When is the right time to buy insurance, and what kind of insurance one should go for? Experts believe that young professionals should go for insurance as soon as they get a stable job.
When is the right time to buy insurance, and what kind of insurance one should go for? Experts believe that young professionals should go for insurance as soon as they get a stable job. With campus placement being order of the day, many students get job almost immediately after finishing their education. Being fresh, these youngsters take some time to settle down in their respective professions. After confirmation in a job, one should think of buying insurance covers because at that stage / age, the premiums are low — ideally, a cover of 15-20 times your annual income is a good. When you buy a term plan at an early age, you are able to lock in a low premium for an entire policy term. Whereas with age the premium amount gets higher, and later in life, one has to care for acquiring other necessary assets such as a house which entail hefty EMIs. So, it’s better to buy it before.
Why is insurance necessary?
But why is insurance necessary? Buying insurance is investing in self as well as creating a financial safety net for family members. Despite taking care, many run into health problems, become victim of an accident or face life and death situations due to unfortunate circumstances. Insurance comes very handy in such situations, particularly for someone who is not financially strong. Luckily there are a variety of insurance plans available in the market, that too at an affordable cost. Moreover, technological advancement has made it easy to compare these plans online and buy within a matter of minutes.
But what insurance plans one should go for? Here, we are listing four plans that we consider necessary for any young professional to go for:
1. Health Insurance: Stress disorders, obesity-related diseases, diabetes, and several pollution-induced conditions – there is an alarming rise in the health problems being faced by people in different parts of the country. It is alarming that India has the most number of registered diabetes cases in the world, and as many as 50 million people are already suffering from type-2 diabetes. Whereas, according to a data, over 14.5 lakh people in India are living with cancer and over 7 lakh new cases are being registered every year. Also, an estimated 71 per cent all cancer-related deaths occur between the age group of 30 and 69 years. So, it could be an alarming sign.
While on the one hand, the health scenario is quite depressing, on the other hand, the cost of medical care has become exorbitant. For instance, cancer treatment in a private hospital can be very costly, and a single session of Chemotherapy can cost you anywhere between 1 lakh and Rs 4 lakh, depending on at what stage cancer is detected, and in which hospital it is being treated. Even the cost of hospitalisation due to an accident becomes unbearable for an average Indian family. In such a situation, health insurance seems to be necessary to take care of any medical emergency.
However, before settling for a health plan, one needs to decide the Sum Insured (coverage amount), Network Hospital of the insurance company, whether hospitalization is cashless, how much per day is allowed, and whether regular check-ups are allowed to keep track of health condition and help diagnose diseases at an early stage.
2. Personal Accident Insurance –The personal accident cover in health insurance offers compensation for any kind of accidental injury and permanent or temporary disability. In case of death due to an accident, the dependents receive a substantial lump sum amount prescribed in the policy.
3. Term Insurance: It is a kind of life insurance where the cover is provided for a fixed term. It suits youngsters the best because if bought at an early age. It attracts a very low premium– as low as Rs 700 to Rs 800 per month – for a cover of Rs 1 crore, and the regular premium remains the same over the entire term of the policy. This is very helpful to youngsters because as they keep progressing in their profession, their savings keep increasing, but their insurance outgo remains the same. Term insurance is also important for those who are the only bread earner in the family because in case of their death, their dependents get a huge amount which can take care of kids’ education, home or any other loan payments, etc.
4. Critical Illness plan: When you buy a policy for yourself, make sure you include an adequate critical illness cover as an add-on. You can buy a critical illness add-on with a term plan or a health policy. There are term plans from ICICI Prudential, HDFC, and Max Life insurance that have critical illness add-ons that give cover amount for diseases like cancer, major burns, tumours, coma, paralysis, kidney failure, heart attack and other complex conditions. In case the policyholder is diagnosed with any of the mentioned disease in the policy document, the cover amount would work as a lifesaver. It could save a tremendous amount of money for you and your family.
By Jerry Bhutia
(The author is Director, Policybazaar.com)