A quote came in one of my readings: “Life is a shipwreck but we must not forget tossing in the lifeboats!!!’’ This is pretty true. Life always has been unpredictable. You never know what comes next. You need to keep yourself prepared both for the best and the worst. Thinking of life in terms of financial aspects preparing for the best part is making investments effectively and efficiently. The setting of long-term and short-term goals and accordingly making investments will surely pay you off for your best times. Considering life unpredictability, you need to be prepared for it as well. And what comes for the rescue? Its insurance!!!!
As per the definition of insurance by Investopedia, Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
Considering the personal finance management view, let’s take a look at the types of insurance that a person should avail:
1. Life Insurance: As the name suggests, life insurance is a protection that you avail from the insurance company for your life. In life insurance, the insured company pays you money against the premium paid; after a specific period as per the terms of the policy or after the demise of the insured. It means that life insurance provides the insured benefit, either on the maturity of the policy or on the demise of the insured. Considering this dual benefit, this is enormously common among the public for investment purposes. Life insurance protects you and your family from getting into a financial crisis if ever any fatal incidents occur.
2. Term Insurance: Term insurance is a type of life insurance itself. The only difference here is that there is no maturity benefit available in term insurance, unlike life insurance. The amount is paid to the nominees of the insured only if the demise of the insured occurs within the specific period as described in the terms of the policy. Term insurance grants your family protection in case of your unfortunate demise. Term insurance is today’s need and a very essential investment. As compared to the insurance cover that the nominees of the insured receive, the amount of premium required to be paid by the insured is very less.
3. Health Insurance: Health insurance provides you complete coverage against the expenses that arise due to an illness. It covers both pre and post-hospitalization expenses, medical expenses, ambulance charges, and doctor consultation fees. Health insurance can be either on an individual basis or a family floater.
4. Mediclaim Insurance: People commonly use Mediclaim and health insurance interchangeably but there is a difference between the two. As mentioned above, health insurance is a complete coverage against all the expenses that arise due to an illness whereas, in Mediclaim, coverage is restricted to the hospitalization expenses incurred due to a medical emergency or surgical expenses. Considering the rising medical expenses pertaining to various tests, consultation fees; it’s better to cover yourself via a health insurance plan.