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Amid uncertain times people are looking towards a reliable insurance

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November 27, 2020

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Life has a way of throwing nasty surprises at us. There are some events that are beyond our control, from wars to natural disasters and a pandemic of unprecedented scale. One way of tiding over such an uncertain situation is to get yourself an insurance plan.

There are many types of insurance plans, those that come with a purely protection component and those that also come with a component of savings. Term insurance, for instance, is a pure protection plan that offers you coverage for a specific term. On the other hand, there are insurance plans where a portion of your premium goes into the savings component, thereby offering you both coverage and savings.

If you are wondering why you should opt for insurance, the answers are many. They include:

The primary premise of an insurance plan is to offer coverage. In the unfortunate event of the insured person's demise, the nominee or dependent(s) can get the payout either in a lump sum manner or in a periodic manner.

If you opt for an insurance plan that is also a savings one with regular payouts, it can help your loved ones pay bills in case of a sudden job loss or financial emergency when regular sources of income are not enough. Coverage with payouts mean that there is a more comprehensive method of caring for your family. This comes into sharp focus when there are external events such as conflict, pandemics or natural disasters that can turn lives upside down. A regular payout/guaranteed income option ensures that you cope better with such uncertainties.

Having an insurance plan with a savings component also ensures that you have some sort of financial discipline. You may not be in the habit of saving regularly but when you opt for an insurance plan that also has a savings component, you automatically save a portion of your premium.

Advantages of a non-linked non participatory savings insurance plan

Now that you know all about a protection + savings plan, you should also know that the savings component can either be linked to the market performance or not. A non-linked savings insurance plan is one where your savings/investments are not linked to the market. This means there are no worries related to volatility in the markets and you can be rest assured that your savings are safe. This is a risk-free and guaranteed savings option. A non participatory plan implies that there are no dividends since there is no market participation. A risk-free non market linked savings insurance plan is reliable when there is too much uncertainty, such as the current situation of a pandemic. A public health crisis has also meant uncertainty on the economic and markets front so an insurance plan should ideally be one that is a zero risk one.

Things to keep in mind while choosing insurance

  • Your age:

    It is never too early to get yourself an insurance policy and now is as good a time as any. The earlier you get yourself insurance the lower the premiums you may have to pay. Age is an important factor because the younger you are you get a longer tenure to create a solid savings or retirement corpus.

  • Life stage:

    The life stage you are in also matters a great deal for an insurance plan. As you grow older, you may have more responsibilities including marriage, birth of children, and retirement. Just because you are single now doesn't mean you don't plan for these life stages. Insurance plans allow you the option of increasing sum assured at different life stages so you would need to check that out. A sum assured that looks good at this point may not be enough at a later date which is why you would need a higher amount.

  • Insurance cover:

    When you buy insurance, a crucial question should be about your cover. Although on paper Rs 1 crore cover looks good, it may not be so substantial if you take into account various life stages and inflation. The Rs 1 crore figure is merely a nice to have number but you would need to opt for a cover after taking into account your liabilities, investments and income, apart from inflation. 

  • Life goals:

    When you buy insurance you should also be aware of your life goals. This could be short term or long term. You could opt for an insurance plan to help with your child's higher education, marriage or your retirement. Pick a plan that matches your life goals. 

Summing up

Choosing a reliable insurance plan is half the battle won in an uncertain time. You should look for a policy that is appropriate for your situation, life goals and commitments. Picking a non market linked and non participatory savings insurance plan such as HDFC Sanchay Plus helps you not only with a good cover but also savings in uncertain times.

ARN:ED/09/20/20580

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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