You cannot predict what is there waiting for you in the future. There are always lots of uncertainties coming up for you in the future and you are always unaware of it. These uncertainties cause a drastic financial crisis to your family and close ones. Getting health protection as early as possible is becoming extremely important. But do you know the various types of health insurance coverage and which one should you have?
Related Article: Complete Guide for buying Health Insurance Plans
Policy has become a fundamental requirement of every individual, thanks to the inactive life lifestyle most people tend to live today. This too is a reason why people are really worried about their health as a matter of fact. Therefore, they consider a lot of options when thinking of buying any insurance policy.
Insurance plans protect you during an unanticipated medical crisis and help in balancing your family’s finances during such a difficult time. Medical insurance has indeed become an obligatory thing to have today considering the rise in medical expenses and an increase in the number of diseases. A medical emergency can arise at any time and affects an individual and his family both financially and emotionally. Thus, financial advisors advise that it is prudent to buy health care policy and insurance plan in advance.
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With the evolution in human being’s mindset, they have started contemplating the radical aspects of their life and the health care necessities. And the best thing is that they have started acknowledging the fact that they indeed need health insurance whether its rationale or not.
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In the modern era of inflation, it becomes imperative to seek out a decent health insurance cover especially if you wish to safeguard yourself as well as your loved ones from falling prey to skyrocketing healthcare expenses. Apart from providing you with adequate peace of mind, it also offers the best chance of recovering back both physically and financially if anything unfortunate happens. Getting a health protection as early as possible is becoming extremely important as once you succumb to issues such as diabetes or blood pressure, your insurance cost starts getting high while the coverage gets low. Today we are going to take you through the most important considerations which can help you in choosing the right cover.
- Even when your company is offering a corporate group health cover, it is imperative to have an individual health insurance in place. This becomes all the more necessary once you lose your job and the company either withdraws the benefit entirely or removes your family members from the coverage umbrella.
- While deciding on the sum insured, you need to consider the present-day costs. Thus, if you are residing in a small city, then you need to opt for a cover ranging from 5-8 lakh INR whereas a metropolitan residence makes it mandatory to increase the health cover quantum to 8-15 lakh INR. It also becomes possible to port from one insurer to another rather than purchasing an entirely new plan. In the porting procedure, the benefits which have accumulated in the old plan are transferred to the new one. You also need to make adjustments to your health cover every now and then for catering to medical inflation.
- Opting for a Family floater policy can keep your back especially if you have a family. This economical alternative can provide greater coverage to your family members while also ranking high in terms of flexibility of using any proportion of the coverage amount in accordance with the requirements of your family.
- It is advisable to purchase a health cover before turning 40 as your propensity of claiming the same remains low at that stage which in turn accumulates a hefty amount of no-claim bonus. This in turn can add up with the original coverage in every claim-free year to provide you with greater benefits.
- It is essential to purchase a health cover which comes with lifetime renewability for keeping your back once you start getting old and the chances of ailments increases.
- We rarely check whether a hospital comes under the cashless list of network hospitals in the case of emergencies. Thus, it is imperative to check the same out to find out the plan offering maximum geographical coverage.
- You should never purchase a health insurance having claim loading as this will just end up making the entire thing costlier if you succumb to any form of critical illness requiring long term cure.
- Your insurance policy should offer you with the required flexibility of restoring the limit in case if the sum assured gets fully utilized. This in turn will help in rendering adequate protection against all unforeseen critical illnesses such as cancer which might otherwise be very difficult to manage. Thus, a sum assured of 5 lakh INR along with a restore limit of 5 lakhs more provides you with 10 lakh INR worth cover without having to incur any extra cost.
- You need to always opt for a plan having high claim settlement ratio as that will ensure that your claim doesn’t get rejected unless the insurer comes up with a valid point of concern.
