Someone once asked me, ‘Did you get sold to insurance or did you buy insurance?’. At first I was confused, how can someone get sold to insurance? But after few minutes I understood what he meant. Almost everyone gets sold to insurance.
Another mistake that people often make is, buying insurance from friends and family. Which could be even worse than buying it from an insurance agent. Every time your friend or relative has to reach their target, they’ll know who to approach. You’ll be stuck with paying premiums for policies you may not even want. You are paying those premiums with your hard earned money. You can use that same money elsewhere, and even profit from it. Use your money to work for you, not the other way round.
Insurance has to be bought for the right reasons. It is a very important financial tool and your financial kitty would be incomplete without it. Parents work so hard to make their children’s life easier, so that their children do not have to slog later.
Everything is becoming so expensive, that planning ahead is very important to reach your goals. Specially if you have a lot of people dependent on you. ‘Life is uncertain’ is a fact, no one can change it. So it always better to have your loop holes covered, before you come to that stage. It’s hard enough your family has to suffer the loss of your life, but don’t put a financial burden on them too. Life insurance policies are not only meant for covering the loss of your life but you can also cover the financial loss of any goal too.
Let us now look at some reasons why you need insurance, some of them might even surprise you. Here goes:
1. Basic Cover For Your Financial Loss :
This is one of the most common reasons why you need insurance, to cover your financial loss. Your family will be so devastated at the time of your death, that they will not be able to think straight. This insurance cover will help them get back on their feet and also cover the immediate expenses that come along the way. This way, you can save your family the trouble of not worrying about their financial needs.
2. Tax Benefits:
Some people buy insurance to obtain the tax deductions available to them. The best thing about life insurance is that their maturity claim as well as the death claim are both tax free. Even the premium amount is available for deduction under section 80C. The premium claimed can be, up to a maximum amount of Rs. 150000/-, since that is the limit under section 80C. After having said that, do not buy any insurance just to claim this deduction. If you are going to buy insurance for this reason, then you might as well buy a policy that will attend to your needs.
3. Financing Your Debt:
Now I’m sure you do not want your family to carry the burden of paying off your liabilities. So if you have got your other goals covered through various investments, then get your liabilities covered through insurance. For example, you’ve taken a house loan, and you still have half the amount to pay back, take an insurance cover for that amount, so even if you are not there, your family will have the finances to pay off the loan.
4. Sort Your Education And Retirement:
Life insurance just doesn’t mean insurance for your life only. It also provides cover for your income. For retirement, annuity is a very good option to consider. After investing in an annuity, you will receive a regular income till your survival. So if you haven’t considered this option, I think it’s time you do.
As for your education, there are education plans offered by the insurance companies for your children, so that in case of an unfortunate event, your child’s education will not be compromised in the bargain.
5. Earlier The Cheaper:
The earlier you buy a life insurance cover, the cheaper it is for you. While you are still young, there is a very low chance of you getting diagnosed with various diseases. So it’s always better to take insurance earlier, so you do not have to spend much when it comes to premium payment, it will be affordable.
6. Insure Your Business:
Insurance is a very handy tool if you have a partnership business. You can take insurance on your partner’s life, so that if he/she passes, the company can use that money from the claim to make up for the loss of the deceased partner. The money can also be given to the nominees of the deceased’s family, this way they do not have to give them a share in the company.
7. Regular Income:
Apart from your basic cover, insurance also provides you with regular income. So if the insured passes away, the family members will get the death claim as well as regular income will be provided to the family. This way the family can use the claim for the immediate expenses and the regular income for their monthly expenses.
8. Sometimes It Can Be Too Late:
The famous phrase ‘It’s never too late’, but in insurance, it can be too late. Do you think a person at the age of 55 or 65 or 75 years of age can get an insurance policy easily? No insurance company will take that risk, and even if they do, then the premium amount will be so high, you might not be able to afford it. So don’t wait for it to be too late.
9. Back Up To Fund Long Term Goals:
Now you may think, we have investments for that. But a lot could go wrong with your investments. In this case, we will consider how an insurance policy, can come to your rescue. For example, you are investing through SIP, to achieve a certain goal in say 10 years down the line, after 5 years, you pass due an unfortunate accident. Now from where is your family going to get the funds to continue that SIP, and how will they be able to reach that goal? But if you had an insurance policy, your family can use the death claim amount to continue with the SIPs.
I think these reasons are more than enough to at least think of buying insurance. You may have had bad past experiences with insurance, but now you are aware of the options available to you, which can help you plan accordingly. So if you still have doubts about your choice, then always consult an adviser, they will guide you in making the right choice. So get insured and get that ‘Peace Of Mind’ in return.
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.
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!