A life insurance cover is necessary so that your family members are able to take care of their living expenses, fulfill one time requirements like spending on kids’ higher education and marriage as well as pay-off any outstanding loans. All the above requirements are critical requirements and cannot be done away with it. Hence a proper calculation should be done to arrive at the life cover that is required.
You may have taken a dozen of all the different types of life insurance policies ranging from endowment to money pack to ULIPs. But have you ensured that the life cover provided by these policies is sufficient to take care of your family in case of an unfortunate event. If not, today is the right time to go and get yourself a plain vanilla term cover which will provide you the required cover.
While calculating the cover required for living expenses, do not forget to take into account the effect of inflation. E.g. If the monthly expenses are Rs 40000 in 2019, even a nominal inflation rate of 5% will increase this to Rs 71000 in 10 years and Rs 1.3 lakhs in 20 years. The cover that you take should take into account this increase. Also, one should review the life cover as an individual moves through different life stages like from a single to married with no kids to married with kids. The goals and living expenses change with different stages and in turn the amount of cover also changes.
A health insurance or a medicalim as it is more popularly known reimburses you for the admissible medical expenses in case of hospitalization. By paying a small premium you can cover this for yourself as well as your family members
Even if you have a company health cover today, there is every possibility that the cover might not be available to once you retire. Also, not all employee sponsored health plans cover all the members in your family. This will leave you in a situation where you do not have a health cover when you need it the most.
With the advancements in the medical field, you have new and better types of treatment available. At the same time, there is an increase in the medical expenses of the household as there is an increase in life style related ailments. The best cover against this is to have a healthy life style. In addition to that, a mediclaim cover is absolutely necessary
An ideal policy to cover multiple members of the family is by buying a family floater policy which covers all the members of the family. Also, if you already have a policy and wish to increase the cover, an ideal policy is the top up policy. We will share more details about this in the next post.
Sudipto Roy was heading Treasury function for Tata SSL and has an extensive experience of the Indian financial markets with a career spanning over 27 years he has worked in diverse industries such as Financial Planning & Distribution, Asset Management, Life Insurance, Insurance Broking, Equity etc. He has held a leadership position in PNB Principal Financial Planners, Kotak Mahindra Mutual Life Insurance, Birla Sun Life Insurance, and Kotak Securities.