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Why you must buy Insurance ?

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Have you got clumsy hands? Does your mobile slip too often? How do you protect it? With a mobile cover and a screen guard. Some even go to the extent of insuring their gadget. All this, because you absolutely love your phone.

How about insuring your life. Most of us think, life insurance is for old age. But this is not the truth. All our life we constantly work hard to earn money for our family but the thought of securing their future with a plan comes seldom.

Insurance remains the most ignored part of investment planning. Insurance penetration marginally rose to 3.4% in 2015 from 3.3% in 2014. While penetration for life insurance stood at 2.7%, it was below 1% at 0.7% for non-life insurance, as per IRDAI Report 2015-2016.

Although planning should begin with insurance, most of us do not realise the need for it. It's a stark reality but most of us buy insurance for tax planning only. The fact is that insurance is not for us, it's for our family.

Financial planning without insurance is futile. Though investment and insurance are two different concepts. Both complement each other and the key for wealth creation lies in finding the right balance. Securing the future is as important as investing for it.

Insurance pays in future by acting as a financial backup for the family's wellbeing when you are not around. Insurance gives the much needed financial support at the time of emotional disruption for someone losing his loved one.
The money received by the family can be utilised to repay a loan or any bigger liability when the breadwinner is no more there.

Even in the absence of the earning member, money goals can be fulfilled if the future expenses are secured with a life insurance plan in time. There is no right age to have insurance. One should buy insurance the day your family is financially dependent on you. You can nominate your parents, spouse or children.

Most financial instruments including bank savings accounts, demat accounts, PPF, even mutual funds ask you to name a nominee. But since it's not compulsory, we usually miss out on the same. In case of insurance, it's mandatory by regulation to name a nominee. This helps in smooth transfer of money to your chosen nominee in case something happens to you.


There are mainly two types of insurance: Life and Non-Life. Life Insurance plans include endowment, whole life, term plans and ULIPs. While Term Plans act as life cover . Endowment and Whole Life Plans are long-term plans that come with wealth protection features. Many of these policies over guaranteed returns, thus affecting the overall returns. Among non-life insurance, health plans are the most common.

Today, when investments are shifting to the online platform and all the receipts are delivered in email account, the world of insurance has changed too. You can buy insurance at the click of a button.

You can buy all kinds of insurance online. For the aggressive investors ULIPs can be a great bet. Unit Linked Insurance Plans are participating plans that can garner smart returns, comparable to mutual funds, because of the equity advantage. ULIPs invest the premium paid by you in different funds and the fund value depends on the stock market performance.


Experts believe, equity market has the capability of giving double digit returns if held for more than 10 years.

While MF provide good returns, there is no life cover attached to it. On the other hand, in case of ULIPs either the higher of the cover amount or the fund value of the ULIP is paid out, or both the fund value and cover amount is paid out on death –depending on the type of ULIP chosen.

A family floater usually covers spouse, children and dependent parents. But it's wiser to buy separate policy for senior citizens in the family. As the premium is calculated according to the age of the oldest member. It's always better to add a health insurance plan to your portfolio at the earliest to get the age advantage. Health insurance is of great help in case of an emergency.

You can choose from cashless and reimbursement option on case of mediclaim. All that is required is 24-hour hospitalisation for the members covered in the policy. Though the penetration is still on the lower side, skyrocketing medical inflation has made it more of a necessity in metro and tier one and two cities.






SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

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