- It is necessary to channelize the purchase of your insurance through a reputed insurance broker who can assist you with settlement of claims. If you ever succumb to an unfortunate situation, then your physical or mental state might not be of much assistance in filing the claim or fighting with the insurer if the same gets rejected without any proper justification.
- Your application form needs to clearly represent all your details in terms of your health metrics. Thus, if you have any serious ailment, then you need to specify the same in details. You can seek out assistance of your broker while choosing a health plan which can cover your ailments after the passage of a waiting period.
Related Article : Types of Health Insurance policies amid COVID-19
- Most of the modern-day plans cover all pre-existing diseases after 3 to 5 years in accordance with the specific policies. You need to check out the waiting period of your chosen plan and go for the one offering minimum waiting time. Certain companies might offer coverage along with lifetime exclusions. It is advisable to exclude these companies from your sphere of selection.
- Your plan needs to have minimal or no sub limit. Opting for plans having an upper cap on the room rate might just add to your cause of concern as it becomes impossible to decide on the room category when you or your loved ones are being taken to the hospital under emergency conditions. Insurers might even impose sub-limits in terms of doctor’s fees, diagnostics and room rent. Anything incurred above the same needs to be borne from your own pocket. Thus, you need to consider all of these while choosing a policy.
While most of us associate the purchase of health insurance with tax savings, we fail to consider the requirement of getting the backing of a comprehensive medical insurance plan. As a matter of fact, medical emergency can be linked to the core of about 80% financial crisis faced by people. Apart from causing a financial bloodshed, such health emergencies can also deter our ability to earn more thus causing double impact. Keeping such things in mind, it becomes essential to opt for a health insurance plan and coupled with our tips, you can easily choose the one which serves you best.
What do people fear most? It is an uncertainty of life, which makes people worry about their loved ones. So, there must be a solution to this problem, which will at least cover your loved ones financially in case of need or contingency! Yes, there is indeed a solution – insurance. Insurance will help cover the insured and/or the family of the insured. This article will help you understand a few important things like the importance of insurance, how to choose insurance and it will answer the most important thing – how much should be the coverage and why?
Types of insurance which deal with most important aspect of contingency management
- Life insurance: – Life insurance will cover the most uncertain thing in life which is – death. There are again many subtypes under life insurance. There is a term plan which will need the insured to pay a fixed sum for the predetermined time. There is also an endowment policy which will provide survival benefits along with death coverage.
- Health Insurance: – Health insurance provides coverage for the medical emergencies and hence second most important. Most of the employees have group health insurance but it needs to be analyzed and assessed whether your group insurance covers the potential liquidity needs and is optimum or not. If not, then it is time to raise your sum assured which will help you cover the unexpected medical emergencies. It is always suggested to have medical cover over and above the cover provided by the employer.
In this blog, we will focus on Life insurance only.
So let us see how to assess whether you have enough life coverage or not?
- Loan coverage: – Needless to say that we all have some kind of debt burden, be it in form of housing loan or be it in the form of car loan or any other type of debt. Make a list of all such loans and arrive at an approximate figure of total loan repayment. If your total sum assured takes care of this loan liability, you are safe, otherwise, it is time to raise your stake. This will help your family to pay off the debt in case of any unfortunate event.
- Routine expenditure: – This includes basic expenditure like power, rent, grocery expenses, etc. which can’t be avoided and must be incurred for survival. Add up all your sum assured and/or retirement income and factor with the expected inflation rate. If your sum assured could cover this inflated required sum then you don’t need to touch your insurance.
- Lifestyle expenditure: – These are the expenditure which is incurred to maintain a lifestyle. So, this will cover pretty much basic expenditure like vehicle maintenance, second home repairs, renovation expenditure etc. These are the ones which are hard to locate, but if considered at the earliest, even these expenditures are easy to cover.
