Covid-19 scare: Five must-have insurance covers you should buy this Diwali

NEW DELHI: Diwali 2020 is unique in many ways. The pandemic and the resultant social distancing, fear of job loss as well as salary cuts and now the economic downturn have taken some sheen off the festival of lights this year. Given the uncertainties about health and life in such times, planning for an unforeseen future has suddenly become crucial and for that one item that you must choose to make a part of your gift list is—insurance.

Here are the five must-have insurance covers:

Health Insurance: The pandemic has boosted demand for health insurance policies, which is explained by how these policies have become a must-have product from a good-to-have product. With surging healthcare costs, buying sufficient health cover is a must. A basic indemnity policy is good to start, but covid-19 has proven that having a sum insured of ₹5-6 lakh may not suffice.

"Many employers offer a health cover for their employees, and as a result many of us don’t buy a health insurance plan of our own. Everyone should definitely get their own health insurance because uncertainties such as job loss or temporary unemployment between jobs are hard to predict,” said Santosh Joseph, founder, Germinate Wealth Solutions, a mutual fund distributor.

Also, one should look at a critical illness policy, which pays a lump sum if you’re diagnosed with specific critical illnesses.

Life Insurance: In the post covid-19 world, planning for an unforeseen future has become the most important. A life insurance protects the family and dependents following the a sudden death of a primary wage earner.

“If you are the sole breadwinner and your spouse, kids and parents depend on you financially then life insurance is a must buy for you,” said Vaidyanathan Ramani, head-product and innovations, Policybazaar.com.

Term covers are the simplest form of life insurance that pay out the sum assured if the insured dies. The premiums are also much cheaper for these plans but getting an adequate cover is the key. For calculating the minimum cover required, the thumb rule is having a sum assured that is 10 times the annual income. However, according to experts amid the backdrop of covid-19 pandemic, one should have a minimum cover of 15-20 times one's annual income.

Home Insurance: A natural calamity such as an earthquake or a flood can damage your house. A home insurance covers all the contents of a house as well as the property. According to experts, you can also buy this policy even if you live in a rented house.

Moreover, basic fire insurance in the policy covers financial losses due to damage to your house and its contents on account of fire and other allied perils such as earthquake, lightening, storm, floods and riots.

A bundled or comprehensive policy, called householder’s package policy (HPP), can secure your home and its contents against incidents such as burglary and electrical breakdowns.

Accident Cover: A personal accident cover offers you financial compensation if you meet with an accident that leaves you permanently or temporarily crippled. “This policy comes with four different covers: death, permanent disability, permanent partial disability and temporary total disability,” said Ramani. The payouts for the four conditions may vary from policy to policy and the premium depends on how risky your job is.

Motor Insurance: Under law, every vehicle owner is required to insure their vehicles. Vehicle insurance helps cover for damages resulting from accidents. “Even though the third party—that pays for damages to a third party—is the only mandatory cover, insurers offer a comprehensive cover that not only covers your liability towards a third party, but also pays for damages to your car and to the passengers in case of death,” said Ramani.

With changing lifestyles, the types of must-have insurance covers have also changed. One such cover is gadget insurance. “These days, gadgets such as phones, tablets and laptops form a critical part of our lives. It’s good to get insurance for such gadgets, especially if you own expensive models,” said Joseph.

Nobody knows what life will throw at us, much like the pandemic. Therefore, experts say, individuals must evaluate their portfolio and balance it with the right insurance products at the earliest.