Insurance covers priced at Rs 10 or even less: Know about sachet policy

Have you ever been offered insurance worth lakhs for just Rs 10? A couple of months ago, MobiKwik and Chola MS rolled out a general insurance product in the Personal Accident category that offered insurance covers, starting from Rs one lakh, available at an annual premium as low as Rs 20. You also have insurance plans you can get for just one rupee. Such sachet, or bite-sized policies as they are called, are offered by IRCTC, Ola and Pradhan Mantri Suraksha Bima Yojana. 

What are sachet/bite-sized insurance policies?

India has always been important to the FMCG sector because of its population and demand for products that are 'value for money'. Marketing of FMCG products in the country was revolutionized by one major change in trajectory – Sachet Packs. Almost all the brands have tried them. These products helped drive product penetration even in the most remote parts of the country. Taking a cue from this, the insurance companies have also come up with sachet/bite-sized policies. Still at a nascent stage, sachet insurance products are getting popular.

Sachet insurance is a non-comprehensive plan, which focusses on specific need. It with a low premium and lower cover. Small-ticket insurance cover or sachet insurance policies have targeted coverage duration, and specific sum assured. This makes the premiums more affordable.

Low-premium - the selling point

The selling point of sachet policies is the low premium.

For instance:

Ola: In April, 2019 Ola introduced in-trip insurance programme. Under the programme, the user will have to pay Re 1, and the company will provide an insurance cover of up to Rs 5 lakh.

IRCTC: Indian Railways Catering and Tourism Corporation offers you an insurance cover of up to Rs 10 lakh at a near-zero premium of 49 paise. Passengers have an option of opting the 'Travel Insurance' while booking train tickets through IRCTC website. If you exercise the option while booking your train, the travel insurance will be applicable for all passengers booked under one PNR.

Toffee Insurance has partnered with companies such as Apollo Munich Health Insurance, HDFC Ergo, ICICI Prudential, India First, Tata AIG and Religare Health Insurance to repackage their products and curate tailor-made policies. The premiums for Toffee Insurance’s backpack policy are linked to the value of the bag. For a bag value up to Rs 2,000, you pay a premium of Rs 25, whereas for a bag value between Rs 5,000 and Rs 10,000, you pay a premium of Rs 100.

Pradhan Mantri Suraksha Bima Yojana: Premium starts at Re one as a monthly basis or Rs 12 per annum. Rs two lakh insurance cover is given for death and permanent total disability. While Rs one lakh cover is provided for partial permanent disability.

Caution one must take while opting for sachet/bite-sized insurance policies

Just like regular insurance policies, one must exercise caution while opting for sachet policies. Read the fine print closely to figure out the exclusions in these policies.