Insurance is your safety net, once it is built then you can invest comfortably without worrying about any contingency that may or may not dip into your savings. Insurance as the name suggests means protecting yourself and your family ‘financially’ from any contingent (things which may or may not happen) events.
Let’s build this safety net for you and your family. The basic 5 insurances that you must have in place are as :
1. Health Insurance- Insurance you absolutely need.
With a steep rise in the medical cost and diseases not being age-specific, having a health insurance policy is a number 1 priority. Where most individuals would have health insurance from their employer, it is advisable to have your own mediclaim as well and where you are self-employed, health insurance becomes a must. You can opt for an individual policy or for the family, or opt for a family floater plan under which the whole family gets covered in one policy. Do remember to get health insurance that covers most of your health needs and also has a cashless claim in your neighbourhood hospital.
You can know more about health insurance by going through these articles.
- 6 things to note before buying Health Insurance.
- Health Insurance: What You Need To Know During COVID.
- Things To Do After You Buy A Health Insurance.
- How to save Income-tax on Health Insurance.
- Health Insurance for a Newborn Baby.
2. Life Insurance - Term Insurance
You obtain life insurance for the ones who continue to live after an untimely death and to secure them financially. Life Insurance must replace you financially and can be around 10 to 12 times your yearly income.
Generally, investors end up looking at how much would you get in return from the insurance policy rather than the sum assured and for how long to have the insurance policy. A small reminder that term insurance is a must for everyone who has or would eventually have any dependents financially. And for returns and investments, you have many investment options available.
You can know more about Life insurance here
- Insurance is not Investment.
- Why should I buy term Insurance, even when I am not getting anything in return.
- 10 things to note before buying Term Insurance.
- Nomination process in case of life insurance.
- Free-look period in Insurance.
3. Personal Accidental Insurance
Personal accidental insurance is the least opted insurance, especially in India - this is due to the lack of awareness of the various benefits accompanied with this insurance. It provides financial coverage against accidents that may cause bodily injury, permanent partial disability or permanent total disability and accidental death. It covers hospitalisation, pre and post hospitalisation, and offers a daily cash allowance of up to 30 days, depending on the insurer. In case of loss of income, it even covers you for a certain period, depending on the insurance you choose. Also, when it comes to the cost of premiums, this insurance has the least premiums against an exclusive range of coverage.
Given the raging accidents, we see every day this policy becomes a must-have too.
4. Critical Illness Insurance.
Generally, health insurance plans do not provide cover for critical illness or life-threatening diseases such as cancer, tumours, paralysis, bypass surgery, heart disorders as well as organ transplants. Treatment for these illnesses is also quite expensive. With some of these illnesses, hospitalizations are not required, and regular hospital visits are required over a long period of time. Therefore, having critical illness insurance can help you stay financially equipped for such medical emergencies.
However, these critical illness plans offer fixed benefits where a lump sum amount is paid to you for the treatment. The amount can be used not only towards treatment but towards your other financial responsibilities.
5. Home Insurance
A house is one of the most valuable and precious possessions that holds many priceless memories and belongings. Therefore, it is extremely essential to protect this prized possession against numerous unexpected damage that may not be in your control for eg, theft, natural calamities and so on.
Property insurance is calculated based on the value of the objects insured. For a homeowner, it may be the current value of the house, and the furniture and other items that have to be insured whereas for a shopkeeper, it will be the value of goods that are currently lying in the shop.
With the ever-increasing costs of electronics and other items at home, it is crucial you protect yourself financially from that extra loss, and obtain home insurance. Generally, for apartment societies, the co-operative buildings already cover the structure so your home insurance is only for the contents of the home. It would be a good practice to check with your society if the building and structure are insured or not.
Wealth Cafe Advice
Insurance policies work as a shield to protect you and your valuable possessions against numerous
Fun is like Life Insurance, the older you get the more it costs - Kin Hubbard. Buying insurance today will not only protect your family & yourself from the contingent expenses and loss of income but also be cheaper for you. Make the shift in your understanding of insurance and take it to build your safety net.
Where you wish to learn more about insurance - check out our course NM102: Build your Safety Net. You can use code SAVE20 for a 20% discount.