- Savings to income ratio: – If you save almost around 35% or more of your income, then it is safe to say that you need not invest more in life insurance. For e.g. consider that you have been investing 30% of your income in mutual funds having an approximate rate of return of 10-12%. Also, that you have invested in term insurance which will cover your family in case of death of the insured. In such a case, you need not divert your further income towards the term insurance since your mutual fund investments will take care of it, So you should buy Insurance along with SIP for your betterment.
- Investment goals: – You may wish to marry off your children lavishly or you may be wanting to provide them with the best education. But all of it comes with a cost, and to provide for it your family will need strong financial support. You can easily achieve it by investing in the right kind of insurance. There are many insurance policies which are tailor-made for such events which help you cover these expenses even if you are not there with your loved ones.
Instances when you need to raise insurance coverage
- Getting married: – When you started earning, you may have thought only about yourself and your parents. But, when you get married, you need to think of your spouse also in terms of insurance coverage. You need to add your spouse to your nominee list too.
- Starting a family: – When you hold your new bundle of joy in your hands, the first thing that comes to your mind is about its safety and security. This is another major event when you need to restructure your insurance investment. When a child is born, you need to raise your sum assured to cover the additional expenditure.
- Additional income: – When you earn a promotion or income raise, it is time for you to consider a corresponding increase in sum assured. This will help your family to incur and adapt to the better lifestyle needs even when you are not around.
- Additional loan : – You may invest in a second home or a new car by resorting to loan for the same. But, while you take the loan, you need to think about repayment of the loan when you are not around. If not taken care of, generally this additional asset may be termed as a burden due to loan repayment by the nominee or heirs. To avoid this situation, you need to increase your sum assured to such an extent so that it will cover at least a major part of the loan repayment.
So these were some of the instances where you should be increasing your life insurance cover to keep you adequately insured at all times. You may download the Fintoo App to get a suitable insurance policy for yourself.
The term ‘Life Insurance’ is easy to understand, though it features may be complicated. It all depends on the needs of a person. If a person knows what they’re looking for in an insurance policy, it becomes easy for them to search for one. Insurance is important for everyone because it covers the possibility of a risk occurring.
The reason as to why people end up buying the wrong policy is because they don’t buy it according to their needs. People make their decisions based on other people’s experience. Everybody’s needs are different, so based on that, policies from different life insurance companies should be compared.
The outbreak of the COVID-19 pandemic might have made you realise the importance of having life Insurance but do not make these mistakes while Deciding on an Insurance Policy. Let us discuss these mistakes in detail.
Insurance Is An investment
One of the biggest mistakes, thinking insurance is an investment. People need to know that insurance is to cover their risks. If you want to invest, there are many other avenues where you can invest in, they give you better returns and other benefits as well. Taking a ULIP and an endowment policy just because it has investment, will result in paying high premiums and the maturity or death benefit will not be much also. In many cases, the first question people ask when it comes to insurance is, how much return will I get? In fact the right question is supposed to be ‘How much cover am I going to get?’
No Proper Research
Before buying an insurance policy, do you compare it? Most common answer will be “No”. This is also why they end up with the wrong policy. It is always important to do research before you take a policy. Identify what your needs are and the cover you require. Then once you know your need, pick out the best insurance companies in the market. The next step is to compare the different policies and the policy which suits your needs the best, is your answer. If you do not know how to go about it or if you are not sure of whether what you’ve chosen is right, then seek advice from a financial advisor.
‘THINK’ Insurance Is A Waste Of Money
Almost everyone thinks insurance is a waste of money which is not true. Insurance is a need, especially when there is only one person working in the family. People give excuses like ‘I don’t have money’, ‘premiums are expensive’ and so on. In this case, a term insurance is the best to take, it’s the purest form of insurance and it serves one’s needs and it’s premium is cheap. It’s not a waste of money. It secures your family’s future.
Some people blindly trust the insurance agents, just because their friends or relatives are agents. In the end, they are the ones suffering, because they are paying a premium for a policy that’s not even required by them. That same premium could have been invested somewhere else and they could have got a better return. It’s your hard earned money, so use it wisely. Don’t just blindly buy policies, that will be a waste of money.
