Let's Check How Insurance Savvy You Really Are

When you start earning and planning your investments, your family, close friends, and financial advisor will ask you to get insurance cover or term insurance. They will recommend getting insurance for your health, life, and even your car. But you believe that you are healthy, young, and a good driver, so getting insurance is a waste of money. Why would you need insurance?

Life can be unpredictable. Therefore, getting insurance is imperative. It is a safety net that will support you during crises by offering financial security when you need it the most. If you are diagnosed with a disease and need expensive treatment, health insurance will enable you to pay for it.

If getting insurance is crucial, it is important to be insurance-savvy for yourself and your loved ones. 

What is Insurance?

Insurance refers to paying a monthly or annual fee to an insurance company to ensure coverage for your health, life, car, etc., for a specified period. On the other hand, the insurance company will pay for any financial damages related to health or material risks, whether medical expenses or auto repairs. You are transferring your risk of incurring a financial loss to the insurance company in exchange for a fee you pay them to bear that risk. This fee is called the premium.

Why is Getting Insurance Important?

While some people believe that getting insurance is an unnecessary expense or that one should get insurance only when they are older, buying insurance in a crisis provides much more than just financial support. It gives you peace of mind, and you can get your life back on track without worrying about how you will procure funds to solve your problems. For example, a medical emergency in your family could deplete your savings. Health insurance can help you pay for the treatment while ensuring that your loved one focuses on getting better.

The primary reason for buying insurance is that it provides financial stability. It provides financial stability to you and your family. In case of an unfortunate event or untimely death, insurance will ensure that your family members will be able to pay off debts, restart their lives, or have something to fall back on. Insurance reduces your burden during difficult times.

What are the Different Types of Insurance?

There are several types of insurance. Everyone should have health insurance, life insurance, car insurance if they own a car. Let’s look at these types of insurance in detail.

Life Insurance

Life insurance or term insurance, as it is often called, is the most fundamental protection you can give your family. It shields your family from life’s uncertainties. If the policyholder passes away and his/her death is covered in the term plan, the nominee receives the promised amount.

The policy sets a premium amount that you will need to pay the insurance company at regular intervals. It is a universally accepted concept that helps mitigate the financial risks your beneficiary might face in your absence. Life insurance provides survival benefits to the one insured under the premium plan. These survival benefits are tax^*-deductible under Section 80C of the Income Tax Act, 1961.

If you are your family’s primary provider, you must buy term life insurance. It is important to get the right coverage. The right coverage would factor in your loans, mortgage, credit card debt, taxes, dependents, and any other liabilities you may have. Once you have this estimated number, you can look at term insurance quotes and find a term plan that suits your requirements well. So, in your absence, your family will not be burdened with these payments.

Health Insurance

Medical treatments and hospitalization are not always affordable. Instead of paying humongous medical bills, you should rather pay a premium to an insurance company that would take on this financial risk for you. In a health crisis, the insurance company will bear the burden of your medical expenses. The best time to get health insurance is when you are young and starting your first job. At this point, you are healthy, you will get better coverage. You may not even need to undergo medical checkups due to your age. It is crucial that you get health insurance for yourself and everyone in your family.

Car Insurance

At times, maintaining your car is almost as expensive as buying a new car. Car insurance or auto insurance provides you with the assurance that the insurance company will bear the cost of car repairs. As with any other insurance plan, there will be predefined clauses. You will pay a set premium towards auto insurance. However, this is non-refundable.

Insurance plans may seem like they come with high premium costs, but it is important to remember that they will protect you from higher costs in the future. Understand your requirements, research, and buy only when you are confident in your knowledge of insurance. Buy plans that work well for you and your family and secure your financial future.

People also ask:

How do I know how much insurance I need?

What is the maximum amount of life insurance I can get?

What are the major types of insurance?

L&C/Advt/2021/Jun/1047