Hi this is KK Rapa and in the second video of the personal finance series let's talk about insurance and the role it plays in your personal finance Journey we will talk about both health and term insurance and at the end of this video I'll also share top five things that you need to look for when buying a health and a term insurance.
Which people usually overlook in the previous video the link for that is in the description below we discussed about building an emergency fund essentially an emergency fund covers you for the risk of unknown and in this.
Video let's take that conversation forward and discuss about insurance which is your second building block in your personal finance Journey Insurance 2 is basically covering you for risk in fact pretty much all financial planning should start by covering for risk after ensuring that you have an emergency fund you need to ensure that you have.
Insurance in place of course it's not necessary that you should first build an emergency fund and then get an insurance both these things can happen in parallel there are two basic insurance that you need to have in place one is a term insurance the other one is a health insurance imagine a situation where you the sole bread winner of the family or.
Maybe you are one of the financial contributors for the family and your family's Financial Dynamics is highly dependent on your contribution given this unfortunately if a tragedy were to strike and you were to pass away what would your family do the emotional loss that your loved ones will have to battle is unimaginable add to that the.
Financial void you would create for your family unknowingly the pain only gets Amplified with this while we can't control life and its outcomes what we can control is our financial situation the financial void that I just spoke about can be easily fixed with a term insurance in term insurance your insurer will pay your family a large cers or the.
Sum assured in the unfortunate event that you pass away for example let's say you have a term insurance for two cross and in the unfortunate event that you pass away then your family will get two cross the money that your family will receive from your insurer will act as a cash reserve and hopefully your family shouldn't struggle financially in your.
Absence you can buy a term insurance from a life insurer against which you will have to pay a yearly premium for instance let's say you pay every year 15,000 for which you get a cover of 1 and a half gr how much life cover should you get from a life insurer up until what age should you get this insurance what is the premium that you need to pay.
What is the frequency of the premiums that you need to pay all these things can be discussed with a trusted insurance agent note I've used the word trusted for a reason here as much as I like insurance as a product there are few things that can be misleading this is because of all the Clauses and the sub Clauses that gets baked into your.
Policy one of the big biggest issues in my opinion is that people often mix insurance and investment the typical thought process is something like this I anyway have to pay so much money as premium every year may as well double that up and make that into an investment the problem if you take this path is that you'll neither get a good.
Investment option nor will you get a decent insurance it's best if you do not mix investment and insurance and treat them both separately treat the money that you pay as premium towards your insurance as an expense and that's about it once once you have term insurance in place the next thing that you need to have is a health insurance the health.
Insurance covers you for another risk medical expenses in case of hospitalizations and surgeries medical inflation in India is as high as 15% it's a no-brainer for you not to have a health insurance having a good health insurance ensures you're covered for medical emergencies and hospitalizations and when you get a health insurance.
Ensure you also get a cover for all your family members and the senior citizens at home one of the the most common misconceptions when it comes to health insurance is that you don't really need a health insurance just because you're young people think that things like health insurance is only for middle-age folks well this is not true especially.
In the postco era think about it in your own Circle how many times in the recent past have you heard about young people suffering a heart attack or for that matter young people Contracting type 2 diabetes in a situation where you contract critical illnesses very young in life then there are chances that that you will never get a health insurance so.
It makes sense to get a health insurance covering you your dependents and the senior citizens as early as possible irrespective of how young or fit you feel of course buying a health insurance when you are young also means you pay lower premiums I did mention at the start of this video that I'll share top five tips when it comes to buying health.
And term insurance for this I reached out to my friend shreit from ditto and here are the tips from him let me start with term insurance first when you're buying a term insurance policy your insurer generally expects you to be in good shape they conduct a bunch of medical tests and they may even ask you to go through a threadmill test to.
Determine your Fitness this comes as a rude shock to most people since even the smallest variation from normal can have a massive consequence based on the test results and the variance from what they perceive as normal they may ask you to reapply in 6 months or they may charge higher premiums or there are chances that they'll reject your application.
Entirely so before getting a term insurance it makes sense to ensure that you are reasonably fit the term insurance premium for smokers is considerably higher compared to non-smokers so if you're thinking about getting a life insurance or even otherwise please stop smoking buying a critical illness Rider along with a term.
Plan makes a lot of sense critical illness can often be crippling both physically and financially and during your treatment you may need additional income to replace the Lost income a critical illness Rider can offer you that so with the critical illness Rider the premiums may be tiad bit expensive but it makes absolute sense to include.
That in your policy don't fall for the Trap of buying a term insurance till you're 99 years old think about it after 60 people usually tend to retire and the source of income will anyway not exist which means to say your family may not be dependent on you financially after your 60 given this it makes no sense to pay a higher premium and get a life.
Cover for 99 years and here is the fifth point and this fifth point is common for both term and health insurance in most Industries the existence of a middleman is generally frowned upon however the insurance industry is an exception in that regard insurance companies generally reject a claim even if they have the slightest suspicion and then.
They expect the customer to seek further recurse this is why having someone on your side will help especially while making a claim dealing with a rejection and escalations let's move to the top tips when buying a health insurance when buying a health insurance you need to fill something called as a proposal form do not lie on your proposal form you may.
Be tempted to lie on the proposal forms about your General Health pre-existing conditions and lifestyle habits to avoid loading charges or cut down on chances of application rejection however this is a terrible idea insurance will almost always find out about your preconditions when you make a claim picking an insurer is more important than picking a policy.
It may be very tempting to buy a fully decked out policy with amazing features at attractive premiums however doing this without fully understanding the insurer profile is dangerous features like unlimited restoration and 100% bonus matter little if the insurer has no track record or has a reputation of denying claims this is for frequent.
Travelers if you're traveling throughout the country then it makes sense to check if your policy imposes zonal co-payment usually when you buy a health insurance policy the premiums quoted are for certain pin code this is because the treatment cost can vary considerably depending on where you live however what happens in case if you're hospitalized.
In a different city well then in some policies your insurer will expect you to pay a certain portion of the hospital bill from your own pocket so if you are a frequent traveler ensure you get a health insurance with a pan India payment of course this may come to you at a slightly higher premium Health policies usually exclude a list of.
Diseases up until 2 years of the policy maturity these are called specific illnesses usually the disease included here are common ailments like Cataract and kidney stones which you expect from most policies however some policies also include things like heart conditions which you generally don't see in these specific illnesses so make sure you go.
Through the policy or talk to your agent to figure out what the exclusions are I hope hope you found this video useful if you have any other tips that you think will be helpful when buying an insurance then do comment below and let us know I'll see you guys in the next video.