In view of life and well being uncertainties, insurance coverage is a should for everybody’s monetary plan. It affords the much-needed monetary cushion ought to an unlucky occasion happen. However, salaried staff usually face a dilemma as to what share of his/her wage ought to go in the direction of fee of life and medical insurance premiums. More so within the wake of quickly rising value of residing throughout cities.
Experts say that purchasing insurance coverage with low sum assured is not going to assist in the long term. When it involves medical insurance, the thumb rule is that 2-5 % of your month-to-month revenue ought to go in the direction of medical insurance protection. But that is only a thumb rule and one can fluctuate it in keeping with their present requirement based mostly on members within the household, particularly elder members.
“While buying health insurance, it is important to take the future value of money into account. Any treatment that costs Rs 5 lakh today, may cost over Rs 50 lakh 18-20 years later, given the skyrocketing medical inflation. It’s advisable to go for a minimum sum insured of about Rs 10 lakh, and this can go up to Rs 25 lakh. If your pocket allows, you could go much higher as well,” Vivek Chaturvedi, Head of Direct Sales at Digit Insurance, informed FE Online.
Experts say that {that a} increased sum insured doesn’t translate to a proportionate rise in premiums.
“As a rule of thumb, we would advise going for a sum insured that is equal to your annual income. If you buy a Rs 10 lakh cover at age 25, you’re likely to spend anywhere between Rs 700-1,200 a month based on the insurer you opt for,” mentioned Chaturvedi.
“It’s also important to look at top-ups to enhance the cover and maximize benefits if you only have an employer-offered cover or a cover with lower sum insured. Top-ups are an affordable way of enhancing your health cover,” he added.
Rakesh Goyal, Director at Probus Insurance, mentioned one wants no less than Rs 10 lakh cowl for the household and top-up or tremendous top-up if wanted. Generally policyholders ought to spend round 8-10% of their revenue on insurance coverage want.
Life insurance coverage
Experts say that purchasing the insurance coverage for decrease sum assured is not going to clear up long run objective of their monetary planning.
“While looking at buying the life insurance, one should not just look at the affordability of the premiums. Policyholder should ensure that the cover is enough to meet family’s financial requirement as well as repay all debt when he is not around. Typically, life insurance should be around 10-15 times your annual income. So if someone is earning Rs 10 lakh per annum he should have a life insurance cover (term plan) of Rs 1-1.5 crore,” Goyal mentioned.
However, premium shouldn’t be the one issue to be thought-about whereas shopping for a life plan.
“Premium should not be the only factor to arrive at the coverage, other factors like pre-existing conditions, medical history, and hereditary ailments that may crop up in the future matters. For life insurance again, the premium should not be based on the percentage of salary but on the existing and future liabilities such as home loans, education for children, and so on,” mentioned Vijay Singhania, Chairman, TradeSmart.
Motor insurance coverage
When it involves motor insurance coverage, third-party insurance coverage is necessary for plying on Indian roads. Other than a third-party cowl, it’s additionally vital to purchase an own-damage cowl that protects you and your automobile towards any damages triggered because of accidents, hearth, pure disasters, theft and so forth.
“Ensure that the sum insured you opt for is as much as the market value of your car. Based on the make and model of your vehicle, you may have to shell out anywhere between Rs 10,000-20,000 a year. When it comes to non-life insurance, the complete insurance needs of a family can be fulfilled by spending 3-4% of the family’s income if the household earning is Rs 12 lakh per annum,” mentioned Chaturvedi.
Source: www.financialexpress.com”