Three Types of Insurance Covers You Need

You take each of your financial objectives into consideration when you build your investing portfolio. For instance, while planning to retire, you determine a goal retirement nest and determine the monthly investments necessary to reach the objective. Similarly, plans are made for other financial objectives including children’s education.

Such financial planning, meanwhile, presumes that the family will have a steady source of income to fund these investments. What if something unexpected occurs? Not only may it disrupt family finances, but it could also damage the financial objectives being thought about. How can we protect our family’s finances in the case of an accident or bad circumstance?

The insurance can help in that situation because it functions more like a dormant emergency reserve. Even though there are several insurance options, financial experts classify the following three as the essentials:

Term life cover

Term life cover usually referred to as pure life insurance, is a type of life insurance that ensures payment of a defined death benefit if the insured person passes away within a predetermined term. The policyholder has three options after the term has ended: renewing the policy for another term, changing the coverage to permanent coverage, or letting the term life insurance policy lapse.

Income streams are disrupted when a family’s lone provider dies young. Owning a term life insurance policy could be helpful in that situation. It is the least expensive and a pure life insurance policy. A 40-year-old who purchases a $1,000,000 life insurance policy pays $27,000 a year. A payment assured of Rs 1 crore is given to the insured’s family in the event of his death.

How much protection does a family require? Some people accept a cover that is 10–12 times their yearly income, while others are content with a seven-digit sum (Rs 1 crore). However, income fluctuates with time, whereas a seven-digit sum assured doesn’t last that long. In essence, you should take into account the predicted income loss caused by the passing of a family member who was an earner.

Medical cover

Health insurance is a type of insurance that pays for a policyholder’s medical and surgical costs. It either pays the care provider for the covered person directly or reimburses the costs incurred as a result of illness or injury. Medical and surgical costs for an insured person are covered by health insurance. Depending on the conditions of the insurance policy, either the insured pays expenses out-of-pocket and then receives a reimbursement, or the insurance provider covers expenses directly.

Family finances may also be impacted by an unplanned medical bill. A major operation costs between Rs. 4-5 lakh. A kidney transplant costs at least Rs. 4 lakh, while angioplasty or bypass surgery can cost you at least Rs. 2-4 lakh.

When a family member must pay hospital bills or other connected costs, medical insurance begins to take effect. The insurer either reimburses or pays these costs directly to the network hospitals.

For a young family, a base health insurance policy with a sum assured of Rs. 10 lakh is sufficient. However, you must continually add to it because medical expenses escalate.

Critical illnesses and Accident cover

Even more expensive treatment is required for serious illnesses like cancer, costing up to Rs 10 lakh. A family with a comprehensive health insurance plan, including coverage for critical illnesses, effectively outsources such high hospitalisation costs to the insurer so that no one has to pay them or make plans for them. In turn, this releases savings that can be used for long-term investments.

Similar to health insurance, accident insurance covers you for mishaps, injuries, and temporary and permanent impairments. By paying an additional fee, you can add them as riders to your life insurance policy.

Final Thoughts

Consider the insurances mentioned above as an untapped emergency reserve that will help you out in times of need. Your savings are made available for long-term investments and the smoothest possible progress toward a variety of financial objectives.