How to Opt Life Insurances and Health Policies?

Now first, we have to understand Life Insurance policies and Health insurance policies.

• Life Insurance is an agreement between the insurance company and policyholder. The company guarantees to give a fixed amount of money in return for the premiums paid by the customer after a set period or after he died.

• Health Insurance can be defined as an agreement between the company and policyholder in which he or she pays the premium of a fixed amount. In return, the insurer pays all the medical expenses incurred, which include- post and pre hospitalisation charges, consultation charges, medicines and drugs etc., by the insured.

Opting for the correct sum insured plays a crucial role in insurance as it is the total amount that the insurer will pay or will spend on your expenses. If you choose a low amount of insurance, you might face difficulty if the expenses are greater than the sum insured. Whereas if you choose a high amount of insurance, it will affect your present income and expenses. It may cause an excess burden on your head, and you may lose some good investment opportunities.

The two situations that arise while opting for the sum to be insured are as follows-

1. Under-insurance-
   This situation arises due to the underestimation of future requirements and expenses. The costumes do it to avoid paying high premium, tax saving purpose, unaware of benefits etc.
2. Over-insurance-
   This situation arises due to availing high premium policy with coverage amount more than what is needed. It happens because of a lack of knowledge, financial planning, blindly listening to the insurer etc.

One should consider several factors before opting for any policy. These are as follows:

1. Age:
   It is an essential factor in determining the sum insured. If you are young, you can buy a low sum insured policy and can increase it in future.
2. Health:
   It is another essential factor to determine the policy because a healthy person can ensure a basic amount of policy but an aged person needs to think twice before opting for a policy.
3. Income:
   It acts as a constraint in opting for a policy because everyone checks that the premium should not cause heavy pressure on the pocket. Saving is the main aim for every rational person; hence it affects the amount of the policy insured.
4. Proper process:
   Everyone should fill the processing form correctly so that the company can provide the best policies that suit your medical expenses and you do not have to pay extra from your pocket.

Insurance is essential in one’s life because it protects you from sudden financial expenses that may occur from nowhere. Also, it is beneficial as you don’t have to pay the whole amount in one go. You can set premiums monthly, quarterly or yearly according to your income. Just giving a small amount of your income every month will help you in future when you will need sudden financial help.