Covid-19: Paying insurance policy premium even in job loss

The Covid-19 induced lockdown has again hit the economy and rendered many jobless. Many companies had to temporarily shut operations and go for salary cuts. Due to this, an average Indian is finding it difficult to cope with the sudden dip in income levels. Many are planning to use their savings or take loans to meet their daily requirements or any unexpected expenditure.

Some are even finding it difficult to pay their monthly EMIs or insurance policy premiums.

Rishi Mehra, founder of Wishfin and personal finance expert tells Money9 that it is very important to have a life insurance cover in times like these. He says that one should avoid skipping payment of their policy premium and make most of the available solutions like savings, FDs, etc. wisely. In the situation of financial stress or job loss, one should logically analyze all the options and then make decisions.

According to Rishi, one should note the timeline for the minimum payment of premium that has to be made for the insurance policy to be active. “If the time has passed and the minimum premium is paid, then one can stop paying the premium. If that is not the case then one has to look for other options, like taking out certain money from FD to pay the premium,” says Rishi.

Taking up a term plan is also a wise decision as it is much cheaper than all these policies.

In case a person is considering liquidating mutual funds to pay the insurance premium, then that should be kept as a last resort. It is better to liquidate a part of  FDs after that go for other options like liquidating physical gold if there is no option available only then consider mutual funds.

“If a person is paying a higher interest rate on a home loan, then he/she can consider altering the home loan, maybe by increasing the tenure so that EMIs are reduced. There are options like balance transfer of loans, also available by the banks which tends to reduce EMIs,” Rishi adds.