Life and health coverage: How much coverage should one buy and issues to consider

The need to buy adequate life and health insurance seems to have increased in recent times. Insurance is a tool to manage the risks that arise in life. While life insurance helps maintain quality of life and meet life goals, health insurance helps one avoid having to dive into one’s own investment to cover the cost of hospitalization. Even before anyone starts investing for the goal, the family needs to have adequate amount of life and health insurance coverage.

The life insurance coverage amount is marked as Assured and with the bonus it becomes Death Benefit. Under insurance one does not have an adequate amount guaranteed and surviving family members may have to pay less to meet their financial needs. As a thumbs up, one can look at buying a life cover 10-15 times the net annual income, accounting for other liabilities such as home loans.

One should do a proper need-based analysis. “Multiple factors help one to get an ideal cover amount that one should buy. Factors such as age, financial resources, financial liability, annual income, lifestyle, and dependents’ expenses are some of the factors that determine a person’s required insured money. It is also important to continue reviewing every 5 years. As one’s life progresses, one should monitor their protection needs at regular intervals and upgrade their cover amount, ”said Aatur Thakkar Co-founder and Director, Alliance Insurance Brokers.

When it comes to buying adequate health cover, the answer may not be as simple as life insurance. Several factors can help you determine the amount of health insurance coverage, such as the city of residence, medical history, and the types of hospitals in your area. “The geographical location in which one lives is also taken into account because the medical costs are lower in Tieir-2 or Tier-3 than in metro cities. If someone has an existing illness, the amount of premium may also increase. The waiting period for PEDs and specific illnesses also determines the amount of premium. The premium for health cover is comparatively lower with PEDs and higher waiting times for certain illnesses, “said Vivek Chaturvedi, Head of Direct Sales, Digit Insurance.

“Considering the rising medical costs, a person can consider an insured sum of Rs 10 lakh to adequately cover themselves. They can re-evaluate their needs and get a higher insurance once they get married or have children. The premium is usually higher for people who have pre-existing disease (PEDs) and they bring waiting time, ”Chaturvedi added.

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