Sound insurance purchases go a long way in securing financial independence. A family needs sufficient insurance to make sure that lifestyles are not compromised in the event of the death of the earner, say financial planners.
Veer Sardesai, managing director of Sardesai Finance says loans must be insured to enable loan repayment in case of your death. Health insurance is also important, and more in case you stay in a metro.
“Each member of your family should have a mediclaim/ health insurance policy of at least Rs 3 lakh to Rs 5 lakh,” says Amar Pandit, a certified financial planner. If not a “family floater” of Rs 5 lakh to cover the entire family is advised, in addition to critical illness and disability covers.
A householder’s insurance is a comprehensive single policy divided into 10 sections protecting against fire and allied perils, burglary and theft. It covers jewellery, breakdown of domestic appliances and electronic items, baggage losses during travel, death or disability.
Insurance companies will insure your house on the reconstruction value — that is the cost to rebuild the house.
You can choose to insure the contents at reinstatement (replacement) value. You can also insure at market value, which deducts depreciation for used items.
Although the third party motor insurance is mandatory for all vehicles except government vehicles, experts say you can also buy a motor ‘own damage’ cover that protects your car against accidents and natural disasters.
Sardesai Finance recommends that a person should have an emergency fund to cover sudden expenses, like in the case of a job loss.
“The emergency fund should consist of an amount which is equivalent to your six months living expenses to take care of situations such as job loss,” Sardesai said.