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Planning For It!

Four Vital Insurances for a Better Shield against Risk

Insurance is a most quickly acknowledged and wide-spread risk mitigating financial instrument available in the market. The word insurance is many times confused as an instrument only associated to cover life risk or health problem and still there are very few takers to such a significant tool. It is very important to get the protection against the primary risks such as death and disability. Once these basic risks are covered then one can plan and buy further cover to enhance the protection against other major risks as per need. Let’s discuss some of the insurance covers available in the market to strengthen the shield against the uncertainties:

The Mortgage Redemption Insurance (MRI)


An individual buys a house on loan and meets an untimely death, what would happen to his property? Who’ll pay the loan amount?  The MRI has answered to all these questions. MRI is a type of insurance that assures the policyholder to pay the outstanding loan after his or her death. The premium payable on MRI reduces every year as the loan installment is paid. The single premium option is also available, but it is advisable to opt for the regular yearly premium because it costs less as the premium reduces every year. This type of insurance is only available to a male person in an age below 50 years. There is no maturity value of MRI.  It also reduces the credit risk of banks, so that helps in faster processing of home loan.

Hospital Cash Plan (HCP)


HCP allows policyholders to cover the risk of everyday hospitalization expenses by providing fixed daily allowances.  Here it should be noted that HCP is not a substitute to normal health insurance, but it is a complementary product. There are many expenses incurred during hospitalization, which are not covered under normal health insurance such as travelling by family members and their accommodation. In hospital cash plan, all such expenses are covered on day to day basis. A health insurance policy holder can do avail this facility by either buying a rider or an add-on from the company.

Insurance to cover critical illness


If one thinks that he/she can face some critical disease because of family history or existing lifestyle, then it can choose either a standalone policy or buy an add-on as a rider with existing health insurance plan. Rider costs less than a standalone insurance policy. If a claim is made on a rider, then base policy gets ceased. Many companies continue to offers' insurance for the rest illness with an addition of little extra cost.

Retirement Plans


Normally, an insurance plan covers the risk of uncertainty but a pension plan covers the risk which is certain and sure i.e. retirement. It provides a regular income to a person after his or her retirement. It comes with cover and without a cover option to mitigate the untimely death risk. Retirement plans are available with a ULIP and conventional choice. A small amount invested today can make life happy even after the retirement with a living standard similar to present status. The most important thing is not buying a pension plan but to buy it with a correct amount that could provide sufficient money after the retirement.

Insurance not only protects the family after one’s death or health risk, but it also gives a satisfaction and confidence to the insured against all kinds of uncertainties that can bring havoc in the life. So it’s very important for all to get a better insurance shield by opting correct rider, add-on and plans to mitigate maximum risk possible.

About the author:


Amit Sethi is an MBA (Fin) graduate and a Financial Consultant. He has spent 9 years in Equity research, Stock broking and Financial Consultancy Sector. He can be reached at amvifinance@gmail.com

Here are few calculators for your peruse:

Insurance Expense Protection Calculator

Life Insurance Calculator

 

Published Jun 07 2012

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