The insurance sector in India has experienced a rapid growth in the last decade. Despite steady growth in this sector, the penetration of Life insurance in India is only 3.4% in 2016. Using the statistics, we can deduce the fact that very fewer Indians have opted for term insurance plans. One of the major reasons behind this is ignorance about the importance of life insurance. Consequently, they end up purchasing plans that do not offer a proper coverage. This ignorance is the major reason why people often financially jeopardize the future of their loved ones.
Read more#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply
It is, therefore, important for everyone to understand the repercussions of not having a life insurance plan. Another important thing that you must remain heedful about is the steps to pick out the best insurance plan according to your needs. Doing so will help you ensure a secure future for your loved ones.
Under-insurance means that the insurance purchased by you is not sufficient in order to financially protect the future of your family. In our opinion, anything below Rs.1Crore should be considered underinsurance in terms of life cover.
Let us check out a few reasons why people buy life insurance plans that do not offer sufficient life cover.
1) People usually purchase an insurance plan just to avail tax exemptions and not as a policy that helps them at the time of an emergency. The insured sum depends largely on the premium the insured pays for the product. Moreover, people think more about the premium they have to pay than the sum assured their family will receive.
2) Another most prominent reason is that the agent who is trying to make a sale is interested only in the commission. They hardly think of the benefit of the buyer. So, they force the buyers to buy costly life insurance plans that offer inadequate cover.
3) People often make wrong decision and end up buying the wrong product. For instance, if you try to buy a life insurance policy that offers a cover for Rs. 1 crore through a unit linked insurance plan (ULIP), the premium will be too much for you to afford or continue the policy for long.
Purchasing an insurance policy may create a delusion of getting complete safety. Due to this, you will relax and will not focus on savings. This will put you in a very bad position in case of any mishap. You will get to realise that your insurance cover is not sufficient only at the time of an unfortunate event. In such cases, you will realise that you won’t be able to pay your debts, leave aside paying for your children's education and other expenses.
The very first thing you should do is to calculate how much insurance cover you ideally need now and also calculate how much cover you might require in the near future. Though there is no rule as such to calculate an ideal sum assured, most of the people opt for 15 times of their yearly income. However, this suffers from a lot of limitations as it does not consider factors such as age, liabilities, expenses, living standards, etc.
Now that you know the fact that you are under-insured you need to take some steps in order to reach a decent insurance coverage. To find out a decent coverage, you need to assume all your expenses including the impact of inflation on them. The best way to get a higher coverage by paying a minimum premium amount is to opt for Term Insurance Policy.
Term insurance is the best if you are under-insured because it is the best way to increase your coverage amount by increasing the sum assured. Moreover, term plans are cheaper. So, if you already have any other life insurance (non-term) plan, which does not cover you sufficiently, buying a term insurance cover, will not be much painful for your pocket.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Being underinsured mars the purpose of taking an insurance policy. So, if you have already taken an insurance plan out of sheer ignorance, you need to figure out ways to increase your life cover. Now that you have already purchased a non-term insurance plan, one of the best ways to bridge this gap is to purchase a term insurance plan. There are several term plans, available in the market, which can help an individual to increase their insurance cover at a very nominal premium.
If you are underinsured and you are still not sure what you need to do to increase your insurance cover, feel free to contact us. We will be glad to help!
04 Jan 2023
Kotak Life Insurance, is one of the leading insurers in India04 Jan 2023
Tata AIA is one of the life insurance providers that offer20 Dec 2022
Edelweiss Tokio Life Insurance is an Indian insurer that offers12 Dec 2022
Life insurance plans are essential for anyone looking to secure08 Dec 2022
ICICI Prudential Life Insurance company limited offers a robustInsurance
Policybazaar Insurance Brokers Private Limited CIN: U74999HR2014PTC053454 Registered Office - Plot No.119, Sector - 44, Gurgaon - 122001, Haryana Tel no. : 0124-4218302 Email ID: enquiry@policybazaar.com
Policybazaar is registered as a Direct Broker | Registration No. 742, Registration Code No. IRDA/ DB 797/ 19, Valid till 09/06/2024, License category- Direct Broker (Life & General)
Visitors are hereby informed that their information submitted on the website may be shared with insurers.Product information is authentic and solely based on the information received from the insurers.
© Copyright 2008-2023 policybazaar.com. All Rights Reserved.
+All savings provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.