We have seen the colossal effects of natural calamities, whether be it in Mumbai, Kerala, Odisha, Chennai or even the recent Hulimavu Lake breach in Bengaluru that has affected 1,000 families and over 300 cars were sunk. Things flip upside down without any prior notice, and this is when insurance comes as a financial shield.
Such incidents cause a hole in your pocket and make it difficult to get back on your feet. Insurance saves you and your family from facing a financial crisis in case of unforeseen events that may result in the loss of life and property. Having insurance means having a provision of financial aid when needed, just like a helping friend during a crisis.
There are various types of insurance available to cover different risks. The objective of this article is to address the type of insurance policy you should opt, when to opt, and their benefits.
- Term Plan
It is a pure life insurance product that covers the risk of the life assured’s untimely death. In case the life assured passes away while the policy is still in force, the sum assured is paid to the nominee.
Why should a Term Plan be one’s priority?
Life is unpredictable. Young or old, natural or accidental, anyone can become a victim of an untimely death. Untimely death causes loved ones to suffer emotionally and financially. The sum assured can help family members to get back on their feet without any stress or worries.
When to opt?
The younger you buy a term life plan, the lower is the premium, and the premium remains the same throughout the policy tenure.
Benefit: If there’s an untimely death of the life assured, his/her family is supported with an enormous amount of money. The sum assured replaces the loss of income which was caused due to the breadwinner’s death, which can be used to meet the daily lifestyle expenses, paying off debts, child’s education, marriage and so on.
2. Health Insurance
You may be healthy and fit, following a healthy diet, and a member of yoga or gymnasium. But an unforeseen bodily injury or being diagnosed with dengue, malaria, chronic disease, life-threatening illness, or an unfortunate accident, could severely hamper not just your health but also your pocket too.
Health plan covers the cost related to all the pre- and post- hospitalization, in-patient hospitalization expenses.
When to opt?
Buying when you are young helps in lower premiums, no medical tests, and no worries about the waiting period. Because the older you get, you are prone to many illnesses and diseases, the premium increases, and only after the completion of the waiting period, any of the pre-existing diseases will get covered.
Benefit: Year by year there’s a rise in medical inflation, which has resulted in high medical treatment cost; this may exhaust your savings or dig a hole in your pocket. But with a pocket-friendly health plan, you can cover medical treatment costs and save yourself from exorbitant medical expenses.
3. Motor Insurance
Whether private or commercial, if you own a two-wheeler or car, it is mandatory to have motor insurance.
For every vehicle plying on the Indian road, having a valid third-party motor insurance is mandatory as per the Motor Vehicles Act,1988. It covers losses that may incur on to the third-party or their property due to the insured vehicle.
However, to cover your vehicle’s own damage or repair costs incurred due to an accident, it is advisable to have comprehensive motor insurance.
4. Other Life Insurance Policies
There are various life insurance plans other than term life, which offers investment and savings options along with life cover.
Whole Life – Provides lifelong protection to the insured life cover for the whole life.
Benefit: Offers an opportunity to leave behind a legacy for your heirs.
ULIP – Offers investment opportunity along with life cover. Advisable to opt when you want to invest specifically for long-term.
Benefit: Offers investment option as per the risk appetite.
Endowment Plan – Offers long-term savings option along with life cover
Benefit: An opportunity to have savings on maturity.
Child’s Plan – To fulfill the financial expenses related to a child’s education and marriage. Benefit: Helps in fulfilling your child’s dream with maturity funds.
Money-Back – Periodic returns with life cover.
Benefit: It fulfils short-term financial goals. Also, provides financial assistance to meet rising inflation.
Retirement plan – Offers savings option for retirement period.
Benefit: Build corpus for your retirement and helps you to stay financially independent during post-retirement.
5. Other Insurance Policies:
Personal Accident insurance provides a lump sum amount as compensation in case of an accidental bodily injury, temporary or permanent disability, or accidental death.
Critical Illness plan covers various critical illnesses like cancer, kidney failure, paralysis, and other life-threatening illnesses.
Home insurance is a must for people living in a flood or any other natural calamity prone area, which may cause the loss of home and its content. Whether you own a property or live on rent, you can choose to cover home structure, its content or both.
Business/shop owners can also look forward to business property insurance, trade credit insurance, marine, liability cover, keyman policy, group medical plan, and so on.
Hope it helped in understanding the different types of insurance policies and which one to buy for different unexpected risks.
Article by: Mr. Sumit Asrani (https://sumitasrani.com/)
About Sumit Asrani
A Chemical Engineering graduate from Mumbai University, Sumit is a Customer Experience expert, Trainer, Speaker, Writer, and the Founder of Digital Marketing Sprout where he shares his passion and help start-ups, SMEs, and MSMEs to transform and grow their business digitally.