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 a 37-year-old corporate lawyer earning up to Rs10 lakh per annum. My wife is an engineer and we have a three-year-old child. Which insurance plan will be most suitable for me? I also intend to take out a home loan.
Before buying a policy, you should ask yourself some fundamental questions—Why do you need insurance? What benefit do you want out of your insurance policy? Are you looking for protection or saving or both?
Based on your income, age and family details, there are multiple options available for you. While it is good to have options, choosing the best one can be difficult. Hence, I recommend you take a financial health check (FHC). This is offered by some insurance companies, including Aviva. Depending on your life stage and earnings, this tool assesses and recommends the right product for you. The check will help you decide whether you should opt for one product or multiple products to meet your insurance needs.
You say you intend to take out a home loan. When you do this, it is extremely important that you take a life insurance cover at least equal to the outstanding loan amount. The home loan is often the largest loan liability for an individual, and should something unforeseen happen to you, your family will have to pay off the loan amount. Failure to pay off the loan can mean losing the security of your home. Life insurance for the amount of the outstanding home loan ensures that the family does not have to worry about the financial burden or the risk of losing the house in case the borrower dies before the loan is repaid.
I had taken a term insurance and an endowment policy. Due to an emergency, I couldn’t pay the premium for one year. Is there any way I can reactivate the policies?
You could revive the policies after paying the unpaid premiums and any penalty charges that apply. You should contact your insurance company for more details.
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 Bert Paterson, managing director, Aviva India.