Insurance is a Must!
Insurance protects us from unexpected expenses.
Insurance protects us from unexpected expenses. These expenses aren’t planned and are not predictable. They can confront us anytime. In such a scenario, having adequate insurance cover helps us gain financial stability easily by not losing a huge amount of savings. You can choose a simple plan or a premium one depending on your income and requirements
Most people are well-acquainted with the fact that insurance is a prime component of an individual’s life given that there are various risks associated with living and earning. Insurance is a form of risk management essentially used to hedge risks. Fundamentally, insurance is the mode to financially compensate for losses that life throws at people in unexpected ways. It is a form of risk transfer – an individual transfers his or her risk to an insurance company and in case of any uncertain mishap the company provides funds to the insured individual. Insurance can be used as a tool to financially shield an individual against certain potential risks like travel accidents, death, property destruction, diseases or emergency admission in hospital, fire mishaps, etc.
By identifying the risk and estimating the value of loss due to such instances, an individual buys insurance to obtain protection against the loss. Insurance companies cover various types of risks and therefore they offer various types of policies. An individual should cover himself sufficiently and appropriately in order to avoid any financial stress in case of a sudden unfortunate event. Every individual must have at least these five essential insurance policies: life insurance, health insurance, motor vehicle insurance, personal accident insurance and home owners insurance. Coverage under ‘must have’ insurance plans is the ticket to safeguarding a healthy and secure financial future. Let’s look at these insurance policies in detail:
1 Life Insurance Policy
Life insurance is a man’s solution to the vagaries of life. Generally, most income-earning individuals opt for this policy to ensure that his or her family is financially secured even in case of sudden death and loss of income. Ideally, a life insurance policy should be bought by an individual who has dependents or is the sole bread-earner of the family. The insurance company will come to the family’s rescue should there be an unfortunate event. Life insurance can be bought for a variety of reasons such as to cover debts or liabilities, cover final expenses such as hospital bills or funeral expenses, pay for child’s education, provide regular income for the family, etc.
One should buy appropriate amount of life insurance by considering various factors such as income, standard of living of the family, inflation, income hikes, retirement age, life expectancy, etc. Life insurance companies offer several types of life insurance policies such as term insurance, endowment insurance plan, money-back insurance plan, whole life insurance, unit-linked insurance plans, and many more. A pure insurance plan is the term insurance plan which offers pure insurance cover and no other investment benefits are available whereas other plans offer other benefits such as investment returns, bonus, etc. Therefore, before purchasing an insurance
2 Health Insurance Plan
All of us are exposed to the risk of both mortality and morbidity. There is popular saying, “Buy health insurance when you don’t want it because you may not get it when you want it.” That’s right, indeed! Health insurance provides risk coverage against expenditure caused by any unforeseen medical emergencies and is defined as ‘coverage that provides for the payments of benefits as a result of sickness or injury’. Health insurance is emerging as an alternative mechanism for financing healthcare in the light of escalating healthcare costs, coupled with demand for healthcare services and lack of easy access for people from the low income group to quality healthcare. Health insurance is a ‘must have’ policy as even a minor illness or accident can create a huge financial stress. The financial consequences in case of major health issues or surgeries are unthinkable. Health insurance refers to wide variety of policies. These range from policies that cover the cost of doctors and hospitals to those that meet a specific need such as paying for long-term care
3 Motor Vehicle Insurance Policy
As per Motor Vehicles Act, 1988 which regulates all aspects of road and transport vehicles, it is compulsory to obtain vehicle insurance in India. Presently, every individual possesses at least one vehicle. A motor insurance policy helps evade unexpected vehicle expense. It helps you to claim any damage to your own vehicle in an accident be it due to an accident with another vehicle or cause due to your own error. Similarly, it also helps you to reimburse the cost of damage caused to another person’s vehicle involved in the accident. In some cases even the medical costs of an injured person can be claimed depending on the policy terms. Premium for these insurance varies from vehicle to vehicle and for the time period you choose.
4 Personal Accident or Disability Insurance
Some people question the need to purchase personal accident insurance in case they already have health insurance? Personal accident insurance provides financial assistance in case an individual get injured and gets disabled due to an unfortunate event on account of which might not be able to work for an extended period or never. The unique feature offered by this insurance policy is that it supplements the lost income by providing income replacement for a maximum of two years when one becomes disabled. Personal accident insurance provides financial assistance in case of death, temporary total disability, permanent total disability, temporary partial disability and permanent partial disability due to accident. Health insurance provides for expenses only till discharge, covering no other expenses after that.
5 Home Insurance
It provides protection for property and interests of the insured and family members who permanently reside with the insured. A house is one of the most valuable and precious possessions that hold many priceless memories and belongings of a person. Hence, every person wants to completely protect his or her home against numerous risks like theft, losses due to natural catastrophes, etc., that you may not be capable of alleviating effectively. So, in order to protect your house you must have a home insurance policy.
Additional Policies
Apart from the above mentioned insurance policies one may have other insurance policies too depending on person to person according to his living conditions, occupation, etc. If an individual is living in rented house then he must possess a renter’s insurance or if an individual travels very frequently then he must have adequate travel insurance. An individual who is a doctor must possess liability insurance or if he is a businessman then he should buy business insurance. It is important to assess your need for insurance and the policy must ensure that you will be financially protected.