Insurance Industry News

Here are the must-have insurance covers during your lifetime

Days are gone when everyone in the family had just a few life insurance policies as their only insurance cover. But, things are changing as there are more uncertainties and one needs to protect oneself from various kind of risks.

What if you met with a medical emergency need? Will your life insurance policy cover that? No, in such case, you need to have health insurance to meet the exigencies during crises. Similarly, if the insured dies then in that case term insurance will rescue the family members from getting into financial woes with payment of a huge lump sum. Having an insurance policy for all these purposes can help you save from financial crunches during any kind of mishappening.

Here are a few insurance policies which will protect you while heading your life to meet the needs of your family from time to time.

Life Cover

One should have a pure term plan in his or her portfolio. Manik Nangia, Director Marketing and Chief Digital Officer, Max Life Insurance said a well thought and timely purchased term Insurance product can protect one from the most threatening 3Ds in one’s life term: Death, Disease, and Disability.

“These plans provide a death benefit to the beneficiary on the death of the insured if the insured dies during the time period specified in the policy,” Nangia said.

Rakesh Goyal, Director, Probus Insurance Broker Limited said the general thumb-rule says it should be 10 times of their annual income.

“But I would suggest that term plan should be based on their age factor also. For example, if 25-year-old is earning Rs 10 lakh per annum, in the basic term he should have term plan of Rs 1 crore (10 times of annual income). But I suggest that they should have term plan Rs 3.5 crore because they still have to work for another 35 years. So it is better to have term plan based on his age rather than going just by having term plan of 10 times of their annual income,” he said.

Health cover

Also, it is important to have health insurance cover, over and above what is given to you by your employer. Goyal of Probus Insurance Broker explained it with an example saying that a young couple should ideally have base health insurance of at-least Rs 5 lakh and top up or super top up of another Rs 20 lakh. “In all, it will have them covered for sum insured of Rs 25 lakh which is must in today’s time,” he added.

Policy for your vehicle

One should ideally have motor insurance as they must compulsorily buy third party cover. Further, they can also look on an add-on for the vehicle insurance like engine protection cover, road assistance cover, and zero depreciation cover.

Policy to protect your dream home

Policyholders should also have home insurance or if they have shop then they should also have shopkeeper’s insurance.

“In today’s time, anyone buying a home would be spending around Rs 50 lakh or 1 crore and above, in order to protect family after the demise of bread earner in the family, it is very critical to have home insurance,” said Goyal.

Policy to plan pension income for retirement

All policies mentioned above protect them against risks if they die or fall ill, but policyholders should also have pension policies for their retirement. Pension plans help you allocate your savings towards retirement over a period of time.

Although people make an investment in various avenues, but having a pension plan in your portfolio is also very important. When you save in pension plans it helps you generate huge corpus because of the compounding effect. It also helps you in maintaining disciplined investment towards your retirement.

Policy for child’s education

Finally, they should also invest in child insurance plans as they are long term in nature. Many people think that investing in mutual funds is the best way to save for child’s education, but many times after there has been an appreciation, they are tempted to remove some portion for either vacation or some leisure activity.

“I suggest investing in child plan should be for longer lock-in period and insurance provides them with the best platform. The day is not far when everyone will need to spend at least 20 percent of their yearly income on various insurance as by paying for insurance they are getting peace of mind,” said Goyal.

Even after buying such policies, if policyholders feel that they should buy more, then in that case,  one may prefer going for add-ons provided by the insurer for every particular policy. However, such decisions should be taken under the guidance of a financial adviser.