7 Must Have Insurance in 2021

About 30-40 years back, things were very simple. Insurance meant LIC policy. Someone from your family or relative will buy LIC Jeevan Anand policy on your name and that was it. That was the only must have insurance back then.

But in today’s world, you cannot rely just on LIC policy. You need more than that. Problem is that market is flooded with an insurance policy for everything – including your body parts (eg – Jennifer Lopez has $27 million insurance on her hips, Ronaldo had leg insurance of 130 million euros etc.) Just have a look at the different types of insurance policies offered by Policy Bazaar

With so many policies available in the market, it is easy to get confused about which one to buy and which one to avoid. And this is where this article will help you. I have listed 7 must have insurance in 2021.

Term Insurance

Term insurance is a type of life insurance that gives your family sum assured on your death. In the case of survival, you do not get anything.

Main advantage of Term Insurance is that it gives you a high cover at a small premium. So in case of your untimely death, your family will get a good amount to help them survive a few years/payoff big-ticket loans without having to sell assets.

Hence, if you are the sole bread earner of the family, have dependents or have financial liabilities, then this is a must have insurance for you. However, if you do not have financial liabilities now or in foreseeable future, you can skip buying term insurance. You can read my earlier article on this topic where I have detailed all things you should know while buying term Insurance.

Suggested read => Things you should know while buying a term insurance

Tip => Term insurance premium remains constant throughout the lifetime. Hence, it is a good idea to buy it early in your life for a good cover and cheap premium.

Term Insurance premium for 25-year-old non-smoking male for 1 Cr sum assured with coverage till 70 yrs age comes to just 7557/- per year.

Also read => Is 1 cr enough for retirement?

Health Insurance

Health Insurance pays for your medical bills in case of hospitalization. Instead of focusing on arranging money to get that emergency operation done, you can avail your health insurance and get treated without paying anything.

With age, medical expenses rise drastically. Not having adequate health insurance will result in your savings depleting quickly. Hence, it is very important to have adequate health insurance. Also, most of the health insurance policies have a waiting period to cover existing diseases. So the earlier you get health insurance, the better it is.

Health Insurance can be categorized into two types – Personal Health Insurance (one purchased by you) and Corporate Health Insurance (one purchased by your company for you). Most people think that company insurance is enough and hence don’t buy personal health insurance. But this is a big mistake. Do not rely solely on Company’s health insurance policy due to the following reasons:

• While company insurance policies have lots of advantages, the cover provided by them is normally low and may be inadequate in case of serious illness.
• The company sees these as costs and in case of a financial crisis where management is looking to reduce its expenses, your insurance cover can take a hit.
• Imagine a situation where you have left your job and will join a new company after a short break. If there is any medical emergency during this period, you will not have any company insurance to cover you. You will have to bear all the costs.

Hence, it is always recommended to have a personal health insurance in addition to corporate health insurance.

Tip => You can also try and port out / convert your corporate policy into personal policy when you switch the company. This way, you will be able to retain the existing benefits related to waiting period.

Premium for family floater plan covering 30 year old non-smoking male with spouse and 2 children comes to around 15,500/- per year for 5L cover.

Personal Accident / Disability Insurance

What will happen if a software engineer loses his eyesight? Or if a sales guy loses his limbs? Or a singer loses his voice? They will be jobless and without any income source. Term Insurance guys will not give them money since they are not dead. Health insurance people will cover only till they are hospitalized. Not beyond that. If the accident has left them partially / totally / temporarily / permanently disabled, none of the insurance agencies will offer any money.

Hence, it is mandatory to have a Personal Accident / Disability insurance policy that covers such accidents and disabilities. This way, even if a person loses his job due to disability, she/he will at least have some money to survive.

Premium for 25 year old male for 25 Lakhs cover comes to just 2355/- per year on Oriental Insurance Company

Note – Could not find this insurance being sold as individual policy by private players. Only Oriental Insurance company was selling this as individual policy. All others were selling this as a rider with Term Insurance.

Motor Insurance

With the government mandating motor insurance (and especially third-party accidental insurance), this is something which everyone has to buy now. Hence, not detailing much about it as you all already know about it and have it.

House Insurance

If you own a house, then this is a must have insurance. As the name suggests, House Insurance policy insures your house for any damages and is the only thing which will help cover your losses if anything unfortunate happens to your house (fire, theft, destruction due to earthquake etc). You have invested so many lakhs to buy a house. Why hesitate in spending few thousands to cover its insurance?

Premium for 1Cr apartment in Pune comes to 4500/- per annum.

Covid Insurance

There are no signs of Covid free life at least for the next few months. New variants are being identified and health care is under enormous pressure. If someone is identified as Covid positive, chances are that others in the family will also be positive. In such a case, having Covid insurance will help.

I have already written an in-depth article about why Corona Insurance is a must have insurance. You may read it here.

Suggested read => Why NOT to rely on Office/Personal Health Insurance for Covid-19

Critical Illness Insurance

Critical Illnesses like Cancer, Paralysis, kidney failure etc require repeated treatment which can quickly deplete your savings. Every round of chemotherapy costs approx. 21,000 per sitting, dialysis on an average costs around 1200/- per session and goes on lifelong. With these costs, just relying on health insurance for treatment might not help much due to two reasons:

• Sum assured of health insurance is normally few lakhs only. This will be depleted quickly if used for critical illness since critical illness takes lots of time to cure. As a result, you will have to dip into your savings for eventual treatment which can cause financial difficulties.
• You will not be able to avail of health insurance for other diseases if your health insurance sum assured is depleted on critical illness.

Hence, Critical Illness Insurance can be labeled as a must have insurance. While everyone should take it, it becomes mandatory for females who might have breast cancer history in the family.

Bonus – Indemnity Insurance

If you are a doctor, chef, or someone whose work is such that people can sue you in case something goes wrong, you should definitely buy indemnity insurance to cover yourself.

Smart tips

• Term insurance =>Increase cover while buying things on loan/planning life milestones. Do this by buying an additional Term Insurance Policy. Close this policy once the loan closes/milestone is achieved
• Health insurance -> Go for policy offering increasing sum assured
• Health Insurance => Premiums keep rising with age. However, buying health insurance early is still better than buying a new policy at an old age because you might either be denied health insurance due to health issues or may run the risk of needing money for a disease while not completing your waiting period.
• Health insurance => Buy a family floater plan for spouse, kids and yourself. Buy a different plan for your parents. This will lower the premiums while also providing tax benefits for both self and dependents
• Health Insurance => Always prefer a family floater policy with a sum assured restoration feature.
• Health Insurance => Check the network hospital coverage list while buying the health insurance policy. Buy only if majority of the good hospitals (offering multi-specialty treatment) of your area are included.

I hope this article has helped you realize the importance of having the right insurance. If you do not have any of the above must have insurance, now is the time to buy them and safeguard your personal and financial health .

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