Insurance policy is necessary as it provides financial security to you and your family. As similar to financial investments, there isn’t one plan that fits everyone. Decide on an insurance plan that helps you fill the financial gaps as per your requirements and financial goals. Here we will discuss the prerequisite before deciding on the insurance policy –

• Know your requirements – Just like how you create a shopping list before shopping, you will need to identify what your requirements are. Only when you are aware of what your needs are can you shop for it. List down your requirements, what you want to cover and for how much, which will make it easy to decide. Largely, there are two types – Life and General Insurance. Life insurance as its name suggests is for your life and choose a plan that will provide lump sum money to your beneficiary on your demise. General Insurance is for property, vehicle, medical, etc which helps create a financial backup. If there is damage to your vehicle, then the insurance can cover some portion of the amount spent on its repair.
• Quantify your requirements – By quantifying we mean to say, ascertaining the monetary aspect of insurance you need as coverage. For Life Insurance, you will have to estimate the financial needs of your family based on your current expenses and also the cost of any medical emergency that may arise. For General Insurance, in example of a vehicle, depending upon what you would have to shell out in case of a repair/damage, you can get a policy with higher coverage.
• Selecting the policy – There are several insurance policies in the market for both life and general insurance. Deciding which one can be a tricky question, but as mentioned earlier, if you have listed down your requirements, that can help you decide which one is a good fit. It is imperative that you understand the objectives and working mechanism to build a robust insurance portfolio. Life Insurance should be able to meet your hospitalisation requirements and General Insurance should be able to cover your losses in cases of any damage.
• Timely review – Similar to all your other financial investments, you have to regularly review your insurance policies. As you move to different stages in life, your insurance cover also requires a modification to meet the requirements necessary at that stage. For example, when you get married, you will need to revise your policy to include your spouse, same as when you have children. You may also decide to get additional riders such as critical illness or disability insurance.

As we conclude, it is advisable to review, analyse and compare different policies before deciding on which one you want. You would want to select the one that will provide the maximum benefit to your family in case of an unfortunate incident. Read the document carefully, to know how and when the nominee is eligible to receive the benefit. Don’t buy a policy for investment or tax benefit; there are other financial instruments which are specifically for that reason. Choose wisely and make an informed decision.