Investing in life and health insurance should not be avoided. Because both are the factors to safe guard against the risk of life. Life insurance provide the cost of safe guard of your family against sudden death, when health insurance provide the cost of safe guard of your life. Both are major player in the risk of our life.
So investing in life insurance or health insurance should not be taken as a burden rather than as a necessity. Both for the safe guarding against the risk of life and also ensuring great peace of mind.
How Much Sum Assured To Be Taken For Life and Health Insurance Policy
Considering life insurance it is up to you how much life coverage you should take or afford to continue long term. If you take it at younger age your premium will be lower for higher sum assured. As you getting older your premium will be higher and sum assured will be lower. So it is very important to choose an insurance coverage for family at your earlier age. what are the benefits of both life and health insurance?
Choose an insurance plan that has also a benefit of long term investment option. Some people says why should take any insurance plan ? If life assured live long then no benefit is given, only loss of huge money. The answer is simple. Do a policy that have both death benefit as well as survival benefit. If life assured live long then he get more survival benefit after maturity of the policy.
Most simple form of life insurance policy with survival benefit is called Endowment policy. In this policy some portion of premium used as Mortality Charges and rest portion of premium will be invested at the rate of interest 4% to 6% in different plans with bonus in certain intervals. The total invested amount + Interest + Bonus will be maturity benefit after policy term is completed.
This is the win win situation for both, life coverage and also investment for long term with assured guaranteed return, negligible what ever the market condition will be the whole term of the policy.
Factors To be Considered Before Buying A Life Insurance Policy
Investors should go a proper need based analysis when to choose perfect amount for life and health insurance coverage. Factors involved for choosing a right life coverage is depends on age, and financial needs of life to be assured. In life insurance amount of sum assured depends of policy holder’s liabilities of dependents. If he is the only earning member of the family he need more amount of sum assured for the policy.
Not only need policy holder should keep in mind that how much load of premium he can afford for long. in simple math shows that life insurance should be 10 times more than policy holder’s yearly income. If policy holder’s yearly income 10 lacs, his life coverage should be one crore. Because absence of him family can maintain all liabilities smoothly.
Now many insurance companies offer one crore sum assured term insurance at very little cost. Investors can opt for term insurance only if he can’t afford any endowment policy premium. Term Insurance only offer life coverage , it has no other investment benefit included. That’s why it has no maturity benefit. Only sudden death of policy holder his family get the amount he has insured for.
Other factors that also associated to determine the amount of life insurance is life style and expenses. According to status of life style expenses depends, that should be keep in mind also. As people progress on life, they should upgrade their insurance coverage according to needs. After marriage and children liabilities rises, so need to upgrade insurance coverage also.
Factors To Be Considered Before Buying A Health Insurance Policy
Considering the rises of medical expenses policy holder must take an amount for life coverage which is sufficient for standard hospitalization cost. Some people thought Critical Illness Rider in life insurance covers all medical expenses and if policy holder opt for this rider they need not apply for any health insurance. First of all, Critical Illness Rider not covers all hospitalization cost. Secondly, it is only applicable for some particular Critical Illness not for all type of illness. and thirdly, it is only cover for the policy holder, not for the family.
Health Insurance covers almost all health hazard, like illness, diseases, accident with all hospitalization expenses pre and post also cashless. Not only policy holder, all dependents could be covered in a single plan.
Before taking a health insurance the factors should be considered are residing city, age, medical history and also prior existing disease. Geographical locations also taken to be consideration because the cost of hospitalization in Metro cities are more expensive than tier 2 and 3 cities. Cost of premium also can be high in case of PEDs and waiting period for any existing specific illness that depends on medical report.
Keeping in mind the rising medical cost investor should take at least 10 lacs of health coverage to adequately cover. If he want to include his dependent with it, that is also available. In that case premium should be little higher. As getting older continue to reassessment for higher coverage needed.
Over all, Life Insurance is a must do thing for an individual earning member of the family, as well as a Health Insurance is essential for all individual to save life and hospital expenses. So Life and Health Insurance both has a major roll in our life, never consider both as burdens.
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