Life is highly unprecedented and you might have to face a contingency in an unexpected manner. All you need is to be completely prepared to face any emergencies that might come up.
Precisely, the two major unprecedented and unfortunate situations which you might face are ill-health/illness and death. In case of your unfortunate accidental demise, your loved ones would have to face several economic and financial problems whereas your illness can also create problems if you are the sole bread earner in your household. So, you need to ensure that even if these critical situations arise you have made specific arrangements by which your loved ones would remain financially secured.
Life insurance would act as a support system for your loved ones in case of your untimely demise. It would take care of their financial needs and prevent them from facing any hassles. A health insurance policy would help in handling the medical expenses in medical emergencies. Thus, if you are starting your career and are in a dilemma as to which one is important; this article would help you by resolving your confusion.
Why is Life Insurance Important?
Life insurance policies are designed in such a way that they would provide your family with a lump sum amount in case of your sudden demise.
- Life Insurance policy would help in providing your family members with death claims which would act as financial assistance for them to start their lives fresh.
- Life insurance plan premiums do not increase once the policy starts. So, if you take a plan early in life, your net premium outflow will be much less.
- In addition to providing death coverage, life insurance policies also offer maturity benefits. You can avail money at the maturity of the plan. So, a life insurance policy helps in creating an investment option that would return a corpus in a specific period.
- By paying the life insurance premium, you are developing the habit of saving which would help you in obtaining a lump sum in the long run.
- Life insurance can act as a tax-saving tool as the premium paid can help in claiming tax deductions.
Why is Health Insurance Policy Important?
Health insurance policies are meant to take care of your unexpected medical expenses which might arise due to illnesses.
- Medical insurance is necessary these days as there has been an unexpected rise in the spread of lifestyle ailments and the sky-rocketing rise in the prices of the medical services. It would help in providing cover for all the basic expenses incurred in case of any medical contingency faced by you.
- Medical insurance policy will help in providing cover for the expenses incurred due to hospitalisation, pre-hospitalisation, and post-hospitalisation.
- You can include an additional rider in your general health insurance plans such as maternity benefits; room rent waiver, ambulance cover, etc. for enhanced coverage.
- A health insurance policy would cover several other expenses such as emergency ambulance services, domiciliary expenses, expenses related to other alternative methods of treatment, etc.
- Furthermore, the health insurance premium which you would pay towards health insurance plans can help you to claim income tax deductions under section 80D of the Income Tax Act.
Life Insurance or Health Insurance?
During the different phases of your life, life insurance and health insurance both would play an essential role. The life insurance cover would help in providing financial cover to your loved ones especially when you have dependents whereas health insurance is important as medical contingencies can exhaust your savings easily due to the high prices of medical services.
However, when you have just started your career, premium payment for both policies at the same time can be difficult. With an increase in responsibilities; you might choose only one to move ahead.
So, since both are essential; how do you maintain both life insurance and health insurance?
The golden rule which would help you to have both life insurance and medical insurance together is through proper financial planning. You must plan your investments in such a way that your long term financial goals are achieved and you maintain your financial well-being in the present as well.
While purchasing both life insurance and health insurance policy, you can purchase only the required coverage. Alternatively, you can start with one, say health insurance as that is a survival benefit and then opt for a life insurance plan.
Moreover, you can plan to purchase a specific kind of life insurance and health insurance in a particular age group based on your requirements. By this, you can have adequate coverage and premium payment for both would not be a problem as well. Then, you can choose to increase your coverage based on your age.
- In the Age group of 20-30 years i.e. at the start of your career, you must proactively purchase insurance due to the reasonable insurance premium, especially Life Insurance since the premium doesn’t rise. The premium for Health insurance is low due to fewer probabilities of health problems at a young age. If you have dependents, you must purchase term insurance in this age group. Otherwise, a life insurance plan can be taken subsequently when you can afford the premium.
- Then when you are in the age group of 30-40 years, and you have started your family; this is when you need to upgrade your health plan into a floater plan which would help in providing cover for your dependents along with high coverage facilities. Term plan needs to be taken if you have taken it already. Moreover, a child insurance plan can be added up to the already present term insurance plan.
- Later on, when you reach the age group of 40-50 years and above, you should focus on wealth creation and buy plans which act as investment tools like ULIPs. Also, you can include additional riders and cover for critical illness. You can buy super top-up plans to enhance coverage at a low cost. Moreover, a pension plan could be included in your portfolio for future requirements.
- Furthermore, as time progresses, you should keep enhancing your health insurance policies for senior citizens as health-related problems would see a rise after a particular age.
Hence, emergencies can arrive unexpectedly. You must be aware of your requirements and should implement proper financial planning to face emergencies. Life insurance cover and a health insurance policy would prepare you to face the challenge of life.