The chief objective of insurance is to protect what’s most important to us – life, health, home and workplace. Coverage under must have insurance plans is the ticket to ensuring a healthy and secure financial future.
The correct insurance policies guarantee the safety of your assets and earning power. Although insurance requirements vary from person to person, here are five must have insurance policies that every investor should purchase:
Life insurance is a must have insurance policy for those with financial liabilities and dependents. For those who are primary breadwinners, life insurance comes to the family’s rescue by making good the income loss at an unfortunate time.
It is imperative to have a life insurance policy with an adequate sum insured so that it can replace the lost income and function as a financial buffer for the policyholder’s family in the event of his/her demise. A good life insurance provides a good cover while also guaranteeing a secure financial future for the insured’s family.
While buying life insurance, it makes sense to calculate one’s annual income and factor in inflation, salary hikes, and the approximate number of years the person wishes to continue working.
Health coverage is a must have insurance policy for all, as studies show that a substantial number of reported personal bankruptcies are attributable to high healthcare expenses. This fact, coupled with continually soaring healthcare costs, make investing in a good health insurance policy an intelligent financial decision. Even a minor illness or accident can create a huge financial dent, so the financial repercussions in case of major health issues or surgeries are unthinkable. Today, without a health insurance policy, good quality healthcare is unaffordable.
While buying a health insurance policy, consider factors like costs, affordability, specific needs, age, premiums, deductibles, co-pays, restrictions on keeping current doctors, etc.
It is strongly recommended to get a health insurance policy at an early age as people are healthier in their younger years and the premium rates are lower as well.
According to the Motor Vehicles Act 1988, India, it is obligatory to have third-party liability cover for all vehicles driven on public roads in the country. Although comprehensive cover is optional, including this must have insurance policy in your vehicle’s car coverage offers a dual benefit – it provides protection against financial losses and also covers liabilities for injuries and damages to others that are caused by your car.
Types of car insurance:
Personal injury protection - Covers medical expenses for passenger and driver injuries.
Liability - Includes bodily injury and property damage liability, covers damage to others and their property. Does not cover drivers or passengers.
Collision - Covers cost of damage to the car, irrespective of who is at fault.
Comprehensive - Protects against financial losses and covers liabilities for injuries and damages to others caused by your car.
Uninsured/Underinsured motorist – Provides cover if the person who hits your car does not have sufficient insurance to cover the damage or has no coverage at all.
Car theft insurance: For those who own high-value, swanky, or new cars, car theft insurance is highly recommended.
Purchasing the minimum required coverage or not having car insurance at all may save a small amount in the present, but it puts important things at risk in the future.
Personal Accident Insurance/Disability Insurance
Although people tend to disregard the necessity of a personal accident insurance policy, the fact remains that accidents can happen anytime, anywhere, making accident and disability a must have insurance policy for all. A Personal Accident Policy provides financial assistance in the unfortunate event that a person becomes disabled due to an accident and thus cannot work either for an extended period or never. It considers permanent, temporary, partial and total disability.
A unique feature of this policy is that it supplements lost income by providing income replacement (for a maximum of two years) when one becomes disabled. Similar to life insurance, a Personal Accident Policy also pays out death benefits to the insured’s family if something untoward happens to him/her.
Home insurance protects your home against damage and theft. When buying this insurance, look for a policy that covers structure and contents/amenities’ replacement, along with the cost of living elsewhere when your home is under repair. The policy must also provide adequate coverage for liability cost towards damages that may ensue on the property.
Renter’s insurance is a boon for those living on rent and a must have insurance policy for those who do not own a residence. It ascertains that the property is covered in the event that something untoward happens, like theft or fire. It does not cost much either.
Pro tip: Apart from the aforementioned policies, business owners could largely benefit from business insurance as it offers liability coverage in a litigation-happy world.
Various insurance policies are available today, each with unique features and benefits. It is best to start with the basic must have insurance policies, and complement them with additional coverage. Before making a purchase, research about the available policies, compare features and prices, read online reviews, and speak with an agent or financial planner to ensure you understand the policy, its costs and coverage. Also check with your insurance agent if you need additional insurance against earthquakes, floods, fires and other such calamities that standard must-have insurance plans may not cover.
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Insurance is a crucial financial decision. Make sure that the purchased insurance policy is in sync with your specific needs and is worth every rupee you pay.