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INSURANCE

This is the one thing that people often neglect saying that it is not that important and that it is not worth it to pay premiums . But they always forget that in the case of Downside , the amount of money that it is going to cost would be massive for most of the people. Therefor it is always better to be insured than not to be insured.

Therefore before starting your investing journey , it is mandatory for you to have these 2 insurances.

  1. Life Insurance
  2. Health Insurance

Life Insurance

NEED FOR LIFE INSURANCE: If death occurs then to give your family financial protection. Ultimaately , in life insurance you buy a plan for a term or for a duration . This means that you need to pay a premium to the insurance company which would be a fixed amount and at the end you may get something in case it is a maturity benefit or an endowment plan or you may not get anything if it is a term plan.

WHAT THE HECK IS TERM INSURANCE?

You would be wondering why anyone sane would take this product considering that if you take a 40 year term insurance plan , and if nothing happens to you , you would not get anything. The best advantage of this is you get the Maximum cover for the lowest premium possible. Now how much cover should you take?
The answer to that is that if your salary = X then your cover(minimum) should be = 10X. Ideal should be 20X. Therefore suppose your salary is 5,00,000 then minimum should be 50 lakh and ideal is 1 crore. The best thing is premium if fixed for the entire duration.
2nd benefit is that amount paid as premium can be applied as deduction under section 80c.

ENDOWMENT PLAN

This plan tends to give something in return for a premium. Therefore this acts less like a insurance plan and more like an investment plan. Therefore choose wisely .
One big disadvantage of this plan is you need to pay far higher premium for the same cover.

Considerations while buying insurance


  1. Add-ons :If you get into some serious accident or illness because of which you cannot earn money then these considerations are also need to be met. These are called add-ons.
    The 2 most important Add-ons are Critical Illness and Disabiltiy
  2. Premium waiver on critical illness and premium waiver on disability

Now the obvious question that comes to our mind after reading all of this that which life Insurance should I buy?

Remember one thing always disclose everything to the Insurance company about any of your existing illness or habits which might affect your health.If you try to hide these , then the you or your nominee might have a problem in claiming.

To know more,you can check out these websites and youtube videos as investopedia