With the New Year, comes a barrage of New Year resolutions, although how many of these resolutions are kept is an entirely different matter. This year, make a resolution about something that is not just doable, but also beneficial in the long run. Take this time to make sure that your insurance portfolio is updated.
What Is An Insurance Portfolio?
Long ago, buying insurance was all about talking to an agent and signing a couple of forms for life coverage and having a ‘sum insured’ that sounded sufficient. However, with so much information and so many options available, it can become very confusing at times to know which insurance type is important and which isn’t.
Pragmatically, your insurance portfolio needs due thought, keeping in mind that everyone has different insurance needs at different times.
A Life Insurance plan may be a term plan, endowment plan, or a unit-linked insurance. While term insurance premiums cover the cost of insurance and endowment policies offer a bonus, ULIP policies involve stock market investments as well. A predetermined sum is paid if the insured dies before maturity of the policy.
Ideal Age To Buy – Between 30-35 years since the premium increases as you grow older.
Thumb Rule – The Sum Insured should be about 100 times your monthly salary without a personal accident cover, or 50 times with the cover.
Bonus Tip – Activate the premium rider waiver to ensure that if something happens to you, the insurer will take care of the premiums.
Personal Accident Cover
This type of insurance provides compensation if you get disabled in an accident. While Term Life Insurance has personal accident riders, they do not provide coverage for temporary income loss. A personal accident policy will cover your medical charges to an extent, and will cover any loss of income due to temporary or permanent disability by an accident.
Ideal Age To Buy – Between 25 – 30 years
Thumb Rule – Aim for a Sum Insured that will help cover any financial shortage that your inability to earn might cause.
Bonus Tip –Be clear about the coverage of permanent and partial disability, temporary loss of income and medical expense reimbursement.
In general, a Health Insurance policy provides cover for hospitalization and certain minor procedures. The sum insured would depend on a number of factors like your age, preferred hospital, pre-existing diseases, risk categories, etc.
Ideal Age to Buy – From the moment you start earning.
Bonus Tip – Check for coverage for pre-existing diseases, maximum covered age, reimbursement limits, and exclusions.
This insurance is a legal requirement for vehicle owners, and depending on the type of policy, covers damages caused to or by your vehicle. The sum insured for these policies is pre-defined, based on the vehicle and its age.
When to Buy – You have to have it before you drive your car
Bonus Tip – Density of network service centers, zero depreciation cover, cashless facility
This type of insurance policy covers your valuable assets like your house and its content against any damage or loss caused by a burglary or an attempted robbery. There is no lower sum insured limit on these policies; however, the sum insured cannot exceed the cost of construction or of replacement that is stated in the agreement.
When to buy – As soon as construction is complete
There are a lot of insurance riders and covers that you can add on to the main policies, but before you do that, make sure you have all the essentials within your insurance portfolio updated, and in place.