Insurance is a legal financial product that protects the policyholder from the financial burdens of an unexpected hazardous event. We can not predict the future but can prepare ourselves for the consequences so that the impact gets mitigated. Insurance provides a safety net to people so that their financial journey does not derail from the effects of any misfortune. Protecting yourself, your family, and your assets gives you an edge as you are prepared against anything in advance. Here, in this article we will discuss the type of insurance everyone should have.
Insurance becomes essential for everyone as it helps you cover your loss in exchange for small fees known as premiums. It would be wise to ensure the safety of all your precious assets for a small cost. Insurance in itself is of various types. Different types of insurance are used for different purposes. Here are 6 must have insurance everyone should have.
6 Must-Have Insurance Everyone Should Have
Depending on your requirements, the insurance coverage you need can be determined. Insurance can not be a one-size-fits-all thing. But based on the generalized needs of the people, here is a list of 6 different types of insurance that everyone should have.
- Life Insurance
- Health Insurance
- Long-term Disability Insurance
- Auto Insurance
- Home Insurance
- Long-term Insurance
Let us now study the different insurance everyone should have.
Life insurance
Life insurance contributes to 76% of the insurance market in India . Life insurance is a legal agreement where the insurance company promises to pay a coverage amount to the beneficiaries of the policyholder when he dies. There are many cases where, upon the demise of the family's sole earner, the family went into a huge financial crisis.
People generally assume if they are earning well currently, there will not be any problems in the future. But they ignore the fact that life is very unpredictable, and if they do not have a backup plan, their family might suffer a lot in case something happens to them. That is why life insurance becomes the most essential insurance to have.
Life insurance is of two types:-
- Term life insurance
The term life insurance provides coverage for a certain time. That means if the policyholder dies between the tenure of the insurance policy then only his beneficiaries would receive the coverage amount. Term life insurance is for those who want their families to be secured for a specific time after that their dependents would be capable enough to take care of themselves.
The best term insurance plan in India is provided by companies such as Max Life Insurance, ICICI Prudential, HDFC Life, Tata Aia, etc.
- Whole life insurance
The whole life insurance covers the insurance policyholder's beneficiaries upon his death. In whole life insurance, a particular portion of the premium is used for building a cash value which can used for wealth building. It is slightly costlier than the term life insurance. People can also use it for retirement plans.
The best life insurance policy in India is provided by companies such as SBI Life Insurance, Bajaj Life Insurance, ICICI Prudential, HDFC Life, Tata Aia, etc.
Health Insurance
Health Insurance is another kind of insurance in which the insurance company assists the policyholder by sharing the financial burden of the policyholder's medical bills or his family. On average ₹6000 and ₹1500 are spent per day if a person gets admitted to a private and a government hospital, respectively.
Expenses on health problems are something that no one can plan in his budget. Health expenses can put a lot of pressure on your budget. Health Insurance also provides other benefits such as cashless hospital visits, free regular check-ups, and the facility to use top healthcare services, as many health insurance companies have tie-ups with leading healthcare companies.
Apart from these benefits buying health insurance also makes you eligible for tax benefits. Under Section 80D of the Income Tax Act , buying health insurance enables you to claim deductions up to ₹25000 per person.
Long-term Disability Insurance
People often buy Life Insurance and assume their families are now entirely financially secure. They do not take into consideration what will happen if someday he might not be able to work because of some disability. Usually, the people working in some companies are generally secure as the companies have typically employee benefits plans that could financially help the employee.
But what about the self-employed or the freelance contractors? They do not have a company to help them in such cases. Long-term disability insurance becomes essential in such cases. It provides insurance coverage to the policyholder if he cannot work because of some disability. The coverage benefits are usually 50% to 60% of the income of the policyholder. To be eligible for the benefits the medical information about the disability must be confirmed by a physician and after a certain waiting period, benefits can be received.
Auto Insurance
Auto Insurance has become essential not only because of its usability but also because the government has made it compulsory. According to the Motor Vehicle Act of 1988 , it is compulsory to at least have third-party insurance otherwise, it is a punishable act and the owner of the vehicle may be charged. In India, every family's dream is to have a home and car. People usually spend a lot on buying a car and customizing it. Auto insurance ensures the safety of your dream by providing coverage in case of damage due to an accident.
Buying auto insurance can also provide tax benefits if the vehicle is used for business purposes.
Home Insurance
Buying a house is one of the most significant financial and emotional investment that the people of India makes. Even today, the real estate sector is expected to grow at 25% CAGR between 2024 and 2029. No one would want their investment to be destroyed because of some unwanted, devastating event. Home insurance provides coverage for your house and your belongings. If any damage is caused to your house because of events such as fire, burglary, hurricane, flood, lighting, etc. It is wise to secure yourself against such types of events as these may cost you a lot. Securing your assets for a small premium cost would always be a wise decision.
Long-term Care Insurance
According to the reports published by the Department of Health & Human Services , 70% of people after crossing the age of 65 would require long-term care. Long-term care, such as in-home assistance for day-to-day work or stays at a nursing home, is needed by people over 60. Long-term is quite expensive, and it can be challenging to afford only from retirement or pension funds.
Long-term care (LTC) insurance helps you pay the cost of long-term care services, such as in-home care, adult day care, or nursing home stays. It is better to get long-term care insurance when you are in your 40s and 50s because as you grow older, the premiums will also increase. Yes, in India, we have joint families where children care for their parents when they grow old. But we have seen many cases where children leave their parents alone in their old age. So, buying long-term care can secure your old age as you would not need anyone’s help.
These were the list of some insurance everyone should have. Analyze your needs and financial condition before buying any insurance policy. Make sure you have proper knowledge of various types of insurance and how to buy and claim it to get the most benefits.
