Importance of insurance in your financial plan

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Money9 Helpline has emphasised the importance of insurance time and again. It is very crucial to decide on a suitable insurance plan that can provide maximum benefit.

Money9 Helpline hosted Amit Chhabra, Business Head, Health, Policybazaar.com to answer some queries related to choosing and buying a suitable insurance plan.

Here are some questions:

S Banerjee, Kolkata: I am a 42-year-old single mother with a 13-year-old son. I have always felt that the savings part of an endowment plan is a waste. Should I opt for term insurance?

Chhabra: It depends upon the function of your life cycle. You should definitely look at term insurance. You have to support your 13-year-old son as he is dependent on you. In case something happens to you, you have to ensure that your son is able to survive alone. Build a corpus, that is enough to make sure your son is getting enough money to fulfil all his needs related to money. The sum insured is a function of your lifestyle and requirements. So, first, look at term insurance to secure the future then the endowment plan.

Mukesh Majumdar, Mumbai: I am a retired govt employee and have Rs 5 lakh for investment. receive a pension of Rs 22,000, FD interest, and dividend income from shares. I don’t have an insurance policy. what should I do to cover my health cost and medical emergency?

Chhabra: You should first go for a health insurance policy. Today you have options to buy insurance on EMIs. In your case, the premium will be high as you fall into a higher age bracket. I would suggest instead of paying a premium upfront, buy a policy on EMIs, that will allow you to cover all your medical costs. You should go for at least Rs 10 lakh cover policy.