away. Medical insurance to take care of hospital bills. Critical illness insurance to take care of bigger hospital bills. Accident insurance to cover the consequences of an accident — hospitalisation and replacing lost income. Car insurance. Then there are less widely used forms of insurance like home insurance, which insures the contents of your house. And structure, if you own it.

Instead of assembling the coverage you need from a dizzying variety of individual policies, you should be able to buy just one policy that covers all the above [1]. You undergo the medical test only once, and you have a single point of contact for all claims. You have only one policy to renew.

Imagine if, instead of buying one medical insurance policy, you had to buy one for each disease: cancer insurance, diabetes insurance, hypertension insurance, liver insurance, kidney insurance, and so on. That would suck, right? You want one medical insurance policy to cover all diseases. By the same logic, and taking it one step further, you want one 'everything insurance' policy to cover many types of financial hardships one can encounter in life.

When there are many types of insurance, most people are unaware of many and don't buy them even if they would benefit. I'm told few people in India have critical illness or accident insurance, for example. Whereas one 'everything insurance' policy would cover more people from more types of losses. This shouldn't be surprising — make it hard, and people won't buy your service, whatever it may be. Make it easy, and more people will buy.

It's time to simplify the field of insurance. Companies should start selling 'everything insurance' to make our lives easier, simpler and safer, by covering us from more misfortunes.

[1] Which is not to say that there shouldn't be sub-limits. There can be, like 10 lac for a car.

Sub-limits also ensure that the insurance isn't exhausted by one event. A 2 crore 'everything policy' can have a 20 lac sub-limit for medical insurance, to ensure that the family doesn't spend the entire 2 crore on medical bills and not be left with money for daily expenses if the insured passes away.

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