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

Stick to Good Fund Manager who Can Multiply Your Investment

A manager may be the difference between the best and worst funds. Here's how you can find the right one    Does a mutual fund manager make a difference to your investment? The answer may not be as easy as you think, since most best-performing mutual funds have moved away from individualistic fund management to process-driven methods, limiting the scope of an individual's role in investment decisions. In fact, many fund managers would speak at length about how the "system" their fund house has in place makes their task of picking stocks easy even though it restricts their freedom. Still, the question is important, especially after recent reports that the Securities and Exchange Board of India ( Sebi ) may ask fund managers to disclose to investors their track record of managing money. Let us take a look at the universe of large-cap funds over the past five years. According to Value Research, an independent mutual fund tracking firm, the topper in the category is DSP...

Tata Fixed Income Portfolio Fund dividend

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)       Tata Mutual Fund has announced dividend under the dividend option of Tata Fixed Income Portfolio Scheme B2 Plan A-DQ, Tata Fixed Income Portfolio Scheme B2 Reg-DQ and Tata Fixed Income Portfolio Scheme B2 Direct-DQ. The record date has been fixed as August 29, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- 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 Onlin...

NRIs and direct taxes code (DTC)

DTC Proposes To Do Away With Special Provision That Allows NRIs Liberalised Duration Of Stay In Country      THE new direct taxes code could bring a large number of global Indians under the tax net, as it does away with a provision that allowed individuals to escape tax in any country citing double tax avoidance.    The new legislation, introduced in Parliament on Monday, says an individual shall be a resident of India in any financial year if he is in the country for more than 59 days in that year, and has been has been India for more 365 days in four preceding financial years. A number of Indian industrialists including Vedanta's Anil Agarwal and Essar's Ravi Ruia have acquired non-resident status over the years.    The DTC has only attempted to clean up the provision in line with the laws globally. A phrase "being outside India" in the existing income tax law exempted individuals who stay outside the country for six months from paying taxes. This was prone ...

How to gauge the risk profile of your mutual fund portfolio?

MUTUAL funds are considered to be an investment option for those who do not generally devote a lot of time to monitoring and managing their portfolios. Investors experience both good as well as tough times as far as mutual fund investments are concerned. But while evaluating the portfolio of their equity mutual fund holdings there are a few points that one should check to know about the level of risk that they are facing. Often there are situations where there is a higher risk than what was estimated initially. Here are a few ways to evaluate various risk levels. Individual holding exposure : The portfolio of the equity fund where one has invested or plans to invest needs to be scrutinised to see whether the risk levels are such that could lead to a larger volatility in the holdings. Depending upon this factor and the risk taking ability of the investor the choice about a particular fund as an investment should be made. One key point to watch out is whether there is a large ex...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
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