Here's how much health and life insurance cover should you buy

The significance of having sufficient health and life insurance covers have been evident. There have been several cases wherein people have faced problems due to the absence of insurance policies.

It's not just the coronavirus, but having proper coverage can help in many medical and life situations.

According to Rakesh Goyal, director, Probus Insurance, Insurtech Broking Company, while buying a health insurance plan, customers must consider the scope of the coverage, i.e.; one must weigh the balance between the premiums paid and the benefits the plan has to offer.

"Secondly, one must consider the individual and the family needs before finalising on a specific plan, and the sum insured e.g. opting for a plan with a sum insured as low as Rs 5-10 lakh for a family wouldn't be enough, especially with senior citizens in the family suffering from critical illness. A sufficient sum insured should be considered by accurately evaluating both the individual and the family's growing requirements," Goyal explains.

Customers should also look for the sub-limits, co-payments, claim settlement ratio, premium loading, and cashless network hospitals to ensure that these factors fit well as per the need, convenience, and budget.

The maximum renewability option, Goyal tells, also helps as it promises to renew the plans even after a specific age.

"In addition to the above factors, one must also check the flexibility to increase the insured amount (if needed), know more about the waiting period for pre-existing diseases, go with an insurer that has the highest claim settlement ratio, consider the add-on riders (if any), and read the reviews and exclusions well in advance to know more about the plan you are planning to opt for," Goyal opines.

While there is no ideal sum assured for the health Insurance policy for an individual, there are some broadly-accepted rules on its quantum.

As per HDFC ERGO General Insurance Company, health cover should be at least 50 percent of the annual income. And second, the insurance cover should at least cover the cost of a coronary artery bypass graft in a hospital of choice.

Talking about the life insurance cover, the evaluating factors are somewhat similar. One must understand which policy would suit their needs better.

"An individual's needs would differ depending on the life stages one is into: someone may look for a policy to save for the future while the others may look for a plan for their children's marriage/education, or others may look to plan their retirement," Goyal illustrates.

To ensure an individual buys an optimum plan, one must consider the claim settlement ratio, look for riders, compare the policy with other plans, and analyze the documentation to better understand the plan.

Moreover, IRDAI also suggests that the coverage of the life insurance plan must depend on what the investment needs are and also on the affordability.

Most insurance companies say a reasonable amount for life insurance is six to 10 times the amount of annual salary. Another way to calculate the amount of life insurance needed is to multiply the annual salary by the number of years left until retirement, according to experts.

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