Why Insurance

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Insurance is a highly misunderstood product, and it's often bought and sold for the wrong reasons. At the same time, it's a very important part of your life, and you must know certain ground rules for making the right decisions in the new year. Many of us consider insurance just another investment for tax savings. Our day-to-day lives are full of unpredictable risks, for example, loss of life, loss of income, critical illness, disability, etc. Insurance planning means figuring out adequate cover against "insurable risks" and getting the most out of the premium you pay. Tax exemption is just another aspect of it. Having the right insurance cover gives you peace of mind as it provides financial support in case of contingencies.

Life insurance is a replacement for your income. When your income ceases or falls insufficient either due to death, illness, retirement, or a major goal such as a child's education or marriage, insurance fills in the gap. On your death, the money received from term insurance policies will provide a corpus with which the family can pay off debts, convert dreams into reality, and still lead a comfortable life. You must have seen cases of non-working mothers or non-earning family members getting insured. It goes against the fundamental principle of insurance. Therefore, it's important that the breadwinner covers the risks to his life and income so that his family's quality of life is not compromised after he is gone.

Calculating life insurance needs is not a simple exercise; you must evaluate your current and required coverage in 2010 and take corrective action. Remember that each of us has our own lifestyle, goals, aspirations, and dependents, which may be completely different from the life situation of your friend or colleague. So what works for someone else may not work for you. There are essentially three ways to calculate your insurance needs.

  • Expense Protection

  • calculates the corpus required to take care of the family's future expenses and goals. Inflation diminishes the value of money, and hence expenses need to be adjusted to inflation for the calculation of protection required.

    Expense Protection
  • Human Life Value

  • It is the economic value of an individual; the present value of all his or her future income. Setting aside the part of income one spends on oneself, the protection required through human life value calculates today's value of one's income for the years till his or her retirement.

    Expense Protection
  • Needs Analysis

  • In this method you calculate your needs by considering each of your dependents and what financial milestones you want to achieve for them. The needs may range from child education, marriage to repayment of loans. Next you assess your current assets and investments and shortfall due to loss of life. This gap in income can be filled up by insurance.

    Expense Protection

Ideally, insurance must be taken to cover the working period of one's life. You take insurance to protect your dependents from the loss of your income; using the same logic, you take insurance for the time that the dependents are being supported by your income. Hence, it is advisable to take insurance until one's retirement. However, when insurance is taken for protecting and saving towards specific goals, then the tenure of the plan should match the years left for meeting the goal.

Choosing a product will depend on the specific need and the life stage one is in. What is the final product you will choose? When there are multiple choices that match the need, it is affordability that makes the final choice. Most importantly, individuals must be aware of the purpose of the insurance they are buying. They must know that life insurance products for investment and savings are structured for the long term and meant for someone who is earning and whose earnings are supporting his or her dependents.

To be able to prescribe the best insurance products for an individual or family, a financial plan is necessary. Any advisor needs in-depth knowledge and understanding and proper prioritization of all aspects of your life. The probable duration of life, amount of security needed, present and future needs and shortfalls, and post-retirement requirements are also essential pieces of information to be collected. Knowledge of the "markets," mutual funds, and economic climate, coupled with comprehension and application of HLV (human life value), expense protection, and corpus requirements for retirement, helps in prescribing an effective solution. With the awareness of the need for proper investment service on the rise, coupled with the plethora of insurance products available, it is imperative that you take any decision after doing your home work or engaging a competent financial planner.

In A Nutshell

  • It is very important that you are adequately covered, as inadequate cover is equal to no cover at all.
  • Insurance planning is the first step towards investment service, and investment service should be the first step towards purchasing insurance. To advise an individual on his or her insurance needs, it is important to get a holistic view of the present and the future.
  • Insurance requirements must be reviewed every two years or when there is a change in the family scenario, for example, the addition of dependents.
  • The insurance requirement changes with every change in your life: income, expenses, lifestyle, members, liabilities, and assets.

