List of Insurance every individual should have | Life & Health Insurance

Insurance is something which shouldn't consider as an investment but it should be consider as a support in unforeseen situations. Mixing up of insurance with investment is not recommended, it advisable that both are kept separate and there are a lot of investment options that one shouldn't enter into insurance schemes which are used as an investment also.

There are many types of insurances available but here is a list of insurance which is essential.

Life Insurance - This is the essential insurance for any individual and if you haven't bought it till now, you should buy it immediately. One can even buy online as there are several websites which provide insurance online.

Things to keep in mind before buying

Insurance amount should be at least Rs. 50 lakhs or 10 times of your annual income.

One should look for claim settlement % as many insurance companies give fewer rates but have really less claim settlement ratio.

The insurance period should be longer as average life expectancy in India is around 63 years. Imagine you buy a life insurance at 30 for 20 years duration, technically it doesn't make sense. I would recommend buying a life insurance which can ensure you till the age of 65-70 years.

Buy early when you are younger as the premium required to be paid would be less for a person holding insurance starting at the age of 25 yrs as compared to the age of 30 yrs.

In some life insurance plans, you get to pay premium completely at one go or pay yearly. I would recommend going for a yearly plan as you might think that you need to pay less for the same insurance, but imagine that if you had invested that amount in a fixed deposit for eg, you would have earned more in this case.

This example is taken from data given by HDFC Online Term Plan for a person of age 23 years looking for Life Insurance cover of Rs. 1 Crore and duration of 40 years. This example clearly gives a conclusion that yearly plan is better than one time payment. One might think that If I pay Rs. 8760 for 40 years then I eventually paid Rs. 3,50,400 and by paying one time payment of Rs 1,57,818 I am eventually saving a lot of money, but had you invested somewhere you would earn more money in paying one time than paying yearly.

Premium	Amount (in Rs.)	Period (in yrs)	FD Interest Rate	Future Value (in Rs.)
Yearly	8760	40	5.60%	12,17,912
One Time	157818	40	5.60%	13,95,434
Net Benefit				1,77,522

Note - FD Rate is considered for those who are in 30% tax bracket getting FD rate of 8% and eventually after TDS getting 5.6% p.a

Look for accidental death insurance as well. The life insurance you get doesn't necessarily include death due to an accident, so an additional top up would be required.

My personal recommendation would also be looking for those insurance companies who are well known in this space and also are in this business for at least 8 - 10 years.

Health Insurance - Having a health insurance is essential due to rising in the cost of medical expenses during hospitalization and it often gets difficult to pay those bills if you don't have a health insurance. Having a health insurance would help you be a safeguard from any expenses that you would incur. One can even buy online as there are several websites which provide insurance online.

Things to keep in mind before buying

One should look for how many treatments the insurer is providing. More the better as you never know what can happen to you in future. It is unpredictable.

If you are single, then an individual plan would do. But if you are married and have children, then definitely Family Floater plans should be selected, as you would get more cover at less amount for your entire family.

Understand the benefits of no claim bonus, as each firm has its own bonus. Go for those insurance companies who would give you more cover on no claim bonus on an incremental basis.

Get information about nearby hospitals in your area. Whether the insurance company has that hospital on the list. Also, identify what are the basic cost of hospitalization in your nearby hospitals such as bedding cost, ambulance cost so that you decide on buying that insurance that would complete cover all these requirements.