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If you have been postponing your life cover decisions, the turn of events since the pandemic must have woken you up.. And if you finally bought the life and health insurance, you may ask, ‘Would I do it if there was no pandemic in 2020?’
And, ‘would your situation be any different if the pandemic were to be postponed by a year?’
The answer should not surprise you. Good times can often deceive even the most cautious from the impending dangers. The fact is that the number of deaths caused by COVID-19 almost equals (or is slightly lower) the number of accidental deaths in India.
This means that the risk to individual life remains almost unchanged despite the pandemic. So, pandemic or not, you need to consider contingency planning from day one of your investment life.
Hopefully, by now, you already have health and life cover. So, can you relax now? Or is there more to do with your life insurance plans? Here’s a list of small steps you must take to ensure your life insurance doesn’t leave a part of your life uncovered.
Key Takeaways
Having life and health insurance is just the first step; regularly reviewing and upgrading your coverage ensures you're fully protected as your responsibilities grow.
An adequate term insurance plan should not only cover debts and financial goals but also provide a steady income to your family in your absence.
Look for plans like iSelect Smart360 that offer add-on benefits such as spouse inclusion, income replacement, return of premium, and critical illness cover.
For long-term goals like child education or retirement, insurance-backed investment tools like ULIPs and guaranteed savings plans provide protection and growth.
Don't forget to cover your spouse, even if they’re not the primary earner - life and critical illness cover for homemakers is equally essential.
Ensure Your Term Cover is Adequate
Buying term insurance cover is one thing. However, ensuring that it is adequate is equally important. An inadequate cover would be like travelling to experience Paris, but returning from Dubai. You need to ensure that your term cover can provide for your family in your absence as well as you do, if not better.
Here are two aspects you need to ensure with your term insurance plan:
The cover can keep up with your income and family’s lifestyle.
It will pay a large enough sum to your nominees to take care of immediate debts and investment needs of important financial goals.
Your family will receive a growing monthly income from the plan for a long time to cover their household and life expenses.
Only the best term insurance plans offer all three options in one place. For example, the iSelect Smart360 term plan from Canara HSBC Life Insurance gives you three options to enhance your term life cover:
To include your spouse in the cover, and also opt for child care benefits
To create an avenue for income post-retirement and get further cover for accidental death or disability
Option to add on terminal cover benefits and get back the premium amount paid on maturity of the term insurance
You can also divide the entire sum assured into two parts – lump sum and regular income. Dividing the sum assured means you are giving your dependents money to invest and pay off debts, along with a monthly income.
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Your Health Cover Covers Pandemic and Terminal Illness Hospitalisation & Treatment
While you may have health coverage to take care of emergency hospitalisation expenses, ensure that expenses for pandemic-like situations or terminal illnesses are included. Though the pandemic seems to have come under control, the dangers of this virus evolving into another strain are high. Also, the growing cases of terminal illnesses should always be considered.
Thus, even if you have recovered from an illness, you cannot consider this gone forever. If your existing Mediclaim policy does not cover these special expenses, opt for one that does.
Did You Know?
The origins of modern insurance can be found in the London Fire of 1666. Due to the severity of the fires, insurance became essential rather than optional.
Source: Investopedia
Insure Your Family’s Financial Goals
You have two types of long-term financial goals in your life – one, aspirational goals which will make you feel great. The other is your basic responsibility. It is these goals which you must achieve in your life, as your family’s financial future depends on it.
While investing for such goals, you will feel much better with investments that ensure goal achievement regardless of your presence. Since this involves providing the family financial support after your early demise, only life insurance plans can offer a solution.
Investments like guaranteed savings and unit-linked insurance plans can help achieve your goal as per your risk appetite. At the same time, these investments can also protect the financial goal from setbacks like sudden death.
Guaranteed Savings Plan
The guaranteed investment plan has a maturity value that you can define in the beginning. Thus, this offers you the safest route to your objective. This plan is most useful for goals where you cannot leave anything to chance. . For example, higher education or marriage of the child.
ULIP Plans
ULIP plans offer a unique blend of features to help you invest more aggressively and without worries. You can invest in equity, debt or liquid funds depending on your risk appetite and also receive tax saving benefits.
At the same time, automated allocation management strategies help you manage your portfolio without any additional effort.
Add ULIP to Your Retirement Plan
We have already discussed the flexibility of ULIPs with the type of investments you can choose. ULIPs are also a great instrument if you can plan your retirement pension with it. Few ULIP plans can be signed up for once you turn 18 and can cover you till the age of 80 years.
With a high maturity age, and tax-free withdrawals you can create a tax-free pension scheme with this plan. All you need to do is to make sure you have a large enough corpus by the age of 60. However, to ensure the tax-free status of your pension withdrawals, you will need to:
Start investing early
Select a life cover amount which is more than 10 times your annual present investment in the plan
Remember that withdrawals from your ULIP plan are tax-free only as long as you keep your annual investments up to 10% of the life cover. Thus, starting early (possibly in 2025) will help you accumulate a large enough corpus by the time of retirement.
Ensure Your Spouse Also Has Life & Health Cover
While most life insurance covers are meant for the breadwinner of the family, your homemaker spouse, too, should have a life cover. That is because her contribution to the survival of the family is also crucial.
Few term insurance plans, such as the iSelect Smart360 Life Secure term plan, offer a joint life cover option. With this plan, you can provide a term life cover to your homemaker spouse for a minimum of ₹25 lakhs.
Apart from a life cover, you can also opt for a cover for your spouse for life-threatening diseases like cancer and heart failure, etc. While your family floater Mediclaim cover provides for the emergency hospitalisation, it will not be adequate for such treatments.
Fortunately, the iSelect Smart360 term plan provides critical illness coverage as an added optional benefit. So, when you insure your spouse under the cover, opt for a critical health cover. If you have already purchased the plan, you can add your spouse to the same plan within one year of your marriage date.
Conclusion
So, while buying life and health insurance is the right first step, don’t stop there. 2025 is your cue to go a step further—ensure your coverage is adequate, protects your long-term goals, and includes your spouse and family comprehensively. From boosting your term plan to planning tax-efficient retirement with ULIPs and securing your family’s aspirations through guaranteed savings, every decision today secures a better tomorrow. With the right insurance strategy, you prepare for the worst and empower your family to thrive, no matter what the future holds.
Glossary
Sum Insured: Sum insured is the maximum cap on the costs you are covered for in a year against any unfortunate event. It is applicable to non-life insurance policies like home and health insurance.
Sum Assured: Sum assured is the amount the life insurance company pays to the nominee if the insured event happens (death of insured). This term is used in life insurance policies.
Maturity Value: The amount of money paid out when a life insurance policy matures is known as its maturity value.
Risk Transfer: Risk transfer is a strategic method where a pure risk can be contractually shifted from one party to another as part of risk management and control.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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