The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
I am 34, married, and have a five-year-old child. I am a businessman with a lot of savings and have taken a housing loan which helps me save tax. Do I need insurance?
Insurance is often bought for savings needs but the basic purpose of a life insurance plan is risk coverage. You need life insurance to the extent that your family
can enjoy a comfortable lifestyle even if you are not around. This amount is generally accepted as six-eight times your annual income. You would also need to cover liabilities. For example, if you have a home loan, you would need a life cover to the extent of your outstanding amount. Life insurance is a unique financial instrument with the potential to provide risk cover and tax-efficient savings. It also helps you plan for retirement. It additionally accords protection from disability and dreaded diseases. Adequate life insurance helps you stride through life with complete peace of mind.
I am 28, and am planning to buy a life insurance policy. How can I add to my insurance against an accident or a similar mishap?
Most firms will offer riders on your base policy to offer benefits in case of disability from accident-related mishaps. Riders are flexible options that add value to the customer’s life insurance needs. They allow a policy to be customized. Thus, you can opt for a “personal accident benefit” rider, a low-cost additional benefit paid to the nominee if the insured’s death is caused by an accident. It is important to read the sales brochure and policy document, and be aware of the plan in its entirety.
Readers are welcome to write in with their queries to askmint@livemint.com. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Rajesh Relan, managing director, MetLife.