Before buying an insurance policy, there’s only one question you need to ask yourself, What is my need? It all comes down to this question. People easily get influenced by others and easily influence others as well. If a policy doesn’t cater to the needs of one person then it does not mean that it will not suit anybody else as well. It is better to do research on one’s own needs, rather than asking others about their policies.
So, now we know where we are going wrong and where we make the major mistakes while choosing insurance policies. If the above points are kept in mind, then the policy you choose will be for your benefit only. You may download the fintoo app to buy insurance plans suited to your needs.
INSURANCE! What comes to your mind when you think about insurance? Is it returns and investment? Well all these things are a part of the policy, but what is the actual meaning of ‘insurance’? Insurance covers ‘risk’. We can’t predict the future, so the possibility of an uncertainty happening with our life remains. Insurance was introduced to cover the risk of that uncertainty happening.
Having said the above, people buy insurance thinking it’s like an investment, which is not true. You can profit from an investment, which is not true in the case of Insurance. One cannot profit from insurance. This is the main reason why people end up with the wrong policies and then spread the word that insurance is a waste of money or the insurance agents are cheaters. It’s very important to understand the purpose of financial products before buying them. If you are not sure of the insurance policy, then it is advisable to seek an expert’s or a consultant’s advice.
Insurance, if taken for the right purpose, will suit your needs and work in your favor. For example, a person who wants to secure his family’s future, in case he’s not around tomorrow, the right choice would be a term plan as the situation is purely based on risk cover. Now, what if he doesn’t have much knowledge on the different policies and goes for a ULIP or an endowment, thinking of it as an investment avenue. Here is where people make mistakes. You always have to identify your needs first and then look at the features of the policy that will suit your needs.
Another reason why people buy wrong policies is because someone else has the same policy, maybe their friends, relatives, etc. Every person’s need is different. So obviously the insurance policy which someone else has, won’t be relevant to my needs. So it’s always best to find out your needs and then plan accordingly.
Let us see why do we need insurance:
1. Covers Risk:
Insurance means ‘risk cover’. As I mentioned earlier, we can’t really predict the future. The classic example is the current situation of COVID-19 pandemic which no one could have ever predicted. Of course you can’t put a price on the life lost, but you can put a price on the income that was coming in. The family may not get the whole income but, they can get part of it which can help the family get back on their feet.
2. Secure family’s future:
With the increase in prices and everything, people find it difficult to manage their current lifestyle, even though they are earning. What happens when the earning stops due to an uncertainty or in case of death of the earner?
Again, we can relate it to the current situation where people are facing pay cuts or job loss due to slow economic activity. This is a result of country wide lockdown owing to coronavirus. To avoid such a situation, where it can take a toll on the family financially, insurance is required.
If you have insurance, it brings peace to the other members of the family that they do not need to worry financially.
3. No compromise on future goals:
With insurance, one doesn’t have to compromise on their future goals. Everyone has goals that need to be achieved, it could be family goals, children’s future goals or even personal goals. So if a person has planned accordingly for funds to reach those goals and due to an uncertainty that resulted in death, now the family has no emergency funds.
Thus, they will now have to compromise on their existing savings, which were originally maintained for funding their goals. To avoid such hassles, insurance is required.
4. Child’s education:
Nowadays, even education prices are increasing rapidly. Everyone wants to do their higher education abroad. This puts a lot of pressure on the parents as they want to give their children the best. Education is something that cannot be compromised with. So there are many insurance policies that cater to this need. It secures the child’s education and future.
5. Financially Stable:
Having insurance also brings stability in the family. A person doesn’t have to worry about the finances. They can have peace of mind that they won’t have to arrange for funds to cater to their needs. There are policies that cater to the needs of the family immediately when the insured dies. As mentioned earlier, it all depends on the needs of the person.
