Insurance is a policy which one buys to safeguard oneself, family and the material things one value.
Insurance covers you against any unexpected occurrence in life and it also covers your family even after your death. It is a way of managing risks. When you buy an insurance, you transfer the cost of a potential loss to the insurance company in exchange for a fee, known as the premium.
One must also realize that insurance is different from an investment. Investment ensures return on capital unless there is a loss while insurance safeguards one against un-expectancies of life. Here are the three insurance policies which one should go for.
As rightly said, ‘mysterious are the ways of God’. Today you are, tomorrow you may or may not. Think of those who depend on you financially and emotionally. There isn’t a mechanism to compensate for the emotional loss but financial security of your loved ones can be taken care of with life insurance.
One must select the right amount of life cover in order to make sure that it is sufficient to take care of his/her family’s well-being. A good thumb rule is to choose a life cover which is at least 10 times your annual income. For example, if your annual income is Rs 15 lakh, then your life cover should be at least Rs 1.5 crore. Similarly, if your annual income is Rs 200,000 per year, then your life cover should be at least Rs 20 lakh.