What is insurance planning?
Insurance planning is one of the important components of the financial planning, which helps to compensate the future risks by a specific coverage of security of a certain insurance plan.
As you know the medical expenses are very high these days and you can’t really rely fully on your emergency funds or lifelong savings to meet the expenses.
This is where an insurance plan rescues you from the mud of problems. You should always consider that insurance plan that is suitable for you not that your friend is purchasing so you should also.
What’s in it for you:
- Components of Insurance plan
- Types of Insurance policies
- Importance of insurance plan
- Insurance plan in Indian tax system
Components of Insurance plan:
There multiple standards you should analyze before purchasing any insurance plan.
Long term care:
Everybody wants that they have a security for lifelong that will rescue them from different circumstances, cause you never know what is in the future for you.
Insurances having long term security facility support you the most and this is what you first consider while purchasing a plan.
Disability insurance is a policy that includes the disability coverage facility.
In this policy the person is provided the salary he was getting before being disabled.
The complete work he was functioning when fully capable is no longer completed so there is a risk of job loss.
Disability insurance assured the individual for this phase of disability when he can’t work he is provided with his salary for the maintenance of his family.
This is generally a short term policy.
Critical illness coverage:
Critical illness insurance is provided when there is a life threatening disease occurs in the insured’s body.
Diseases like cancer, heart attack etc. are covered in this insurance. Insured is given a lump sum amount at the time of diagnosis to recover from it.
This plan has features of supporting the person’s family after that person is dead.
The insurance is given on the death of a person to look after the family expenses of the deceased person.
But it is redeemable only after the death of the insured person.
Types of insurance policies:
There are the following types of insurance policies available for an individual;
Life insurance is the contact between a policy holder and assurer where the assurer promises to pay a certain amount of money to the specific beneficiary in exchange for a premium, under the circumstances where the insured person is dead.
The owner designates the beneficiary, though the beneficiary is may not be a part of the contract.
Now let us understand what the types of life insurance policies are;
Term insurance is a contract that is done for a specific number years or specific time if the insured dies within that period of policy is active or in force, the beneficiary will get the amount mentioned in the agreement.
Whole life insurance
Whole life insurance is like any other life insurance except the policy is in force the entire lifetime of the insured in this case.
This insurance plan support an individual’s children financially for their higher education and marriage etc.
It meets the growing expenses of a children insured in the plan.
Education loan is also a matter of concern. Know more about Education loan.
To choose appropriate child plans one need to first plan its family. So you can learn more about family planning.
An annuity plan is a plan in which the insured gets a lifelong regular payment after investing a lump sum amount in the policy for a certain period of time.
Unit linked insurance policy
It is a combination of an insurance plan and an investment instrument.
In this insurance plan some portion of the premium paid by the policyholder is used as investment and other portion is used as life insurance to provide an insurance coverage.
The investments are done in equity or debt Instruments.
Property insurance is a contract that provides protection against risks to property like fire, theft, or damage occurs from natural disasters.
This insurance further has some specialized insurance, such as Fire insurance, flood insurance, home insurance etc.
These insurances are generally divided into two types; open perils and named perils.
Open perils included all the threats to a property like flood, fire, earthquake and many more. Named perils are specially mentioned loss that happened to a property that is not included in the open perils.
Auto insurance is also called vehicle insurance is generally for cars, trucks, motors etc. This insurance simply support the financial expenses incurred due to any loss to the body of the vehicle for traffic collision or any incident arise therein.
It may also support financially for any theft occurred of the vehicle. The specific terms of vehicle insurance varies for different regulations under different regions.
Health insurance covers all medical expenses incurred due to whole body of the person or for some specific diseases arise to that person.
A person can plan his finances so that he can pay the premium regularly in order to enjoy the medical benefits mentioned in the agreement.
Travel insurance support financially for any unforeseen losses occurred in traveling both internationally or domestically.
Losses like theft, flight delays, cancellation charges, luggage loss and any medical emergency occurred while traveling etc. are included in this insurance by the policy company to the policy holder.
The policy differ from person to person according to the person’s travel experience, health issues and responsibility of a person, on these standards the premium of a policy decided for that specific person traveling.
Importance of Insurance plan:
These are the following importance of insurance you can facilitate;
- Provides support against occurrence of uncertain circumstances
- Provision for future challenges
- Provide a sense of assurance
- As insurance look after your security the mental health remain good
- It promotes loss prevention
- It gives you many tax exemption
- Encourages saving
- It gives you financial as well as medical support
- Insurance is an instrument that eliminates your risks and share your losses
- It contributes to your family and business sustainability
- Insurance plan is provided with a loan facility
- It look after your family after your disability or death occurrence
Know more about tax exemptions
Insurance plan in Indian tax system:
Insurance plan in India attracts many tax benefits. So you can enjoy the benefits by adding these plans and Expenses into your healthy financial plans.
Tax benefit under section 80C an individual can avail up to rupees ₹1.5L deduction if any expenses incurred for life insurance policy.
Under section 80D of health insurance you can get a deduction of ₹15k and in case of senior citizen the deduction amount shall be up to ₹20k.
Under section 80U persons suffering from any form of physical disability such as blindness can claim rupees ₹75k.
In conclusion insurance planning is really essential in order to form a healthy financial planning. This will help you to live stress free as all the responsibility is been taken care of by the insurance companies.
Moreover it is a type of investment that will give you highest coverage in circumstances where it would hard to get through.
So you should also apply for a specific insurance plan as your requirements for you as well as for your family member’s safety and security.
It is an insurance plan that gets you covered or active for a definite period of time of your life.
Well you can choose the best according to your requirements but you should consider where the coverage amount is greatest.
It is a combination of insurance and investment.
Yes, but only in case of a whole life insurance plan.
You can analyse the both plan’s amount coverage and their premium and conditions to get the best.
It varies from person to person and amount of coverage.
This insurance plan is in force for the insured’s whole life.
Yes you can plan your health insurance in the family planning.
You can choose one based on your requirements.
EPO health insurance can be called as “Exclusive provider organization”.
It varies from companies to companies according to the conditions of plan.
Yes you can change by a notice before any changes in the plan.
It is a traditional health insurance plan to support the sudden medical expenses.
Endowment is like the life insurance that pays a lump sum amount after the death of the insured to the beneficiary.