THOUGH THE YEAR STARTED WITH sentiments being down, we are ending it where a lot of ground has been recovered. The times may be challenging but everyone feels the worst is behind us, especially in India. Vehicle sales are looking up, housing loans have started picking up, lot of money continues to flow into bank deposits and Indians have again started travelling all over the world. Where does insurance stand in the scenario for an individual?
Let me talk about life insurance first. Whenever one buys an unit-linked insurance plan (ULIP), one should keep few things in mind. First, is the term of the policy. From January 1, new guidelines will ensure that commission and other expenses built into an ULIP will depend upon the term of the policy. Thus every customer should consciously decide the term during which he is committed to pay premium regularly.
Second, ULIPs offer free switching between funds. Customers should utilise this facility keeping in mind their risk profile. If one wants to reduce volatility one should opt for funds like asset allocation or wheel of fortune. Similarly single premium products offer a good option from post tax returns as compared to fixed deposits. The life cover should be decided by looking at one's income level as well as liabilities (such as housing loan). Thus, life insurance continues to be the best solution not only for protection but also for investment. One should also remember that inflation in health care sector is quite high. The cost of treatment virtually doubles every four-five years. It is important for people to buy health insurance as a serious ailment of a family member can burn a big hole in the savings of the family. Here it is important that proposal form be filled in correctly and one should continue to renew the policy from the same insurer to make the claim process simpler. We are living in a world where risks are increasing every day. The incidents of natural calamities such as flood, road accidents and thefts etc are going up. The good news is that the premium rates are lowest ever and the choice of products is quite large. This is the best time to buy long-term household insurance. One should look at opting for additional covers such as depreciation cover and daily allowance for your car. Financial planning will be incomplete without protecting oneself and one's assets against various risks. With insurance one is sure that the financial impact due to uncertainties in life gets minimised.
