Articles September 27, 2019

Top 5 Types of Insurance Policies that is a must-have

Insurance is like your Plan B. If everything goes all right, your Plan A would work. But in case of any emergency, your backup plan should be prepared. But what risks must you insure? Here are the Top #5 types of insurance policies that is a must-have for you…

Most of us spend a considerable amount of time, trying to figure out ways to expand our wealth. This usually means, investing your money in different financial instruments. Depending on your needs and requirements, you can opt for some instruments that fetch higher returns with higher risks or lower returns with lower risks.

Safeguarding Your Interests

However, just investing in financial instruments is not the only way of expanding your wealth. Protecting all the important assets in your life plays a crucial role as well. On one hand, if you keep investing and leave certain assets unsecured or not protected, you might endure greater losses than profits that you can make via those investments.

Thus, safeguarding your assets is as important a step as investing your money. Buying insurance for your important assets is one of the smartest ways of doing so. The presence of an insurance plan will ensure that you are not taken back by any sudden mishaps, both mentally and financially. Here are the top 5 insurance policies that you must have.

Life Insurance

A life insurance plan is without any doubts one of the most important insurance plans that your money can buy. You should buy a good life insurance plan irrespective of whether you are the bread earner of the family or not. Life insurance protects the financial interests of your family at the time of any unforeseen events. Here are some reasons why you should consider a life insurance plan.

  • You have any existing loans such as home loans, auto loans, student loans, etc.
  • You are a regular contributor to the household expenses.
  • You have people dependent on you.
  • You plan to build a sturdy corpus for the future.
  • You plan to start a family shortly.

Expert Tip: Life insurance coverage needs to be at least 20 times your annual income, so that in case of an emergency, your family is at least financially protected!

Health Insurance

Given the ever-increasing costs of healthcare in the country, one unfortunate visit to a hospital can quickly evaporate your savings. If you do not have a health insurance plan, it is quite easy to lose most of your savings in a flash. And then there is the fear of not getting the best possible treatment. Unlike the common misconception, young people need health insurance as much as older people do. Should you buy your health insurance early, you will spend a considerably lesser amount on premiums and without giving up on certain coverage types.

Expert Tip: Consider critical illness as well as personal accidental coverage while opting for your health insurance coverage as well.

Home Insurance

A home is without any doubts one of the largest investments that you will ever make. While the asset might be expensive, there are a lot of benefits to having a home. Thus, securing it with home insurance is a smart choice. If there are any damages to your home or certain items are stolen, it can not only dishearten you but also make your pockets lighter. A good home insurance plan will ensure that your home and its contents are safe.

Expert Tip: Home insurance is one of the most lesser-known insurances in India. However, the implications can be super high in case of an emergency. Since, the premium is very low for home insurance, it is better to opt for the same and be safe than sorry!

Auto Insurance

There are even more reasons to buy auto insurance now. Whether you have a two-wheeler or a four-wheeler, it is essential that you buy insurance for the same. As mandated by the Government, it is mandatory to have auto insurance for your vehicle, at least a third-party cover. Failing to do so will cost you dearly now.

The Motor Vehicles Amendment Act of 2019, came into effect from the 1st of September, and it penalizes heavily for driving without valid insurance. So, if you are caught driving without valid insurance, be prepared to cough up INR 2,000 for the first offense and INR 4,000 for the second offense. Buying a third-party cover for your vehicle is way cheaper.

Expert Tip: It is way better to opt for a comprehensive motor insurance plan than a third-party only, even though it is more expensive because that way damages on your vehicle would also be covered!

Accidental Insurance

There are certain workplaces or occupations, where you are exposed to a higher level of risks than others. Buying accident insurance would help you fight out any such fears. You can even club your accidental insurance with other policies such as a term plan. In most cases, it would double the coverage of your plan.

Expert Tip: Certain credit cards and other financial instruments offer accidental insurance but that is linked to the transactions, minimum balance, etc. So, to avoid any confusion, it is best to opt for a stand-alone personal accident plan of your own!

The first and foremost step is to understand the need for buying insurance. Buying the above insurance types will protect some of your biggest vulnerabilities and keep you and your finances secure.