6. Better to plan before hand:
Planning is something that everyone must do. It can be financial, investment, goal based, etc. Planning is mostly done to make sure that the goals of a person are achieved. Same way, Insurance planning is a must. You need to know how much money you need to replace in case you’re not around tomorrow. So that your family can live a better life.
7. Saves you the burden of worrying:
After the loss of a loved one, who is the only bread earner in the family, it is of course an emotional loss for the family, but there is also a financial loss. The family has to now worry about how they are going to manage the future expenses. So having insurance, reduces the financial burden of the family.
So these were the 7 reasons why you must have adequate insurance for yourself. It is further suggested that you make sure that along with you all the other earning members of your family are also adequately insured. You can download the Fintoo App to start the process of investing into an insurance policy suitable to your needs.
Coronavirus made us realise the importance of having adequate insurance to protect our family from any unforeseen incident. We all know that life insurance gives financial protection to your family when you are no longer there to care for them. There are different types of life insurance policies to cater to your different needs. One of them is Term Insurance.
Term Insurance is a policy which provides the policyholder with the death benefit. Usually, there is no maturity benefit in these policies and that is the beauty of it. As insurance companies do not promise a maturity benefit, these policies come at a very low premium and high sum assured. It provides an adequate protection to your family at minimum cost.
However, term life insurance can be a big aid in case of other problems too. This article will portray a number of problems which can be solved with term insurance. This is possible because insurers are offering additional benefits along with the term insurance.
Let us now see how a term insurance can be useful for you in 5 different ways.
Financial security during the times when you are unable to care for your loved ones
Have you ever imagined what will happen if you are no more to care for your loved ones? Standard term life insurance provides the death benefit, which means that the disbursement is made only in the event of death of the insured.
Your term insurance cover which offers the death benefit should at least be 10-12 times of your income. As everything is becoming expensive year on year, you should make sure your insurance cover is adequate.
Taking term insurance would ensure that your loved ones will not be affected by inflation impact. This way you would not only satisfy your family’s basic needs, but will also be consistent with their lifestyle needs.
Cover against disability or critical illness
Insurance industries have adapted themselves to the changing needs of the customers. Like I mentioned before, the basic term insurance only ensured payout in case of death of the insured.
But now many insurance companies have come up with various other types of term insurance with additional benefits. These additional benefits are called riders.
Certain term insurance policies provide cover against disability and critical illness, by paying an additional amount as premium for such additional benefit.
This option is cheaper as compared to the whole other insurance policy for the purpose of the critical illness or disability.
Also, term insurance for disability and critical illness comes much cheaper and is beneficial when you are diagnosed with a critical illness or meet with permanent disability.
Taking this rider of critical illness will be useful in the current phase of COVID-19 pandemic.
Term insurance with benefit of return of premiums
While most of the people still think of their term insurance as an insurance only where nothing is received on maturity, here is a fresh twist in the story.
The insurance companies have come up with a newer version which will pay the premiums back to the insured in case he survives the term of the insurance policy.
This has an added benefit to the death benefit existing in standard term insurance policy. This can be applied in retirement planning strategy as well. The amount received on maturity will be useful in incurring retirement expenses
Money back plans for liquidity
Money back plans are a combination of a term plan and endowment policy. It is the best instrument for tackling liquidity as well as insurance cover. This type of policy would benefit the insured in two ways.
First, if the insured passes away before the maturity of the term insurance, his family will get payout for the full sum assured even if the premiums were not paid for the whole term. This disbursement includes any accrued benefits or bonuses, if any.
Second, he is entitled to receive proportionate amounts at periodic intervals and will get the remaining corpus (with additional benefits) if he survives the tenure of the policy.
However, this type of plan is recommended only where you are unable to save money and are planning to reinvest the periodic payback amounts in attractive investments or to buy huge assets (which would otherwise cost you exorbitant interest on the loan).
