Moving through different stages of life, we acquire a variety of financial responsibilities. Like most people, you may have envisioned yourself having a house or car by a certain age. These are life goals that require a significant amount of money, and as a result, you may have to take out loans to fulfill them.
Understandably, repaying any financial liability can be challenging when managing other regular expenses in life. You may wonder about the need for an insurance plan, such as critical illness insurance in such a situation. However, protecting your own life is a crucial part of your financial plan.
While repaying outstanding debts is necessary to live a relaxed life, you must not neglect other essential investment prospects because of it. Given the current circumstances, the need for financial protection has become more apparent than before. You can never be too careful when it comes to securing the future of your loved ones.
Here are a few things to remember if you are buying a term plan while dealing with financial liabilities:
Assess Your Requirements
The financial profile of each individual looks different in many respects. The kind of insurance plan that you require depends heavily on the factors that affect it. For instance, for an individual with financial liabilities and a pre-existing medical condition, critical illness insurance may provide more benefits.
When buying an insurance plan, such as critical illness insurance, it is essential to keep track of your finances. According to the nature of your expenses, you can map a more efficient financial plan for your family.
It is almost impossible to predict when a financial emergency will occur. Therefore, it is in your best interest to keep your investments in order beforehand. You can check the duration of your liabilities and align them with life goals to get a clearer picture of your needs.
Get Adequate Sum Assured
When you buy critical illness insurance or a simple term plan, the sum assured plays a substantial role. The whole purpose of creating a financial support system is to ensure that your family members will never face money problems in your absence. If the sum assured from your critical illness plan is not enough, it may fail to serve its purpose.
By reviewing your requirements carefully, you can estimate the adequate sum assured needed to support your family in times of crisis. In case they have to pay EMIs in the absence of an income source, the benefit from the insurance plan should be sufficient.
As the policyholder, it is vital to check if your critical illness insurance duration matches your liabilities. You do not want your loved ones to take up the burden of repaying loans and managing the cost of living without proper resources.
Possibility of Medical Emergencies
Another important factor to consider is the occurrence of medical emergencies. We are surrounded by several threats to our health daily. The increased vulnerability to lifestyle diseases paired with healthcare’s alarming costs should not be avoided when putting together a financial backup plan.
For that purpose, critical illness insurance may be the most appropriate instrument for you. Different insurers provide coverage for a wide range of life-threatening diseases under a critical illness plan.
The healthcare industry in India is projected to reach $372 bn by 2022. As healthcare quality is advancing with technological developments, it makes sense to secure critical illness insurance to get comprehensive coverage. It will ensure that in case of a medical emergency, you can afford proper healthcare.
Reduce Tax Liabilities
The tax relief provided by the Government can be a blessing. In addition to that, reducing taxable income also allows you to use the money better for other purposes, such as repaying loans.
Insurance products can be considered a useful tax-saving tool. Under the applicable sections of the Income Tax Act, 1961, you can avail of tax-benefits for premiums paid towards life insurance. The eligible tax deductions depend on the types of life insurance policies.
Add Useful Riders
If you think about it, you need financial protection for a variety of things in life. As the cost of living is rising, it can be complicated to meet all the demands with your limited savings. For instance, buying critical illness insurance and a term plan may be heavier on your pocket.
If you are trying to optimize the benefits from your insurance plan, riders can be an ideal choice. Insurance providers offer riders as an add-on to the base policy, helping policyholders to customize the policy to their expectations. You can get the benefits of critical illness insurance and a term plan within one plan by adding the relevant riders.
Furthermore, reputable insurers now provide an option to purchase a COVID-19 rider with their term plan. Make sure you are aware of the availability of riders when buying a term plan.