Some life insurers have started bundling health covers for specific critical ailments with your life insurance policy. While this might be a welcome move to safeguard the interests of a large section of individuals who don’t opt for comprehensive health covers, it is better to keep your objectives and focus clear when buying insurance to cover our risks.
Indians are largely underinsured in all respects. However, it makes most sense to keep your insurance covers simple and uncomplicated. You must be clear what you need the cover for and ensure that the risks you have identified are covered. Don’t complicate your policy with addons that you don’t really need, or which are not your priority.
So far as life covers go, it is best to opt for a term plan and not try to confuse insurance with a savings product. To critically evaluate an insurance-cum-savings product, you must evaluate the cost of insurance with pure term policies and the savings component with comparable in- vestment products. As this isn’t always a very simple exercise, it is best to plan your finances using vanilla insurance and investment products.
Among the various term insurance products on offer, the key riders to consider are accidental death and disability benefits offered. The critical illness and terminal illness benefits and the waivers offered on premiums under specific circumstances. What you must also look out for is the maximum age of the cover. While many insurance products offer cover only till the age of 65 years, there are several others that have a maximum limit of 85 years. From a risk management perspective, the longer the tenure of cover the better for you.
Term insurance policies can cost as low as Rs 600 per month or just about Rs 7,000 per year for a 30-year old with a Rs 1 crore sum assured. And therefore, it is best that a life insurance cover is bought by as soon as you start your work-life. As life progresses and your income increases, you can always enhance the cover to address swelling future expenses of your dependants and factor in inflation.
Make sure while choosing your cover that the insurer has a good track record of claims settlement, both in terms of paying the policy amount and the speed of settlement. Also, be honest. Honesty is the best policy when it comes to sharing details for your policy purchase. With- holding any important information at the time of purchase can come to haunt you when the claim comes up for settlement.
This can be an unnecessary botheration for your loved ones even when in- accurate details are provided without any malafide intent. Stay true and simple when it comes to your life protection. After all it is your most important asset.