Should You take Insurance for yourself or for family members? If yes, which type of insurance and How much of is sufficient? Click to know more 👇👇👇
Should You take Insurance for yourself or for family members? If yes, which type of insurance and How much of?
Everyone must have a word as "Insurance". This is a very very powerful word and only the people who had insurance and got benefited can only tell you.
So what is Insurance?
In my opinion, Insurance is an opportunity and a protection. As per experts, it is a protection plan that is taken to get benefits when there is an unfortunate event or risk that might happen.
Even they say that by buying insurance plan, you transfer the risk for your life, health, assets or liabilities to someone who is more than capable of handling such situations. As an Individual, you may not trust another individual to handle your risks but we normally trust the insurance companies who handle such kind of situations for many unfortunate people or families and have a good track record.
There are two types of risks burdens in insurance term and they are :
1. Loss is already occurred like car accident is already happened or a person has died already, etc.
2. Loss that might happen in future
Hope, you got some high level idea about insurance.
Now the question arises, should I /you take Insurance? If so, what for, how much of, for whom etc...
Yes, I can certainly understand your concern. I am assuming that you all love your family members, assets, liabilities and of course yourself too. How can I miss you? 😉
So, it becomes evident that we need to ensure our family members or ourselves that if any kind of unforeseen circumstances come up, then our family members or ourselves are fully taken care of and should not face any issues in case of emergency or absence.
There are 2 types of major insurances available in India and they are Life Insurance and General Insurance. Most of them coming under these two are not applicable to everyone.
Those insurance vaguely named as:
1. Life Insurance
A. Term Life Insurance
B. Whole Life Insurance
C. General Life Insurance
D. Endowment Plans
E. Unit linked insurance plans
F. Child plans
G. Pension plans
2. General Insurance
A. Health Insurance
B. Motor Insurance
C. Home Insurance.
D. Property Insurance.
E. Fire Insurance
F. Travel Insurance
G. Commercial and Agricultural Insurance
H. Pet Insurance
I. Assets and Liabilities Insurance
Out of these all above, there are 2 insurance plans which I will request and urge everyone to take and they are:
1. Term Life Insurance
2. Health insurance
You can take other types of insurances, although not everyone would have those related things and is not applicable to everyone, but a few of them are really important insurances which we will discuss in below.
So what is Term Life Insurance?
This is a kind of life insurance which will cover you and your family in a bigger aspect with a very less premium.
Meaning let's say a person named "Sumit" aged 25 has taken a term life insurance of 2 Crores as regular premium till 70 years and made his parents as nominee. So, for this insurance, he pays around 17000 to 18000 rupees yearly. After 2 years, he gets married and after one more year he got a baby girl.
So, he now changed the nomination to his wife and children names.
After 10 more years, he met a road accident and he left his life by leaving his 10 years old girl and wife.
So, you can now understand how painful it will be for his girl and wife to sustain in this world. They will have regular monthly expenses, debts if any, girl's education, her marriage etc. How are they going to manage all these without Sumit?
As there is a term cover of 2 crore taken by Sumit, who was the single bread earner of the house, in his absence his family will get this 2 crore rupees. Suppose, his wife age was 38 then she can split the 2 Crore rupees as two different amounts.
a. She can create an annuity for 1st 60 lakhs of rupees for 8 years, where she will get around 9.5-10 lakhs of rupees by considering 9% as return rate. This means that she can keep this amount in an auto sweep account in any bank.
She will create this annuity by thinking of her daughter's higher education and marriage, which she won't touch anytime.
Now think, after 8 years you would have received total around 78 to 80 lakhs from the annuity plan, and how much interest you would have earned from bank auto sweep fixed deposit.
If possible, I can also suggest you to do an FD or KVP to make your 60 lakhs investment doubled in 8-10 years.
To know more on high interest FDs, please click here :
To know more about making your money doubled guaranteed using KVP, please click here :
Double benefits guaranteed by government. Get your money doubled in these many months
If you also have a Sukanya Samridhi Yojana with your girls name, then you won't have any monetary issue during your girls growth or for marriage or higher education.
To know more on SSY, please click here :
b. She can create another annuity of 1 Crore 35 lakhs rupees for 30 more years, where she will receive over 12 lakhs of rupees every year by considering 9% as return rate.
Isn't it amazing? You left the world but you took care of them even during your absence.
Your child can pursue a good higher education which you supported her by staying at the back.
Similarly, if your wife is also a working woman, you can take a term insurance on her name to keep yourself and your family members insured.
I will always recommend you to take up a term insurance with regular plan meaning every year you will be paying the same premium till maturity even though you can take other team insurance plan of limited period payment or return of premium paid. I will explain some other time why this regular premium payment is better than limited period payment or return of premium paid.
You might feel the premium amount a little at higher side initially, but down the line this 18k rupees won't bite your pocket too much. The sooner you take that up, the lesser the premium would be.
Few more benefits also are like,
1. The premium you pay every year are exempted under IT Tax section 80C.
2. The maturity or bonus received from the claim are tax free under IT Act Section 10(10)D.
3. If you have any home loan or any sort of loan, this maturity amount will ease your burden, and you can repay from there.
So, bigger question is, How Much Of Term Cover One Should Take?
As per my recommendation, you should take 20-25 times of your gross salary per year. Let's say, your yearly salary is 10 lakhs, then you should take at least 2 to 2.5 crores of cover. Even you can take 3 crores of cover too.
If money is a problem, and you already have some investments running, then you can take bare minimum of 15 times of the cover, which is 1.5 crores.
I recommend everyone to consider the Term Life insurance first even before investing anywhere.
What is Health insurance?
The name itself has "Health" in it. Meaning, if any sort of medical emergencies come, the expenses due to this or any illness are covered in Health insurance.
In today's world, every person is facing any kind of medical emergencies or having illness/diseases during his/her lifetime. Now think, if he/she is admitted to the hospital and there is no health insurance taken then entire expenses to be borne by the person.
Example: Suppose Sumit is 40 years old and he has taken a health insurance of 5 lakhs per year. Even his company also provides an additional 3 lakhs of cover. He had some issue related to liver and was admitted to hospital.
After 15 days of treatment, he was discharged from hospital and total expenses was around 4 lakhs. He had only to pay around 22 thousand rupees for the non-covered items and the rest was taken care by the insurance company.
Similarly, Gurmeet is also 40 years old who owns a shop and she has not taken any health insurance. She got tumor in her stomach and stone at the same time. She is now told by the consulted doctor to be operated asap.
After 5 days of operation, she was discharged from hospital and total bill was 1 lakh 80 thousand rupees. This is the entire amount she has to bear. Think of any amount even higher also to be paid by her self if hospital would have asked based on the criticality and severity of the disease.
So, for Sumit, it worked as a saviour, and it will work for you too if you take health insurance.
You can take health insurance for yourself, for your family members or for a group like your entire family. Just assess the cost, features and do a comparison between individual plans and take the policy accordingly.
Today, I have given you a lot of knowledge and suggestions for securing yourself or your family members before investing in any other investment instruments and make yourself and your family members worry less.
Please click on the link below for more details on other important insurance products which you should consider.
Conclusion :
In this post, I have shared with you the details if you should take Insurance or not, and if yes, how much. I will come up with subsequent blogs soon. If you like our post, then do share it with your friends and family and stay connected with our website (newswisestories.blogspot.com) to get other such lovely and exciting information related to Insurance.
Happy Investing 🙏
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