Why do premiums for motor insurance vary on different sites?

—Name withheld on request

Motor insurance has broadly two components. These are own-damage, and third-party liability. The third-party liability premium is the same for a particular vehicle across all insurers. The own-damage section premium can vary across insurers and intermediaries for a variety of reasons. 

Firstly, the add-ons offered for the own-damage section are optional. So, the selection of add-ons may vary with platform and thereby influencing premium. Next, the insured declared value (IDV) generally moves within a range depending on the age of the vehicle. Some platforms may offer a lower IDV to put across a low premium. This is disadvantageous for the user. You should opt for the maximum IDV available. This ensures that in case of a total loss, your compensation is maximized. The third reason can be the rate charged by the insurer. 

I had bought a life insurance endowment plan and even paid ₹63,000 as half-yearly premium. But, I don’t want to continue with it. Should I stop paying premium or surrender it? Also, how do I surrender this policy without any losses?

—Name withheld on request

In a standard endowment plan, you are entitled to a surrender value, if premiums are paid for the initial few years. So, instead of just stopping the premium payment, you should surrender the policy. Unfortunately, whenever you surrender the policy, there would be some losses. You would have to weigh this loss against the opportunity cost of continuing to pay premiums.

Surrender value of the plan may consist of multiple components including a guaranteed surrender value, surrender value of discretionary bonuses and special surrender value. The calculations of the surrender value is provided in the policy document in form of a table. Such a table would provide the surrender value eligibility based on the number of years of paid premium.

I have had health Insurance for the past eight years now. In the previous year ended 31 march 2022, I paid a premium of ₹56,000. I am now a senior citizen. I want to know how many deductions I will be entitled to under 80D this year.

—Name withheld on request

As a senior citizen, you are entitled to a deduction of ₹50,000 towards premium payment for your health insurance policies. The policy could include yourself, your spouse and children. The deduction is irrespective of your past insurance history. 

A similar deduction of ₹50,000 is also available for children to pay premium for their senior citizen parents.

Abhishek Bondia is principal officer and managing director, at  SecureNow.in.