outstanding housing loan of Rs 15,00,000. The total of all existing insurance policies is Rs 3,00,000. The minimum insurance cover required is Rs 48, 00,000. This is a far cry from the Rs 3,00,000 of insurance that is currently held.
Women with no financial dependents should not consider term insurance. To buy a term plan one should get in touch with a financial counselor. There are also a number of companies selling term plans online.
Once term insurance is out of the way the other critical thing that needs to be covered is medical expense. Everyone must have a medical insurance. Given the ever increasing costs of treatment and the incidence of lifestyle and other new-age diseases, not having a medical insurance can lead to financial debilitation. There are scores of medical plans available in the market.
Even if one is working and has a health insurance provided by an employer, it is better to have independent personal health insurance as well. Employer insurance ends immediately on end of employment and this could leave one uncovered. Also as one gets older it becomes more expensive to get a health insurance cover. Take a health plan early and lock in lower rates.
Another aspect where insurance comes in very handy is in retirement planning. The best time to plan for retirement is the day you start working. However, very few of us think like that. It is important to start saving early, the earlier the better, since this means that one can build a larger corpus leading to a more comfortable retirement. Retirement plans have two phases. The first phase is when you accumulate and grow your money. The regular premium paid by you is invested in market-linked instruments such as stocks and shares, bonds, deposits and many other instruments. This money grows until the pension plan matures or vests. At this point you have the option of withdrawing 33 per cent of your corpus. The balance 33 per cent has to be invested in what is called an annuity plan. The annuity plan is what gives you a periodic payout in the form of a regular pension.
How does one go about calculating how much money to invest in a pension plan? The best way is to sit with a financial counselor who will be able to assess your future needs, factor in inflation and arrive