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5 insurance policies everyone should have



insurance policies

From health insurance to ULIPs, for risk coverage, financial security, here is what you must do

Insurance provides us financial protection against uncertainties of life such as untimely death, accident, property loss, and serious health issues. However, insurance comes at a price. So, everything can’t get insured, but there are certain things which need to get covered. Particularly those which will have a high financial impact on your life as well on the lives of your dependents in their absence. The following five kind of insurance policies, therefore, are worth buying as they will not only give you peace of mind but also financial security:

1. Health Insurance: City life has become far more stressful and pollution far beyond safe limits today. Also, there has been a steep rise in the medical cost and diseases are no longer age-specific. The scenario makes health insurance necessary for one and all. It protects you and your family from unexpected medical situations which have a direct impact on your hard earned savings. “We recommend a good health insurance plan having a cover of at least Rs 5 lakh. Since there are numerous health plans being sold by public and private companies, it is advisable to go through the options online, compare them, and buy the one that suits your requirements the best,” says Jerry Bhutia, Director,

2. Personal Accident Insurance: More than 400 people are killed and many more suffer disability every day on Indian roads. That necessitates a personal accident cover, for, God forbid, if you suffer a disability in an accident, or don’t survive, your insurer will be there to extend monetary help to the extent of the pre-defined sum assured. In fact, in the case of a serious injury, your insurer continues to pay for a long time to cope with financial obstruction that a temporary or permanent disability can cause. Several public and private sector companies provide personal accident covers. So, choose a plan as per your requirements.

3. Term Life Insurance: While health insurance and PA cover provide financial protection to you and your family, a term life insurance policy promises financial guarantee for your loved ones in case of your death. Term insurance is very economical, but its premium keeps increasing with age. So, it is advisable to take a term plan at an early age, say, as soon as you get a regular job or get settled in your business.

To give an idea, let’s take an example of a 30-year-old, non-smoking male wanting a cover of Rs 1 crore for a period of 40 years. The premium for such a policy will work out to be as low as Rs 834 per month or Rs 10,000 per annum. The best part in a term plan is that the premium instalment fixed at the beginning of the plan remains the same throughout the policy period.

“There are two types of term plans available today: 1) a regular term plan which can give you cover till the age of 85 years; and 2) Whole Life plan which gives cover for your entire life. This, in a way, helps in legacy planning. As of now, there are three Whole Life Term Plans available in the market – HDFC Life Click2 Protect 3D Plus- Life Long Protection Option, Aegon Life-i Term Forever and PNB Met Life- Mera Term Plan,” says Bhutia.

4. ULIPs: ULIP or Unit-Linked Insurance Plan is a combination of insurance and investment. Apart from handsome returns that most investment options promise to generate, ULIPs also provide policyholders a risk cover. In ULIP, policyholders also get an opportunity to channelize their investments into various funds depending on their risk appetite and long-term goals like higher education of children, marriage, retirement etc.

5. Critical Illness Plan: Treatment of life-threatening diseases such as cancer, heart disorders, and tumours is quite expensive and such patients take a long time to recover. In certain cases, hospitalisation is not required and treatment can be done through regular hospital visits. For example, “if a person is suffering from cancer, he/she may not require to get hospitalised but the treatment may cost a lot of money spread over several years. The critical illness plans are fixed benefit plans where a lump sum amount is paid to the insured person for the treatment, and it depends on the person how to use that amount. The critical illness cover should normally be 4 to 5 times of a regular health insurance plan,” informs Bhutia.

So, from the above it is clear that insurance is important for both risk coverage and financial security.

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