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Not so long ago, a typical bite sized insurance was getting a cover while buying a train ticket. And now we have come a long way as you can buy customised cover for anything — from a backpack to cycle.
What is bite sized insurance?
Bite sized insurance is a product for a specific need and purpose and comes with a small price tag. These include insurance for mobile phones, a gym session and airline tickets, among others.
Growing Demand
Many e-wallets such as PhonePay and Paytm are already selling bite- sized insurance, as their large volumes leads to better pricing for customers. WhatsApp has also announced plans to sell these policies in tie-up with SBI General Insurance Company.
Gunjan Ghai, Vice-President and Head of Insurance at PhonePe, says, “Most of the insurers preferred selling insurance face to face and therefore did not focus on these products. But due to Covid-19 the demand for bite-sized health insurance products increased. Young people started to look for options to buy insurance.”
PhonePe offers a Coronavirus policy at Rs 396 for an insurance cover of Rs 50,000. It also offers certain policies that give cash in case of hospitalisation.
As insurers see big business in bite sized policies, expect more innovation in the space. For example to increase home insurance penetration, insurers may sell it on rental portals. Professionals such as doctors, CAs and actors take indemnity cover of small value along with debit and credit cards.
Should you buy?
Sachet sized insurance policies are popular among millennials who just want to dip their toes and not buy a full-fledged policy. These policies help in understanding the concept before buying a comprehensive plan. Ghai says, “Bite sized policies have shown an indication that youngsters understand insurance and there is a need for it.”
The other thing that is likely to happen is that insurance will get modularised so that people can make choices according to their age and experience. Ghai adds, “People can keep collecting covers as they go along, and then eventually buy the full fledged cover.”