Skip to main content

Take sufficient Insurance Coverage

There are hosts of insurance products available to meet such needs. Equally important is the amount of sum assured. Unlike developed countries, most Indian don't pay much attention to having an adequate insurance cover. 

Individuals need insurance to protect them against the risk of dying early, risk of living long, risk of surviving a dreaded disease, risk of living with total and permanent disability, risk of high medical expenses, so on and so forth. There are hosts of insurance products available to meet such needs. Equally important is the amount of sum assured. Unlike developed countries, most Indian don't pay much attention to having an adequate insurance cover.

As per the available public data, life insurance accounts for only 19 per cent of total household savings. Further, life insurance penetration in India is merely 2.72 per cent compared to 3.74 per cent in Asia and 3.99 per cent in Europe. Globally, the average rate of life insurance penetration is 3.47 per cent. Insurance density (premium per capita) is another measure of insurance purchased in a country. Life insurance premium per capita for India stood at $46.5 as against $229.5 for Asia and $961.9 for Europe.

World's average insurance density stood at $353, which is about 7.5 times the life insurance density of India. This clearly reveals that we as a community are underinsured. More needs to be done to increase awareness about life Insurance.

In case you are thinking that the under-insurance is because of the rise in the rates of insurance premium, then you are wrong. Industry estimates show that in the last four years, the rates of premium have increased by a mere 3-to-4 per cent with a CAGR of 2.79 per cent for sum insured of Rs 2-3 lakh and 3.29 per cent for Rs 5-10 lakh. So what is the actual reason?

The main reason behind the insufficient amount of cover is that people haven't revised their health cover or term insurance that they have bought. And in case of coverage sponsored by employers, it has stagnated. Industry estimates show that Indians who are full-time employees in a company are of the notion that the coverage that they receive under the company's group scheme is sufficient. As a result of this, they have ended up paying hefty medical bills whenever they have experienced a medical emergency.

While the statistics show that 22 per cent of India's population is insured, it is majorly on account of the different government schemes. The harsh reality is that only five per cent Indians are insured.

Out of which, two-thirds are under-insured. In recent times, the minimum expense of a major medical procedure is Rs 3 lakh in private hospitals and if the hospital is a corporate one, the cost will only rise higher because of cross-referrals and multi-disciplinary treatments. The same study also shows that in coming times, the healthcare costs are bound to catch up with other developed foreign countries. It also shows that the percentage of the claims reimbursed or paid vis-a-vis the amount of the medical bills is falling, especially when it is above Rs 3 lakh.

Life Insurance is perhaps is the best way to protect your loved ones. It is not only a financial choice but is also an emotional decision. There are many compelling reasons to buy life insurance:

 

  • People buy life insurance as a tool to protects their spouse and children from potentially devastating financial losses that may occur in case of one's demise
  • Life insurance protects and provides financial relief for those who need to carry on without the person who's moved on to other realm "        Life insurance is an expression of love and care for your family "       
  • By protecting the financial future, an insured enables his / her loved ones to maintain a certain lifestyle, in case of a grave eventuality
  •  Life insurance provides the deceased's family a range of options that aids them repay loans, meet EMIs and meet other ongoing expenses

Is Life Insurance from your employer sufficient? It is noteworthy that about half of the working population is self-employed and there is about one third of working population who are casual / contractual workers. Such self-employed and contractual/casual workers may not necessarily have any formal insurance and therefore are likely to be significantly under-insured.

 

Most employers generally provide life insurance and medi-claim coverage to their employees. The need of insurance for each individual may be different and the group insurance coverage may not be sufficient to protect a family against the financial stress in case of the bread earner's demise. In event of unfortunate death of the breadwinner of the family, money is needed to:

 

  • Repay debts, such as car loans, home loans, personal loans, educations loans, Credit Card dues, etc.
  • Meet ongoing expenses of the family, such as day-to-day expenses, educational expenses, housing expenses, medical /hospitalization costs

Under employer-employee Group Life Insurance, most employers provide an insurance coverage of roughly equal to one time annual salary. A few employers provide higher coverage, say up to three times the annual salary or some other graded sum assureds.

 

How much Insurance should one take? Every individual has a different family status and financial responsibilities, which impact their insurance needs. The rule of thumb is to take insurance coverage, which is sufficient to repay all your liabilities and debts. You should have enough cover to secure future costs that your family will need to incur. Be mindful to include inflation over the next 15-20 years. You may also want to take into consideration existing wealth (without any lien) that you have built, which if required, may be disposed of by family. It may not be appropriate to consider your home as wealth, because the family will require it to stay.

The employer-employee coverage is available till the time you are in employment. The cover will expire as soon you cease to be in employment. Therefore, it is important to take additional coverage in form of independent individual life insurance policy for appropriate sum assured. You may like to check with the same life insurance company, which has covered you for the group employer-employee cover.




Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments 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 For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage

Modern day balanced mutual fund approach

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   In reality, most balanced funds have a strong tilt towards equity instead of a mix of equity and debt THERE are various types of mutual funds available to investors with specific features. Often investors have a particular idea about a specific type of funds in terms of their features and risks, but that is not what is actually available. Therefore, it is necessary for an investor to understand the actual position before picking up a fund. This requires some work on the part of the investor. One example can be the situation with balanced funds. Name is not representative: One of the first things that an investor has to understand is that the name of the fund is often not representative of its investment pattern. The name often represents only the aim of the fund, and not what it actually is.

ELSS Tax Saver

ELSS Stands for Equity Linked Savings Scheme.   ELSS Fund are mutual funds with 3 years of lock in period and offer income tax benefit under section 80C. They are open ended to purchase. Not all Mutual fund Investments are eligible for tax exception. List of Tax Saving Mutual Funds   Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 Reliance Tax Saver (ELSS) Fund IDF

Should you invest in tax-free infra bonds?

THOSE looking to save tax should take note of the latest buzz in the debt markets. Power Finance Corporation ( PFC ) and Housing Urban Development Corporation (Hudco) have launched bonds that will help you save more tax than your regular infrastructure bonds. Soon, IRFC and NHAI are likely to follow suit with similar bonds. KP Jeewan, general manager, debt markets, Karvy Stock Broking, says: "The coupon in these bonds are completely tax-free and those in the highest tax bracket can expect an effective yield of 10.75 per cent, compared to the 9.5 per cent a 10-year public sector bond would offer." The PFC and Hudco offerings are of 10- and 15-year tenures, with coupon rates of 7.5 and 7.75 per cent, respectively. Unlike other regular tax-free infra bonds, the tax benefits in these bonds are not capped at ` 20,000. Even besides these tax free bonds, those in the highest tax bracket have had plenty of opportunities to invest in tax saving infrastructure bonds under 80 CCF i
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now