The Role of Insurance In Your Financial Plan

May 17, 2018 | 1 year ago | Read Time: 2 minutes | By CA Sandeep Vinod Kanoi

Most of us understand the importance of having insurance, buying an insurance policy still isn’t our top priority.  When it comes to insurance, consumers seem to be uneducated about it. Navigating insurance marketplaces could be puzzling and insurance policies don’t always offer the protection which people are looking for. That’s a prime reason why most of the people don’t go for an insurance coverage which they require.

Insurance is a very crucial part of everyone’s financial plan. Staying prepared for the unforeseen would ensure that you could still accomplish your goals even after encountering a financial crisis. An insurance policy would help to preserve your emergency fund in case of emergencies. Insurance could also protect your family if you’re part of an accident and have sustained injuries, become disabled, ill or die. Some situations could be very expensive for the ones with no insurance coverage, so it is vital to have any policy you which you require depending on your financial situation.

The insurance decisions that you take must be dependent on your age, family, and financial situation. There are several forms of insurance which one can choose from. For instance, life insurance could be a necessity, particularly in case you’re married and have children.

Below are some of the major categories of insurance which should form part of everyone’s financial plan:

  1. Auto insurance: Auto Insurance protects one from the damage to the considerable investment in a vehicle from liability for the damage and also injury sustained by you or others driving your car. It could also help in covering the expenses you or others in your vehicle might incur due to an accident with the uninsured motorist. Auto insurance is crucial for people owning a car. Most of the countries require you to have auto insurance before you could register your vehicle.
  2. Life insurance: Life Insurance is payable on the demise of the insured and it can provide the insured’s spouse, children, and dependents funds essential for helping them maintain the standards of living, could help in repaying the debts, and could also help in funding the education costs of children. The amount one needs depends on one’s financial situation. A life insurance plan is also a tax saving tool since the insurance premium that you pay for your insurance policy is eligible for income tax benefit u/s 80C of the Indian Income Tax Act. The policy proceeds that you receive from the life insurance company are also exempt from tax
  3. Medical Insurance: If you’re insured against medical emergencies and critical illness, you’re staying in very advantageous position. Your medical insurance policy could reimburse all medical expenses during your hospitalization. You just need to furnish the required documents which prove that you were under medical supervision. In case you require a cashless policy, the insurer would directly pay the medical bills to the hospitals.

Sticking to an insurance plan is very crucial part of the financial plan. Annually, you should also review your insurance and make required adjustments. If you require any help, consider seeking the assistance of a financial adviser. Having insurance isn’t enough – it should meet all your needs. Being aware of financial implications and potential risks is critical. Additionally, it is crucial to understand all the features and terms and conditions of the insurance policy so you’re aware of exactly what you’re covered for.

To know about AegonLife’s saving plans and other products like ULIPs, visit our home page.


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