Last Updated on May 24, 2022 by Anjali Chourasiya
The primary objective of an insurance plan is to provide financial security. When you invest in an insurance policy, you, essentially, transfer your risk to the insurance company. Thereafter, if you suffer from the insured risk, the insurance company compensates you for the loss.
As such, there are different types of insurance plans designed to cover each risk. The choice of an insurance policy depends on the risks that you face. However, adequate insurance should be availed early in life to safeguard against unforeseen circumstances.
So, if you are in your late 20s, here are five types of insurance policies that you should consider.
Table of Contents
Term insurance plan
A term insurance policy is a life insurance policy that provides pure protection. The policy covers the risk of premature death during the policy tenure. A term insurance plan, thus, becomes essential as it covers the financial loss that your family might suffer in case of an unforeseen contingency. When you buy the policy at a young age, you can lock in lower premiums as term plan premiums depend on your age.
Some of the salient features of term plans are as follows:
- Very low premium rates (depending on the age).
- You can opt for optional riders and enhance the scope of coverage.
- Many term plans offer whole life protection, i.e. coverage up to 99 or 100 yrs of age.
- With the death benefit paid by term plans, you can substitute the loss of income for your family in your absence.
Modern-day term plans are quite comprehensive with customisable features. You may compare various term insurance plans available and design a plan as per your coverage needs.
Unit linked insurance plan
Unit linked insurance plans (ULIPs) are also life insurance plans but with an investment angle. With ULIPs, you can benefit from insurance and investment in a single plan. Some of the salient features of ULIPs are as follows:
- Different fund options are available to suit different risk profiles. Since you are young, you can invest in equity funds and benefit from their high return potential.
- Guaranteed insurance coverage is offered during the policy tenure.
- The policy is flexible, allowing partial withdrawals, top-ups and switching.
Health insurance plan
Medical emergencies may happen when you least expect them to, irrespective of your age. Accidents and sudden illnesses can lead to hospitalisation, and in such cases, the expensive medical treatments might burn a hole in your pockets. A health insurance policy becomes essential in such instances. The policy covers the medical costs and gives you much-needed financial relief. The features of health plans are as follows:
- Complete coverage for hospitalisation costs.
- You can opt for a family floater plan and cover your family members too.
- You can also avail health check-ups at regular intervals.
- Most health policies come with lifelong renewability.
You can also customize your policy as per your coverage needs with optional features. You may want to check the hospitals enrolled with your provider before signing up for the policy and also check with the hospital for insurance-claim facilities.
Critical illness insurance plan
While a health insurance policy covers your hospitalisation costs, a critical illness policy supplements the coverage for critical illnesses. Critical illness is not restricted to a certain age. Even as you are young, it is wise to bolster your finances and be prepared for unforeseen circumstances.
Critical illness plans cover a list of critical illnesses and complex medical treatments. If you suffer from any such illness or undergo the covered treatment, the policy pays a lump sum benefit to help you meet your expenses. The features of critical illness plans are as follows:
- A wide range of illnesses are covered.
- The sum insured is paid in a lump sum. You can use the money to avail advanced treatment or pay for medications and expensive checkups.
- These policies generally carry affordable premiums.
Personal accident insurance plan
The policy covers accidental deaths and accidental disablements. In the case of accidental contingencies, a fixed claim is paid to help you cover a large part of the medical costs and deal with the financial loss that you suffer. Some salient features include the following:
- 100% of the sum insured is paid for accidental death and accidental total and permanent disablements.
- These policies provide high coverage at affordable premiums.
These are some of the primary insurance policies you may consider if you are over 25. Other types of plans depend on your needs. So, assess your necessities and then create a suitable insurance portfolio. When buying the policy, you may want to opt for optimal coverage. The coverage would also ensure that you or your family is sufficiently compensated in case of a contingency.
Note that all of the aforementioned policies, except personal accident plans, also give you tax benefits. Life insurance plans allow a deduction for the premium that you pay. You can invest in life insurance and claim a deduction of up to Rs. 1.5 lakh under Section 80C. The death benefit under life insurance plans is entirely tax-free. Even the maturity benefit is tax-free under Section 10(10D). For health plans, you can claim a deduction under Section 80D on the premium that you pay.
So, use the tax benefits of insurance plans as well as the financial security that they offer. Insure yourself under suitable plans with optimal coverage and stay financially protected against emergencies.
Conclusion
Emergencies never come announced in life. And age should never be a criterion for deciding to opt for insurance. Covering yourself with insurance on life, accidents and critical illnesses not only relieve you in case of unforeseen consequences but will also help provide for your family financially. Many insurances also provide tax benefits. So assess your lifestyle and opt for insurance coverage to counter life uncertainties.
