When you were in your twenties, insurance was something that was good to have. Buying a life insurance with massive personal coverage was a feat that everyone marveled at. Fast forward to a decade later, we now hold a different perspective of insurance, especially when our kids are young and our parents get older.
Be it protecting your health or growing your wealth, retirement or investments, knowing why you get those plans are very important.
The future is scary, and that’s what compels us to make decisions to buy insurance and becoming more susceptible to scary scenarios many has painted for us. But that does not mean that we should become vulnerable to buying unnecessary plans that we simply do not need. Hence, it is important to evaluate our coverage annually and close the gaps that we might lack in.
Before buying any insurance, carefully evaluate what are your concerns and what are the possible options to address them. Here is a list that addresses each concern with a suitable product:
- If you are a Sole Breadwinner and you are worried should anything happen: Term/ Life Insurance
- Should you worry about being permanently disabled: Term/ Life Insurance
- If you are worried about contracting a critical illness: Critical Illness Health Insurance
- If Hospital and medical expenses are a concern: Medical Expense/ Integrated Shield Plans
- If the loss of income due to hospitalization is of concern: Hospitalisation Benefits Rider
- If retirement is your main concern: Endowments or Investment Linked Policies
Difference Between Term and Life Insurance
Life insurance is usually bought with an element of Life protection, endowment or investment plan as most feel that it is the best way to gain both income protection and coverage.
However, it could be a misconception to believe that your coverage is as comprehensive as buying a term insurance because a huge chunk of the premiums paid could be going to the endowment or investment portion instead or to the fund managers who are helping you to invest in funds that does not really guarantee returns.
More often than not, we hear people saying that “at least they will get some money back” from a plan that they did not claim for, but little do they know that it is due to the investment portion of the insurance plan that resulted in this and that they could probably have earned more if they had used that amount to invest in something else instead.
Consumers would have to understand or come to terms with insurance being a product that is important solely for coverage and that it’s fine if a claim is not made during their lifetime because that is what insurance is all about!
So if you are going for coverage, it would be advisable to get a term insurance at a lower premium as compared to life insurance and then invest the surplus into a better investment instrument such as bonds or safe low-interest yielding shares.
Check this article for a thorough understanding of Term Insurance.
There is a Term Insurance that gives a guarantee of Sum Assured, meaning the person can claim it even without death occurring. Yes, a TERM insurance that actually does that.
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