Siddharth Singh, 24, is a software engineer and has just started working. There is no major financial responsibility or liability on Siddhartha except for his personal expenses. He wants to keep a part of his salary safe for his future and spend the rest according to his own needs. This era of Corona has made us understand the importance of good insurance. But the question is what things should be kept in mind while choosing insurance.
It is advised that life insurance should be bought at an early age. As when it comes to youth, there is no responsibility and liability on them, so know what should be their priorities? So should they look at options like life insurance or accident protection?
Beginning insurance investment
According to SK Sethi, Director, Riya Insurance Brokers, “The earning youth should first go to their bank and get themselves a term insurance of Rs 2 lakh under Pradhan Mantri Jeevan Jyoti Bima. For this, only Rs 330 will be deducted from their bank account in the month of May/June. The second form that they should fill is the Prime Minister's Suraksha Bima, which will give them an insurance cover of Rs 2 lakh and for this only Rs 12 will be deducted from their account in May/June. "
As Siddharth does not have any education loan, but people who have people on him should get term insurance worth at least 10 times more of his annual earnings. Usually we see that youth often buy motor cycles or other vehicles from their first job. In our country, the rate of accidents due to motor cycles is more than that of 4 wheelers. Sethi believes that “if someone dies due to a bike accident, then in both the case of term insurance or accident insurance, the family will get at least enough money to pay off the education loan.”
Term insurance plans are considered to be more economical and better than personal accident cover. But many times the youth do not decide to invest in life cover. Instead, they get insurance like a more probable personal accident.
Life insurance or personal accident cover?
The premium of both the insurance cover is very low, suppose one wants to buy a policy then we have to go into its details. Sethi clearly says that “Most people in India currently die of diseases like corona, malaria, heart disease etc. In term insurance, the dependents or family members get money in case of death due to any reason, illness or accident. But in personal accident cover, there will be a claim cover only if the death has happened in an accident.
We cannot say that a personal accident is not a good option because it provides benefits even in the event of being disabled. If one limb or two limbs is damaged due to an accident, then there is a benefit in disability. In these circumstances, 50 percent or 100 percent cover of the insurance is available respectively.
If a person becomes incapable of doing his job due to an accident, then the person covered in the insurance gets weekly benefits, which range from thousand rupees to five rupees a week. If one is able to take both the policies, then insure maximum coverage.
A look at the insurance plan
Many times a person has to pay a lot of cost for taking more insurance cover. Whereas on the other hand low insurance cover can put your life at risk. The youth should think about what kind of plan they should choose at the beginning of their career.
Considering Siddharth's case, his age is 24 years, he does not smoke. Suppose he earns Rs 6 lakh annually. The insurance premium to be paid for 40 years will be as follows.
Term Insurance- For Sum Assured of 25 lakhs you have to pay Rs 4278 annually or Rs 356 per month
Accident Insurance- Those in non-hazardous jobs will have to spend Rs 3,590 annually or Rs 300 per month for a sum assured of 25 lakhs.
Sethi says that “If you understand in percentage ratio, then this amount is very less. It can be understood in such a way that the cost of 2 coffees in Starbucks is not equal. That's why youth should buy such a policy.
make your choice wisely
Term insurance earnings depend on the age, tenure of the chosen policy (eg 40 years), where the premium is fixed for the entire term. Once such a policy is taken, it is insured till the age of 99 years. The premium of such policies increases with age.
On the other hand, in accident insurance, the job profession is considered and its premium is fixed on the basis of the job itself. A person doing a normal 9 to 5 job has to pay a lower premium while an electrician working between high voltage lines may have to pay a higher premium for this. Here the insurance depends not only on your age but also on the profession.
But here you can understand one thing that – Life insurance cover gives you the protection of the first layer in life. Whereas an additional layer of personal accident can be purchased keeping in view the safety of life. Now you have to choose which one is most important according to your life.
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