Insurance Awareness Day: Are you protected from these risks?

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Insurance on a subtle level provides financial security to an individual and acts as a protection tool against various risks in life. With adequate insurance coverage, you can have a better approach towards creating wealth for your life goals and not worry about the life risks that may arise at any time.

There are different kinds of risks that one needs to guard against. And, this is best met through an insurance policy by incurring a cost that is generally a fraction of the protection that you would get. There are at least five key life risks against which there are insurance covers that each one of us should have. On the occasion of Insurance Awareness Day, let’s visit each of them and see their importance in our lives.

Health insurance

Even before you start saving for life goals such as children education, home buying etc, buy health insurance for self and all family members. Having adequate health insurance for self and family is the first step towards managing risks. Medical inflation has always been rising above regular inflation and the cost of hospitalization owing to Coronavirus has pushed it further. Buying individual health covers or Family Floater plans along with Critical Illness plans is the need of the hour. For those who already have health covers, it is important to enhance coverage by opting for a Top-up or Super Top-up plan.

Life insurance

If you have financial dependants, do not procrastinate on buying a life insurance plan. Along with health cover, get adequate life insurance cover preferably through a term insurance plan. A term plan is a low-cost, high cover plan and ensures financial protection to the family. One may even opt to add Riders such as accident benefit, critical illness, etc to enhance the coverage of a term insurance plan. As a thumb rule, keep the life cover of at least 15 times of one’s yearly income but for other life goals, you may go for an additional amount.

Motor insurance

Whether you own a bike or a car or even both, running them on road without the third-party motor insurance policy is illegal as it is mandated by law to not drive a vehicle without it. Also referred as a ‘liability only’ policy, in case of an accident, the legal liability towards third parties is covered in it. But, if you want to cover damage to one’s own vehicle also, you will have to buy the motor ‘package policy’ or a comprehensive policy. In this, the loss or damage to the vehicle insured in addition to all the covers provided by a ‘liability only’ exists. One may attach certain add-on to the motor policy at an extra premium to get additional benefits at the time of claim such as zero depreciation, engine protection, return to invoice, protection of no-claim bonus, roadside assistance amongst others.

Home insurance

Once, you have the health, life covered and even got your car insured, time to look at your home. There are household or home insurance plans to not only cover the structure of the building but also the contents inside the home. The risk to the structure of one’s home can be from fire, earthquake, flood etc. Buying a home insurance policy allows either insuring the structure (of the building) and contents separately or insuring them both. The coverage for insuring only the structure is up to 10 years and one may pay a premium annually or as a lump sum after getting a discount. The contents of the valuable personal property may include furniture, clothing, music system, computer equipment, jewellery and more.

Personal accident insurance

Life insurance policies cover death which may be natural death or an accidental death. There are specific insurance policies that provide a death benefit to the nominee in case of death due to accident only. Such plans are called personal accident insurance plans and in addition to accidental death, they also cover disabilities. After all, an accident may leave an individual disabled thus impacting the earning capacity. Personal accident insurance policy helps meets the need for replacing the loss of income in four ways — death, permanent total disability, permanent partial disability, and temporary total disability.

Conclusion

To keep your worries at bay while you focus on building wealth to meet your life goals, ensure you have at least these five insurance plans so as to guard against the risks from all fronts. Buying them means you are protecting your wealth from getting exhausted at the time of any financial emergency.