Am I adequately insured? Deepak, 47, Nagpur, Rs 50 lakh term cover, daughter 15.

Ans: There are certain factors to look at while choosing a company for term insurance as the company has to stay for 100yrs from today to give you benefit of your insurance.
You should look at the customer service history, solvency ratio, claim settlement ratio, etc
Term insurance cover should be decided on factors like your family's monthly expenses as in how much they would require every month to survive, your liabilities and your current liquid assets.
A person can get up to 30times of their salary depending on their age

Ans: Given your current financial situation and insurance coverage, here's a breakdown of your existing coverage and suggestions on whether you need to increase your sum assured or alter your policies:

Current Coverage:
Term Insurance: ?1.5 crore
Traditional Insurance: ?5 lakh
Medical Insurance: ?15 lakh
Analysis:
Term Insurance
Current Coverage: ?1.5 crore
Purpose: Term insurance primarily serves to provide financial security to your dependents in case of your untimely demise.
Current Situation: As you are single with no dependents or financial commitments, ?1.5 crore seems adequate for now. However, this amount should be reviewed periodically as your life circumstances change (e.g., marriage, children, significant asset purchases).
Traditional Insurance
Current Coverage: ?5 lakh
Purpose: Traditional insurance policies (endowment, whole life, etc.) combine insurance with a savings component. However, the insurance coverage is typically lower, and the returns are modest compared to other investment avenues.
Current Situation: ?5 lakh is quite low in terms of coverage, but since it’s a traditional policy, the primary goal might be savings rather than pure risk coverage. Given that you are a minimalist and have a substantial term insurance cover, this might suffice, though you could reconsider future contributions depending on the policy's returns and your financial goals.
Medical Insurance
Current Coverage: ?15 lakh
Purpose: Medical insurance covers hospital bills and other medical expenses.
Current Situation: ?15 lakh is generally sufficient for most medical emergencies in urban India. However, given the rising cost of healthcare, you might want to consider adding a super top-up policy to increase your coverage at a lower cost.
Recommendations:
Term Insurance
Maintain or Slightly Increase: Your current coverage of ?1.5 crore seems adequate, but if you foresee significant financial responsibilities in the future (like marriage or starting a family), you may consider increasing it slightly, say by another ?50 lakh to ?1 crore, to keep pace with inflation and future liabilities.
Traditional Insurance
Reevaluate: Traditional insurance policies are not typically the best for maximizing returns. If your primary goal is to save and grow your wealth, you might want to focus more on pure investment products (like mutual funds, PPF, etc.) rather than increasing contributions to traditional policies. Consider surrendering or converting this policy depending on its terms and the financial implications.
Medical Insurance
Consider a Top-Up Plan: While ?15 lakh should suffice for now, healthcare costs are rising rapidly. You might want to consider a top-up or super top-up plan that can provide additional coverage (e.g., ?10-15 lakh) for a relatively low premium, ensuring you are well-protected against major medical expenses.
Overall Premium Commitment:
Given that you are a minimalist and have no financial dependencies, you should focus on maintaining a balanced approach:

Avoid Over-Insuring: Since you currently have no dependents, over-insuring might lead to unnecessary premium outflow, which could otherwise be invested for growth.
Focus on Investments: With your minimalistic lifestyle, channeling more funds into savings and investments might provide better returns over the long term, enabling you to meet future goals like retirement or potential family responsibilities.

Your current insurance coverage seems adequate for your current situation. Consider a slight increase in term insurance, add a top-up to your health insurance, and reevaluate your traditional insurance policy. Focus on growing your wealth through investments rather than significantly increasing your insurance premiums at this stage. Regularly review your coverage as your life circumstances change.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

It is nice to know that you have good health care cover for yourself and family.

But you must also have adequate term life insurance atleast till the age of 60.

Life is full of uncertainties and hence to ensure financial security for your dependents, in case of any unforeseen event, life insurance is highly desirable.

Cheapest life insurance in India is the one offered by Indian Post Deptt. Also known as Postal Life Insurance.

Ofcourse it's not available for all and max cover is 50 L, but you may check eligibility by visiting nearest post office.

If you are eligible then you may supplement it with another term life cover of 1.5 Cr.

I have live example in front of me where a hale and hearty young person(32 years) postponed buying life insurance and suddenly he expired in a freak swimming accident.

Now his young son and wife are literally on the road.

Don't look at premium as a cost rather an investment to protect your family in unfortunate circumstances.

Best wishes;