The five-point insurance guide

[Sukumar.N]

Whether it is for protection, retirement savings or to bequeath some
capital, a large section of the working population today owns an
insurance policy.

To make the best out of this investment, there are some factors that
should be kept in mind while buying an life insurance policy.

Keep it simple
===========

Several policies do not make sense because by splitting the cover
across policies, a buyer loses ‘large sum assured discounts’.

Also in the context of market-linked policies, multiple policies mean
big money spent on charges.

If you are only briefly exposed to certain risks you can go for
specific covers. For example, an individual who has to travel
extensively for work can consider buying a personal accident policy.

Besides being cheap, the policy can be bought for short terms such as
one year.

Nominations
==========

Insurance is primarily aimed at meeting protection needs.

The product must function when the insured is not around. This need is
best served by the concept of nomination.

Hence, the policyholder should ensure that the right person is
registered with the insurance company as a nominee.

All so often a policy is bought when an individual is single and
single persons usually nominate either their parents or siblings. Post
marriage, it becomes imperative to consider if there is a need to
change the nomination.


Cover yourself
===========

Large businesses often provide their employees with insurance covers.
This is usually up to a maximum of three times the annual cost to
company of the employee.

Some companies also go as far as to offer an option to buy voluntary
covers for their employees. In an age where job hopping is the norm,
it becomes imperative that individuals don’t depend on their employers
for protection needs.

The insurance cover offered by the employer may not be enough to
satisfy your individual insurance needs.

The risk is higher when an individual quits a job and takes a break
before joining another organisation. Health insurance is important in
the golden years.

Idea of buying it post retirement is good, for those who have health
insurance from employer if and only if they remain in good health at
their superannuation age.

Buying policies for children
=====================

In India, there are many who buy life insurance policies for their
children. This is primarily done to provide for their education and
marriage.

However, many forget that the child does not earn for the family, and
hence, it makes sense to buy insurance for the bread winner and keep
the investments in his name.

Parents can always liquidate their investments and provide for their
children’s needs.

A point to note is that the policies bought on the life of a child
(minor) vests in the child’s name till he or she attains majority. In
other words, the parents have no say in the proceeds of the policy.


Opt for loan insurance
=================

If you are a borrower and the lender entity offers you an insurance
cover on group insurance platform, consider it.

Especially if you are 45 years and above because purchasing insurance
at this stage in your life becomes tougher as multiple factors come
into play, such as more number of medical tests and health
guidelines.


N.Sukumar
Research Analyst
www.kences1.blogspot.com