We all are in festive mood. Five more days to come to welcome New Year 2015. Usually, we make a promise for the new year. Let this year we promise about adequate insurance coverage to each and everyone life. For every one of us, we need at least adequate Life Insurance and adequate Health insurance. In this regard, other insurances like car, home etc. insurances are also important. For the time being, we concentrate on the life and health insurance.
For an individual, the adequate life insurance cover shall be ten times of yearly income. Suppose, one person is earning 10 lakhs rupees per year, so he or she should take an insurance coverage of at least 1 crore rupees per year. To take one crore rupees insurance one has to spend maximum 10,000 rupees only.
This amount of 10,000 rupees is very less amount comparative to the income. Most of the time we are ending with costly life insurance cover which has other benefits like maturity value etc. My suggestion to prospective buyers is that please don’t go by the conventional insurance policy or the endowment policy. Please take a term insurance of adequate coverage which was mentioned earlier in this article.
You can take the following example from my experience:
When I started my career, being a new earner I did not know much about personal finance. By the influence of one of my relative I have taken a Jeevan Saral Policy which has sum assured of 5 lakhs rupees and the yearly premium is Rs 24020 for 20 years period. After a few years when I come to know something about insurance I have realized that I have made a mistake.Let us say for the insurance coverage of 5 lakhs rupees you have to spend 500 rupees per year. The rest of the amount you can invest in a mutual fund which can return about 12-15 % interest which can return you more than 5 lakhs rupees.
As an example, if you invest 23000 rupees per year in a diversified equity mutual fund you will get approximately 1600000 rupees. Moreover, if you invest this amount in tax saving fund you can tax benefit of the whole amount.
Next insurance which we need to take is the health insurance for the total family. Nowadays Health Care costs are rising day by day like anything. Even if you have the cover from existing employer please do not forget to take a health insurance because of the transition period of one job to another job and for the members of the family who is not covered under the insurance.
If you have dependents like spouse and children take a family floater cover and if you have dependents like your parents means aged person prefer individual cover for them. For a principal insurer of aged 26 years and family of 4 persons including spouse and two children, the 3 lakhs medical insurance costs around Rs 6000.
So let’s begin this year with securing the adequate life and health insurance.
Wishing all of you a very very happy and prosperous new year ahead.