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6 types of insurance covers we must know

I saw an article the other day, “10 things you must have in your wardrobe”, which got me thinking, we should have a similar list for Insurance too. Though it cannot be a must have list, since not every Insurance is meant for all, but nevertheless here are some products we all must know about and have, if relevant to us.

Life Insurance

If you earn an Income and have someone who depends on your income for a living, make sure you have life insurance. A dependent could be your spouse, children, parents, siblings or anyone. Life insurance is a product where you pay a regular premium and the insurance company promises to pay lump sum compensation or regular payouts to your dependent after your demise. The simplest kind of life insurance, which you can buy is Term Insurance-. It is inexpensive, not linked to any investments and simple. You can use our life insurance calculator to find out how much life insurance cover you will need.

If you buy an insurance product, you will not get anything out of it in your lifetime. It isn’t meant for you; it is meant for your dependents. So, insuring the life of kids, people without income or buying combination insurance products which give you some returns are huge mistakes.

Medical Insurance

It is relevant to almost everyone in today’s age but it may be difficult for you to get medical insurance if you have a pre-existing health problem or are a senior citizen. This product covers your hospitalization and related bills up to the amount which is mentioned as the cover. Taking this insurance offers you safety against hospital bills wiping off your bank balance.

However, you should know that, medical insurance covers only hospitalization, not the expense on your cough, cold medication etc. This is a technical product with lots of terminology and clauses so please ask, research and then buy. The best way to get most claims funded is to ensure that you continue to pay premiums.

Accident/ Disability Insurance

Both these are relevant to people for whom Life Insurance is relevant. In case the insured dies in an accident, accident Insurance will make a one-time pay to the family of the person insured. Accident Insurance can be bought individually or as an addition to a Life Insurance Policy.

Disability insurance is a policy very similar to accident insurance but is triggered when person insured incurs a disability and is unable to earn an income. It is usually bought as an addition to an accident insurance or a life insurance policy.

Don’t buy this product if you don’t have dependents. If you buy it as an addition to your life insurance policy; please make sure you read all terms and conditions.

Loan Insurance

Meant for anyone who has a big loan, usually a Home Loan in their name. This policy is designed to take a one-time premium, usually and pay off the loan against which it is taken, if the borrower dies before paying off the loan. A loan insurance protects dependents against incurring debt while paying off the loan.

You should buy this product at the time of taking the loan or in early stages of loan. If you have only a couple of Lakhs left to pay, don’t bother with buying this product.

Property Insurance

It is relevant to anyone who owns a property, as it compensates them against damage to property due to reasons specified in it. A highly technical and specific and you need to read every last word in fine print before you buy it.

Motor Insurance

Here we aren’t speaking about third party insurance, which is mandatory to have, as per law. We are speaking of comprehensive coverage for anyone who owns a four wheeler. A policy like this compensates the owner against repairs, breakdowns and damages due to accidents.

This kind of policy has many conditions and specifications, make sure you read offer documents carefully.

Things to keep in mind

  1. Always buy Insurance, which is relevant to you
  2. Everybody should be insured, is a myth.
  3. Always compare policies before you buy.
  4. Please read the policy documents carefully and if you need to act, do it within the free look period.
  5. Do not take or give advice on Insurance casually.
  6. Always remember Insurance is not an Investment.
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