Double benefit rider in case of accidental death
Some of the policies will have the benefit of opting for additional riders for accidental death. If the insured meets with the accident, then term insurance will generally pay double sum assured.
This type of policy is suited for those who work in hazardous environments or the risky work environment. This type of insurance cover is usually available on payment of slightly higher premium and it is not available as a separate policy type.
Term plans are not just an insurance cover, but they also act as an investment in some cases. When you opt for any other plan than standard term insurance plan (like TROP or money back plan), they pay you back the premium and in certain cases, the added benefits as well. This happens where the insured outlives the term of the insurance.
Retirement Planning can be done by various investments like mutual funds, NPS etc. Treat this term plan as a cushion in your corpus. You should not consider it as the only option for doing investments for retirement.
While planning for retirement, you can always look at term insurance plans as you will benefit from cheaper premiums (where the candidate enters at an early age) and provides cover for the maximum term.
In the case of survival benefits, you will get the rest of the corpus in addition to the regular payout during the term of the insurance.
An average investor may look at the insurance plan only as an insurance cover which will secure the family’s future in case of his death. However, look out for various other options available within insurance to effectively use the same for solving the biggest problems.
Download the Fintoo app to get started with investing in Insurance.
Have you got your health expenses covered? Or are you still confused whether to take a family floater or an individual health cover? Well, whether you fall sick often or not is not the point, health insurance plan is to cover the risk of your medical bills going over budget. Some people fall sick quite often in a year, whereas some fall sick maybe once or twice a year, there are some who also fall sick, every time the weather changes, this is normal.
But what happens, when there are viruses going around, like COVID-19?
Medical bills are bound to go over the top. This is something no one can predict, as it doesn’t happen often. So if you are still thinking that you do not need health insurance, then think again.
For a family, with a husband, wife and children, there are 2 options of health insurance. One is individual health insurance and the second family floater. Under individual health insurance, each member of the family gets a separate health insurance policy, whereas under family floater, there is one cover spread over all the family members.
For example, Mr. Jay, 33 years of age, his wife Mira 31 years and one son Vijay, 9 years. Jay is thinking of buying a family floater worth Rs 5 lakhs, so this 5 lakhs is for all the family members. This means that if the medical bills of all 3 of them come up to 6 lakhs in a year, they will be reimbursed only till 5 lakhs.
Now let’s take the same above example, but in this case, Jay wants to buy individual policies for his wife and child. So he takes a policy of Rs. 3 lakhs per person. This way if each of their medical bills come up to 2.5 lakhs, they will all be able to claim their amounts.
Must Read :- How Much Life Insurance Do You Really Need?
Now let us throw some light on lesser known facts:-
- In a family floater policy, when a child becomes an adult. They have to be moved out of the family floater cover. The maximum allowable age of a dependent child varies from 18 years to 25 years. It is different for different insurers. Beyond this specified age, they are treated as adults. They have the option to buy an individual cover without impacting the continuity benefits such as waiting periods. It will remain intact with the insured who is taking an individual plan.
- In individual cover, the entire sum insured is for an individual and it is not shared among all the family members like family floater cover. If we look at the amount of cover available here, the better option is individual health insurance policy. But all good things come with a price, here the price to pay is higher premium than a family floater.
- Family floater Cover works on the principle that it is very unlikely that all the family members get admitted to the hospital in the same year. Therefore, each member could utilise the maximum limit of cover.
- The premium of family floater plan is decided based on the age and health of the eldest member who carries the maximum risk. This could prove to be a disadvantage if the health of even one member is below average. It will have an impact on the premium.
So what should you do?
We would suggest that you go for a family floater health Insurance Plan if you have little kids, and no major disease or illness. Floater plans will offer you better cover at lower cost than multiple individual plans.
But in case your family has a history of chronic issues, floaters will be inadequate and therefore buying individual health cover will help in the long run.
If you have any further queries, you may download our fintoo App to discuss with our experts to guide the best insurance product for you and your family. Stay Healthy!