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 single, 23, and work in a business process outsourcing firm. Do I need to buy life insurance as I am so young?
Life insurance is always bought when you don’t need it, so that you have it when you need it. Life insurance products are the only financial products which give you long-term guarantees. As you are young, you will benefit more as you will be required to pay less premiums. If you start young, you would also reap the full benefits of what is called the “power of compounding”.
Life insurance is a guarantee for the future—whether you take it for protection, financial needs or tax savings. Please go ahead and get your first life insurance policy.
I am 35 years old and have already invested in a life insurance plan. How often should I update my life insurance portfolio?
Your salary goes up every year. Your expenses also constantly go up. Life insurance is bought to provide for your family’s expenses in case something happens to you. Every two-three years, your expenses would have increased enough for you to review your life insurance provisions.
Additionally, there could be events in your life which suddenly increase your expenses. These could be marriage, childbirth, purchase of a house or a car. Hence review your insurance cover once every three years.
If any assumption concerning the financial needs of your family changes, review your insurance portfolio.
A constant review ensures that you and your family are well prepared to confidently meet the eventualities of life.
Readers are welcome to write in with their queries to firstname.lastname@example.org. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Rajesh Relan, managing director, MetLife.