Insurance: An insurance cover for each life stage
Young individuals these days spend a lot of money on electronic gadgets, holiday travel and parties. However, it is advisable to buy some basic insurance plans before investing in any instrument.
Young age
Term plan: Go for an online term plan as soon as you start earning. As a term plan is a pure insurance plan without any investment component, the premiums are very low. For example, a 25-year non-smoking individual with Rs 5 lakh yearly income can purchase online term plan of 35 years duration of `1 crore sum insured by paying Rs 5,000-7,000 premium yearly.
Individuals can choose an appropriate sum insured by using a simple multiple of salary method. This plan is needed by one who is young, the sole breadwinner in the family, financially independent, has dependents such as parents, spouse and children.
Health insurance
It is important for an individual to purchase a good health insurance plan with adequate sum insured. If an individual is unmarried, he should buy cover himself and parents. If married, he can cover himself, spouse, parents and children with a family floater plan. If parents are senior citizens, it is advisable to have separate senior citizen health insurance plan as premium in family floater plan is calculated on eldest member’s age.
Personal accident policy: A personal accident insurance provides compensation in case of accidental injury and permanent or temporary disability. And in case the life assured dies due to an accident, the nominee will receive a substantial lump sum amount.
Critical illness policy: In this cover, if the insured is diagnosed with any of the listed critical illnesses such as cancer, coma, paralysis, kidney failure, heart attack, etc., the full sum insured is paid.
Middle age with growing family
Top-up health insurance plan: Apart from having the basic family floater health insurance, one must enhance his policy sum insured with a separate top-up (deductible) plan. A top-up plan increases the insurance coverage over and above existing base policy at a comparatively lower cost as compared to increasing the sum assured in the base policy. The top-up plan comes to your rescue if medical insurance claim crosses a threshold.
Deferred annuity plan: In deferred annuity, the person gets pension after a defined time. He pays the money through regular premium or single premium payment over a policy term. Check past track record, current financial strength of the insurer before purchase. It is advisable for an individual to start at this stage to build a good pension for retired life.
Old age
Senior citizen health insurance plans: The higher probability of diseases and absence of social security in old age is a big concern among senior citizens. For this, senior citizen health insurance plans are a blessing. The features include co- payment (between 10- 30%), limit on sum insured (Rs 1-5 lakh), compulsory pre-policy medical checkup, waiting period for pre-existing diseases (2-4 years).
Immediate annuity plan: For a steady pension, an individual having a lump sum amount at his/her retirement age may purchase an immediate annuity plan from a life insurer. In this, he starts getting pension immediately on paying a lump sum premium to the life insurer.