Its amazing how many people buy insurance to just ‘save on tax’ or investment/savings purposes and aren’t sufficiently insured.

The primary purpose of insurance is to protect us financially in the event of an unforeseen tragedy. Most of us however live like we are immortal and will live happily and without incident for ever.

We hope you do, but just in case something goes wrong, are you sufficiently insured ? Do you have adequate coverage ?

Read more about some of the types of insurance that could be helpful for you.

Life insurance: If you have a life insurance, you can afford to plan for unforeseen events that could adversely affect your family’s financial profile. Your decision for the amount of insurance cover must revolve around the number of dependants and their financial needs. You should be able to quantify the need by applying human capital concept. According to human capital, your insurance need is determined by your potential earning. For example, earning potential of a 30 year old person would be lot more than a 60 year old retired person. You must be able to quantify the human capital value in order to assess your insurance needs.

Health care policy: Health insurance is generally more expensive than life insurance because health care is expensive and the probability of people falling sick is higher than that of people dying. Premium must be paid once a year during renewal of policy. Premium rates vary from insurer to insurer. Factors that determine premium include age of the policy holder, sum insured, term of plan. The Basic medi-claim policy is a reimbursement of treatments that require hospitalization – anything where you are admitted for a day or more. Even if you have a mediclaim policy from your employer, still you should have your personal policy because in case you change your job or start your own venture then you would need a mediclaim policy and may be required to pay very high premium.

Accidental Death (AD): Covers the insured in case of loss of life from an accident up to 100% of the SI. In case the insured had life insurance cover, the nominee can get payment from both life and AD cover.

Permanent Total Disablement (PTD): Pays 100% of the SI if bodily injury results in permanent total disablement due to an accident. For example, loss of two limbs, two eyes, two feet, one hand and one foot, one hand/foot and eye is PTD and will pay the insured 100% of the SI.

Temporary Total Disablement (TTD): It pays a weekly benefit up to a maximum of 100 weeks, if an accident causes disablement that prevents you from carrying out your usual occupation. It usually pays 1% of the SI per week, subject to a limit, like a maximum of Rs5,000 per week, depending on the insurance company (subject to the salary of the person).

You have a choice of buying PA policy or taking riders of AD and ADB along with life insurance policy. The policies issued by life insurers guarantee coverage during the entire tenure of the policy, whereas non-life companies in rare situations may not agree to renew the policy after the policy tenure ends. The premium for life insurance riders is also locked for the policy term, which can be up to 30 years, while the premium of PA policy may increase based on different factors. Don’t choose term life insurance product based on riders. Choose the right term life insurance without thinking about the riders. The cover offered by the riders can be purchased as PA policy. As such, most online term plans, which are inexpensive, either do not offer any riders or may just offer the AD rider.

Travel Insurance: Travel Insurance or Visitor Insurance also known as Overseas Medical Insurance can cover your Medical Expenses, Personal Accident, Trip Delay, Trip Cancellation, Baggage Loss, Loss of Passport and many more risks while you travel abroad. Although these benefits might be covered in your personal accident rider but you are better off to buy travel insurance when you are booking your tickets. Recently, I had a small injury in Singapore for which I landed up paying Rs 10,000. I have personal accident insurance but did not buy travel insurance. My personal accident claim was declined by the insurance company since I was not on bed rest as prescribed by the doctor. Therefore, it is much better to have a travel insurance to avoid these confusions.

Home insurance: It is crucial to get home insurance and property insurance in today’s time. There are many reasons that make it very crucial for the home owner to have this insurance plan. For example, home or property is one of the most essential investments one makes in his lifetime. Therefore, there is a necessity to defend this single most investment of your life. The home insurance and property insurance plans are designed in a fashion to provide you this kind of protection. Second, protection for damage, home insurance plan is intended to protect the homeowners against accidental damage of the house. The damage that can get covered under this policy is a variety of disasters such as storm, fire, theft, vandalism and related hazards. Third is obligation, which is a major reason for you to buy house insurance. It is actually a crucial requirement by the mortgage lenders or banks. The loaning organization wants to protect its loan and set a condition for the debtor to have the property insurance plan. As soon as the borrower gets this insurance plan only then he/she can acquire the mortgage for the home.

There are other insurance as well related to professional indemnity and auto insurance but usually most of the people are aware of these policies.


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