Money Guru: Drive away all your tension with insurance – health, term, home loan, travel and more

In this edition of Money Guru, Zee Business’ Swati Raina speaks to Anil Chopra, Group Director, Financial Wellbeing at Bajaj Capital and Feroze Aziz, Deputy Chief Executive Officer (CEO) at Anand Rathi Wealth Limited to explain viewers the importance of different types of insurance.

Drive away tension by taking insurance plan

Shield yourself through insurance plans

Insurance is not just for health but various other things

How to create an insurance portfolio?

Which insurance plans are a must buy for you?

Reach of insurance in India

Low penetration of insurance is a big challenge for the industry?

IRDAI’s annual report for 2020-21

Insurance is just 4.2 per cent of GDP in India

The global penetration of insurance is at 7.4 per cent

As of March 2021, the reach of non-life insurance is just 1 per cent

Why is insurance planning important?

You must take insurance even before you start investing

Important to have health plan and term plan

Health insurance is important as the medical expenses are only growing. It will protect you financial in health emergencies.

You must take plan according to your age, city, income and lifestyle.

Diversify your insurance portfolio.

What is important in insurance plans?

Term Insurance

 - Disability insurance

- health insurance

- ULIP

- Deferred Anuity plan

- Immediate annuity plan.

- Travel Insurance

- Motor Insurance

- Home Insurance

- Money Back policy

-Cyber Insurance

Disability Insurance

You might find challenges in earning your livelihood in the event of disability.

Insurance jhelps you meet your needs and also your family’s needs.

You may avail income from insurance on a monthly basis.

Permanent total disability and permanent partial disability.

Temporary total disability is covered under the insurance cover.

Critical care cover

Under the critical illness plan, serious illness is covered

It includes health conditions like cancer, heart attacks, kidney ailments and others.

Critical Illness rider, standalone policy available

In critical illness rider, limited health conditions are covered

Standalone policy is a comprehensive plan

A lump sum amount is given when the policyholder knows about his condition.

In health insurance plans, a separate critical illness plan must be taken

How much should be the critical illness cover?

Rs 1-50 lakh should be the sum insured

If you are a lone bread-earner insurance is a must

It is also a must if there is some family history of illnesss.

If you have a risky lifestyle and you live in metros, then the health insurance is a must.

There is a 90-day waiting period in critical illness.

Term Insurance Plan

Term plans are pure life insurance policies

It will be of great financial help in the event of something untoward happening to you.

You can be covered handsomely even on low premium plans

Up to Rs 1 cr cover with just Rs 500 monthly premium.

Death benefit in case of term insurance plan.

The amount is given to the nominee if the policyholder dies while the policy is ongoing.

No monetary benefit if the person remains alive at the time of expiry of the policy.

Tax incentive under Section 80C of the Income Tax Act on term plans.

What should be term plan coverage?

Term plan should be taken in accordance with income and age

At 40 years of age, the term cover should be 20-30 times

At the age of 40-50 years, 10-15 times coverage is good

If the age is 50 years or above, 5 times coverage is good

Keep the insurance cover till the time of retirement

Home Insurance Policy

Your home is at a danger because of heavy rains or storm

Rains pose a danger to your home and office 

There is a danger of short circuit or fire

Protect your house against floods, storm through insurance

It is important to have insurance for homes

Which incidents will be liable for coverage?

Fire

Lightening Storm, Tsunami

Landslides

Earth quake

Theft, burglary

Terrorist activities

Natural Calamities

Cyber Insurance

Coverage against digital attacks

Coverage against financial loss because of online frauds

Loss due to illegal transactions, online thefts will be compensated

Financial security against cyber security

Why cyber insurance is necessary?

Digital transactions are on the rise

The cyber fraud cases have been on the rise

Financial loss if there in the event of online frauds

The insurance provides a financial cover on your losses

What all is considered in cyber insurance?

Ransom ware attack/ cyber extortion  

Data loss

Email spoofing

Phishing

Cyber stalking

Loss due to malware

Third party privacy, data breach

ULIP

ULIP- Unit Linked Insurance Policy

It gives twin benefits of investment and insurance

One part of the premium goes for investment while the other for insurance

It invests in equity, corporate debt and G-Sec

5-year lock-in period in ULIP

Tax benefit under Section 80C

Partial withdrawal allowed in case of emergency

Tax on annual premium over Rs 2.5 lakh

Annuity Plan

One is immediate annuity and the second is deferred annuity

In deferred annuity plan, there is a lump sum investment

Deferred Annuity – monthly income on retirement

In immediate annuity plans, payouts starts immediately

Immediate annuity is a good option when nearing retirement

You can change deferred annuity into immediate annuity scheme.

No tax benefit to policy holder on annuity schemes

The payout to policyholder is lifelong or indefinite

LIC’s Jeevan Akshay policy – immediate pension plan

LIC’s Jeevan Shanti Policy – deferred pension plan

Travel Insurance Plan

Compensation if the journey gets cancelled

In medical emergencies, travel insurance is necessary

Terrorist incidents/ helpful in any mishappening to the family member

On natural calamity, the loss is compensated to the traveler

Compensation if the insured misses his connecting flight

Coverage if there is theft in case of holidays

See Full Video Here

Home Loan Insurance

In the event of the death of loan account holder, the insurance company will bear the loan payment

Many insurance companies cover loan repayment

No regular premium payment in home loan insurance

In home loan insurance there is a lump sum premium payment

There is now worry of loan default payment, the onus of repayment lies on the insurance company

There is no cover on death due to natural reasons or suicide