Follow Us:


Uncertainty in life can cause us to think more about our loved ones’ financial security. Getting the best life insurance policy and health insurance is one of the two things that comes to mind when fulfilling such needs. The COVID-19 pandemic has made it even more important to purchase a suitable life and health insurance policy. When purchasing these two policies, it is critical to choose an appropriate life cover. A lack of information regarding the sum assured and sum Insured can lead to financial problems in the long run. As a result, it is critical to understand the criteria that should be used to make this decision.

How much health insurance coverage do I need?

The answer to this question depends on whether you are getting the coverage for an individual or family. Let’s discuss more on this:

For an individual: An individual looking for a health insurance plans during his or her early years of life should always choose a health cover that exceeds 3 lakh. This will assist them in getting the necessary coverage to cover any expenses incurred as a result of illness. Furthermore, you are less likely to file a claim at a young age, so you are more likely to benefit from the no-claim bonus or cumulative bonuses, which means your sum insured will increase year after year by up to 200%.

For a family: With medical inflation estimated at 15% per year, the cost of healthcare has been steadily increasing over the last decade or so. With rising healthcare costs, not having a health insurance plans, regardless of age, might be risky. You can never be sure when an illness will strike you, leaving you to deal with significant medical expenses. If not planned, a single incidence of hospitalization can very well upset a family’s well-calculated budget. Amid such possibilities, having a Health Insurance plans is of essential necessity to safeguard you and your family against any emergency medical condition.

Having a health insurance plans is beneficial, but at the same time, it is important to have the right balance of coverage to get the most out of a health insurance plans. Most policyholders in India cover their families for between Rs 7-9 lakhs, which is the average as the common sum covered is shared by one family. For two adults and two children, get at least a sum insured of ten lakhs.

For Senior Citizens or Parents: You must be practical while determining the level of coverage for senior citizens or parents. Today, even a small surgical treatment might easily cost up to Rs 100,000. A bypass surgery at a respected hospital costs more than Rs 2 lakh today, and will probably cost more in the next five years. A Sum Insured that appears enough now may be insufficient to pay your healthcare costs in the coming years. So, it is advisable to factor in the inflation before deciding on the Sum Insured. Also, your parents if they are seniors will undoubtedly need a higher sum insured and the premium too would be high as per their age.

Is there a right amount of coverage that one needs to look at?

The appropriate coverage is determined by a variety of factors, including the sort of hospital you prefer, your current age and the health of your family members, your budget, and so on. The cost of healthcare varies greatly depending on the hospital and facility. The size of your health insurance should be proportionate to your income and lifestyle.

While there is no optimal sum assured for an individual’s health insurance plans, there are two widely accepted market criteria regarding its amount. First, your health insurance should cover at least 50% of your annual income. Second, the insurance should at least cover the cost of a coronary artery bypass graft in the hospital of your choice. Most personal finance gurus advocate a minimum health insurance plans coverage of Rs 5 lakh. You can get a similar sum assured as a family floater to cover your family members.

Health and Life Insurance How much coverage amount is necessary

Parameters to Consider Before Choosing Life Insurance Cover

1. Age: Wondering, ‘How much insurance do I need when I’m young?’ Most of the potential buyers do this while considering the best life insurance policy maximum amount. The truth is that your age when you get life insurance is a crucial factor in determining the sum assured you should choose. Financial needs vary throughout life. If you’re in your twenties, you may not have many financial liabilities. However, as your family grows, these responsibilities are likely to increase as well. For example, you may have planned to purchase a new home or car in the near future. A reasonable coverage amount for the best life insurance policy for your family is one that allows them to retain their current lifestyle.

Current Financial Liabilities: Have you ever wondered why bank officials ask for a nominee when you borrow a loan? They do this by contacting the loan repayment nominee in the event that something unforeseen occurs to you. Consider all the assets you’ve purchased using loans. If you are not present, your family will suffer the burden of these loans, something you do not want to happen. Even the most basic term insurance can help your family deal with such financial stress. To calculate an appropriate level of coverage for the best life insurance policy, you must first identify such liabilities. Make a note of all loans you’ve taken out, either directly or through money lenders. Then, check into several term insurance policies that can give adequate coverage at a reasonable rate. All of these factors to consider when purchasing life insurance will help you live a happy life knowing that your loved ones are protected and can pursue their aspirations without financial barriers. A better strategy to choose the correct life insurance policy is to consider the cost and coverage. The amount of life insurance coverage should be sufficient to provide financial support for your family after your death, and the cost should be affordable.

Estimated working years: Given the nature of your profession, you may have considered retirement. You want to enjoy life with your spouse after retirement, rather than stressing about the routine aspects of your job. A vital part of retirement planning is completing key financial duties while still working. The amount of life insurance coverage you choose should correspond to a premium that you can comfortably afford during these years of your life. By determining when you want to retire, you will have a time frame in which to plan for numerous obligations. Similarly, different life insurance plans allow you to prepare for a monthly income as well as life coverage.

So we are saying,

We’ve covered the most important factors to consider when choosing life and health insurance coverage based on your age, current health state, dependents, and lifestyle choices. Considering the aforementioned points your loved ones may encounter in your absence helps you come up with a sum assured and sum insured that can provide them the peace of mind that comes from knowing you’re prepared for unexpected medical emergencies


Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
July 2024