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Life Insurance and Health Insurance: Why to Get Insured and Which Cover is Essential?

dateKnowledge Centre Team dateSeptember 24, 2021 views204 Views
Life Insurance | Health Insurance | Best Life Insurance Policy

All battles are planned, but no battle is eventually fought as per plan!

Life is beautiful as long as one is not inflicted with a critical illness or a heart attack or does not end up as a victim of somebody’s reckless driving, leaving behind a helpless family that is left to fend for itself. Life is also a battle that has to be carefully planned with the best life insurance plan to mitigate risks that can affect not only one’s well-being but may also cost the lives and careers of the children and rest of the family members.

If everything goes well, consider yourself lucky, but if not, do you have a Plan B?

In a world that is becoming increasingly volatile and our society that is going nuclear, the large family concept has diluted to small families of 2-4 members. The household can come crashing down if the income-earner is down sick even for a few weeks.

But what if the condition is worse?

Some illnesses can be lifestyle related but does Cancer or Corona differentiate between the healthy or the wealthy?

What is the Purpose of Buying a Life Insurance Plan?

Insurance cannot restore good health. Insurance cannot bring a dead (wo)man back to life. But insurance may save a sick (wo)man from dying. Insurance can replace income. Insurance can ensure that the dreams of those living are fulfilled. In a nutshell, insurance covers the financial risk.

If the insured dies, their nominee/family receives a fixed “Sum Assured” that helps the family financially sustain for years to come. This amount can also help the children pursue education and become independent in life.

Private healthcare costs are already exorbitant and growing by leaps and bounds due to spiralling inflation which is more than average in the case of healthcare. Whereas even minor hospitalization bills can badly hurt a common (wo)man’s pocket, critical illnesses are a double whammy.

On one hand, medical treatment costs can run into lakhs of rupees and on the other, income may cease to exist due to inability to work. Health insurance is the only known, financially viable solution that can offset the financial risks by bearings costs of hospitalization as well as allied services.

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Additional riders even give away lumpsum amounts that can replace the lost income or be used to cover incidental costs (such as additional nursing at home etc) which may not be covered in a standard Mediclaim plan.

Life Vs Health Insurance: Which One First?

Both are definitely and equally important and there is no way to assign more weightage to either of the two. However, many a time, for salaried individuals, it may not be pragmatic to sign up for two important policies in one go. Prioritizing one over the other becomes imperative.

Common sense tells you that buying health insurance first is important because if health is taken care of, the probability of death due to illness will be significantly reduced. Go for a health insurance policy first. But do not procrastinate on life insurance for too long.

Types of Essential Life & Health Covers

1. Mediclaim Insurance

Mediclaim can be considered as a health insurance policy that covers expenses incurred for treating illnesses or ailments through hospitalization. The policy offers a financial cover of a specific amount (depending on the plan opted for) called “Sum Insured” which is the maximum amount that can be expended for treatment. There may be sub-limits under various heads such as room rent, nursing charges, ambulance etc.

Mediclaim policies offer the option of availing cashless services at its networked hospitals wherein you can apply for cashless authorization for treatment. In case you opt for treatment at a non-networked hospital, you can pay and claim for reimbursement at a later date.

2. Terminal Illness

The Health First Plan from Canara HSBC Oriental Bank of Commerce Life Insurance offers special financial protection for major critical illnesses. The applicable Sum Insured is paid as a lump sum to overcome the loss of income and to meet any incidental expenses. Claiming this benefit does not require proof of the expense and is paid irrespective of the actual expense.

This comprehensive plan covers heart and cancer-related ailments and a lumpsum amount will be paid on the first diagnosis or surgery. The lump-sum pay-out is made as a % of the total sum insured and depends on the severity of the illness.

3. Term Life Insurance

The name “Term Life Insurance” originally referred to a pure life protection plan for a definite period in the person’s life where s/he would have gainful employment. The insurance was meant to replace the income in case of loss of life during the “term”. However, with evolving markets and increasing lifespans, people are living longer and working longer. This implied the necessity for enhanced life protection beyond 60.

New age insurers have begun offering whole life policies that can extend coverage until the age of even 99! The iSelect Star Term Insurance plan from Canara HSBC Oriental Bank of Commerce Life Insurance is a 360-degree plan giving an option to cover the spouse, opt for return of premiums at the end of the term or even increase Sum Assured as per life stages.

4. Accidental Disability Cover

In case of disability or death due to an accident, the Sum Assured is paid immediately. For total permanent disability, the life cover would continue but the future premiums would be paid by the company.

Other Life Insurance Covers You Should Use

A. Guaranteed Savings Plan

Your investment portfolio should comprise of a solid, dependable and sustainable savings plan that you can fall back on even if everything else does not go as per plan. Whilst there may be many “guaranteed” plans in the market, look for an insurer that is backed by credible institutions. In the Guaranteed Savings Plan of Canara HSBC Oriental Bank of Commerce Life Insurance, you can pay premiums for a fixed term and get guaranteed income until maturity.

The Guaranteed Sum Assured will be paid at the end of the term whereas in case of demise, the Sum Assured is paid immediately and the fund value is paid on maturity. The company pays future premiums in case the insured becomes disabled for life.

B. Unit Linked Insurance Plans (ULIPs)

Ideal plans that club insurance + investment and give you the best of both worlds. You are free to choose the allocation between equity and debt basis your risk profile and/or the market movements.

C. Pension Plans

Money received, post-retirement, from a fixed corpus placed with an insurer is called an annuity. Pension4Life plan of Canara HSBC Oriental Bank of Commerce Life Insurance allows you to opt for a single-life annuity that pays you till the end of your life OR a joint-life wherein your spouse continues to receive income after your demise.

Both health and life insurance are important and neither one can be neglected for the other. With evolving needs, both types have become more comprehensive keeping in view the needs of the insured person. Additional riders, joint life options, return of premiums, guaranteed pay out etc make insurance an irresistible buy to secure your life and health.

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