Why Insurance

Insurance is a smart way to protect yourself and your family from money problems in the future. It helps you stay safe during medical emergencies, accidents, and unexpected events. By paying a small amount regularly, you get financial support when you need it the most. Insurance is not only a safety plan for today but also a strong step for a secure future.

Financial Safety for You and Your Family

Life is uncertain. A sudden illness, accident, or death can create serious financial stress. Insurance gives financial support during such difficult times. It helps your family manage daily expenses, education costs, loan payments, and medical bills without pressure. With insurance, your loved ones remain protected even when you are not around.

Importance of Life Insurance

Life insurance provides financial security to your family after your death. It ensures that your family does not suffer because of a loss of income. The payout from life insurance helps in managing household expenses, children’s education, and future goals. It also supports long-term savings and gives tax benefits. Life insurance is essential for every earning person.

Importance of Health Insurance

Health insurance covers medical expenses such as hospital bills, medicines, tests, and surgeries. Today, medical treatment is very costly. Without health insurance, even a small illness can disturb your savings. Health insurance helps you get quality treatment without worrying about money. It also covers emergencies, day-care treatments, and serious illnesses.

Difference Between Life and Health Insurance

Life insurance gives financial help to your family after your death. Health insurance pays for your medical expenses while you are alive. Life insurance protects your family’s future income. Health insurance protects your savings from medical costs. Both are important and should be part of your financial planning.

Why Buying Insurance Early Is Better

Buying insurance at a young age is always better. Premiums are lower when you are young and healthy. You get longer coverage and better benefits. As age increases, health risks and policy costs also increase. Early insurance gives long-term protection at a lower cost.

How Insurance Builds a Secure Future

Insurance helps in proper financial planning. It supports savings, investment goals, and emergency needs. With insurance, you can focus on your career and family without worrying about sudden expenses. It brings peace of mind and stability in life.

Protection Against Rising Medical Costs

Medical costs are increasing every year. Even a normal hospital stay can cost a large amount of money. Treatments, medicines, tests, and surgeries are becoming more expensive. Without health insurance, people often have to use their savings or take loans. This creates long-term financial stress. Health insurance protects you from this problem. It pays most of your medical expenses and helps you focus on recovery instead of worrying about bills. With cashless hospital facilities, you can get treatment without paying money immediately.

Support During Critical Illness and Emergencies

Critical illnesses like cancer, heart disease, kidney failure, and stroke need long and costly treatment. These illnesses not only affect health but also disturb income and family life. A good health insurance plan gives support during these serious conditions. It helps cover hospital stays, medicine costs, and follow-up treatments. In case of accidents, insurance pays for emergency care. This support is very important when quick medical help is needed.

Tax Benefits with Insurance

Insurance also helps you save tax. Premiums paid for life insurance and health insurance can be claimed under income tax rules. This reduces your total tax amount. Health insurance also gives extra tax benefits for senior citizens. By buying insurance, you not only protect your life and health but also reduce your tax burden in a legal way. This makes insurance a smart financial decision.

Key Points: Why Insurance Is Important

  • Insurance protects you and your family from sudden financial loss.
  • It helps during medical emergencies and accidents.
  • Life insurance secures your family’s future after your death.
  • Health insurance saves your money from high hospital bills.
  • Insurance supports long-term goals like education and retirement.
  • Buying insurance at a young age gives lower premium benefits.
  • It reduces financial stress during difficult times.
  • Insurance also provides tax benefits as per government rules.
  • Family plans cover all members under one policy.
  • Insurance gives peace of mind and financial stability in life.

Our Commitment to Your Safety

We believe that everyone deserves proper insurance protection. Our team helps you understand every policy in simple language. We guide you in choosing the right life and health insurance based on your needs. We also support you during the claim process so that you do not face any trouble. Your trust is important to us, and we stand with you at every step.