Why health and life insurance are more important than ever

At the end of 2020 Annika had been in the job for over 8 years. With all that the year had brought and taken its toll, she decided to take a career break. A well-deserved, necessary and well-deserved break! She quit her company job in February 2021. And with that it also lost its advantages.

What hit us in April 2021 was most terribly unexpected. There is almost no family in the country that was not affected by the second wave of COVID. Some, of course, had it much worse than others. Annika had three of her family members hospitalized for lack of oxygen – these were hospital stays that stretched over several weeks. Her husband works for a leading multinational company and has about Rs 5 lakh health insurance that covers all of his family members. Under these circumstances, this insurance was far too little coverage to protect several members. To settle the bills, the family had to fall back on their savings – a situation you don’t want to be in in already troubled times.

Unfortunately, hospitalization can bankrupt an entire family. It may sound morbid and something that nobody likes to think about. If the past year has taught us anything, it is that adequate insurance is an absolute must and that we cannot procrastinate or ignore. Families have lost their single-earning members. In households with double income, the family’s financial future was jeopardized by the lack of life insurance.

After Annika’s family recovered, she quickly took action and sought out health insurance – both family floater and individual insurance. It took a few months after recovering from COVID, but she realized that her employer’s lack of coverage had hit the family hard and they should have purchased personal health insurance.

Nobody wants to fathom worst-case scenarios. Unfortunately, these scenarios can become real faster than we can handle.

So here is what you need to do:

Health insurance

Adequate Health Insurance Coverage: To keep inflation as a factor, coverage of at least Rs 7.5-10 lakh per adult is a must. So if there are 2 or more adults you may need a health insurance floater of Rs 15-20 lakh.

Family Floater Plans for Children: A family floater should be used to protect children as children are not eligible for individual coverage.

Seniors Plans: There is no plan available for family members over 65. You may need to address this requirement by building savings and investments.

Term life insurance: If a person is contributing financially to the family goal, they will need pure term life insurance. For coverage, 10x annual income is a good start. Ideally, you should work with an insurance advisor who considers inflation and various life goals and issues to find the right coverage and plan that might work for you.

(Dipika Jaikishan, co-founder and COO at Basis, a financial services app developed for women.)

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Posted on Friday August 27, 2021 10:49 AM IST

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