Mr. Joshi is a long-sighted person who believes in thinking for the present and the future. Thus, all the decisions- no matter big or small, taken by him, showcase this demeanor of his. This same ideology and attitude can be seen in the way in which he purchased his two-wheeler insurance.
He had enquired and compared amongst the various companies providing insurance policies and finally found the one which suited his taste the most. However, this wasn’t the end of his struggle for choosing the best policy, because now he had to choose between a long-term cover and a short-term policy.
After asking his peers and scrutinizing the several aspects of the policy, he chose the long-term insurance and wisely so. Now after two years, he is reaping the benefits of the long-term two wheeler insurance that he had sowed in the past.
The various reasons which prove the cost-effectiveness of opting for a long-term insurance policy are here as follows:
- Saved on NCB (no-claim bonus):
NCB or no-claim bonus is the discount on the premium amount provided by the insurance companies. This discount is provided by them, to the drivers who ride safely and have not filed for a claim during the tenure of the policy. You can accumulate NCB for both short-term as well as long-term insurance policies; however, there is a huge difference in the way NCB works for both the policies and Mr. Joshi has witnessed it firsthand.
He and his friend Mr. Dinesh had both opted for insurance policies in the same year. The only difference between the types of insurance policies that they had chosen was- Mr. Joshi opted for a long-term cover whereas Mr. Dinesh chose a short-term one. However, both got into an accident during the tenure of their respective policies and filed for a claim.
Later on, when Mr. Dinesh went on to renew his policy, he had to pay a higher premium in comparison to the premium that Mr. Joshi had to pay- Because unlike long-time cover, you lose out on all your NCB when filing a claim on a short-term insurance. Thus, Mr. Joshi saved a lot of money on premiums by opting for a long-term insurance policy.
- Discount on the premium:
The government of India has made it mandatory for all the vehicle owners to at least fulfill the minimum requirement of a third-party cover. Thus, now every motorbike owner has to buy a third-party insurance cover for 5 years.
However, they have the option of either opting for a short-term comprehensive cover or long-term own-damage cover. But Mr. Joshi opted for a long-term bundled policy because he knew that the insurance company would provide him with discounts on premium. In this way, he cut-down on his insurance-related expenses.
The prices of premiums for third-party cover increase every year. This premium is decided by the IRDAI (insurance regulatory and development authority of India).
Thus, if you choose a short-term third-party cover then you might have to pay a higher amount of premium the next year. Therefore, opting for long-term motorbike insurance is the wisest option to save money and Mr. Joshi did just that.
Hence, these were the following ways in which long-term cover proved cost-effective for Mr. Joshi.