Take half chances but not with your insurance

A rope is as strong as the yarn or strands that it is made up of. The risks that you are exposed to in life are no different—it depends on the cushion that you have to face the risk. When it comes to risk mitigation, all types of insurance play a big role. It is natural to be overwhelmed when it comes to buying insurance.

There are many types of policies and several insurers to sift through before you can make a decision. Factors like monthly premiums, coverage level, and tenure of the policy, and whether it will eventually hold up to its promise when it comes to claims, can be the reasons for heightened anxiety. Yes, there are several benefits in buying health and life insurance. But, chances are most Indians will look at a policy as a tax saving avenue and stop right there. That in a nutshell demonstrates the awareness about insurance.

The tax advantage or benefit provided to you on payment of premiums towards life and health insurance should be optimised and not maximised. The income tax system is such that tax rates are determined by the tax slabs that you fall in, which in turn depends on how much you earn. Good health, good life and a secure retirement plan are some of the essentials for every individual, in the order mentioned. How much life insurance you need and how much money you will need for yourself at the time of retirement are somewhat linked to how much you earn. So, why not use the tax savings aspect of insurance that is available with adequate term life insurance and a pension plan to build a sizeable corpus for you?

Using this approach will hit multiple birds with one stone—create a corpus for your dependents if you do not wake up tomorrow, have something to manage your retirement and also optimise your tax savings. Suddenly, insurance becomes very meaningful and powerful, which it is. Now, you are left to choose how much insurance you need towards healthcare risks that you are exposed to. While healthcare costs are on the rise and there are several types of policies available to mitigate all these risks, it will be in your interest to work towards a healthy life than solely depend on health insurance. Use the details about different policies, their benefits and suitability, ways to optimise premiums, and how you can make insurance work for you.