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Do I need to buy insurance? − Money Essentials #6

by Money Puzzle   ·  April 21, 2022   ·  

Have you heard someone say, you must get insurance done? Have you heard others say that insurance is useless and unnecessary, just buy equity stocks instead?

Let’s first clarify that buying insurance is not an investment. Unlike what is advertised, insurance is not the key to securing your financial future, your children’s or anyone else’s financial future.

Insurance can be of many types, the two which are a priority are life and health insurance.

Life insurance is a must if you have a family that depends on your income or if you plan to have a family in the near future. A life insurance policy comes with a sum assured which is paid out to your dependents, your family, in the event of your untimely death. The sum assured can be chosen in such a way that it compensates for the lack of your income for many years to come, in case of this eventuality of death. Term life insurance policies are the only ones which make sense for this, do not consider any other type of life insurance policy.

Health insurance is a cover for hospitalisation costs which can come up without warning and you may not have enough saved for it. Sudden hospitalisation, prolonged hospitalisation, and pre and post hospitalisation tests can all add up to be a very high cost. Health insurance cover can take care of this heavy expenditure at a very low premium.

Ideally, get a health insurance cover for all family members including yourself, your spouse, children and dependent elderly members. Keep in mind these two types of insurance always as part of your contingency planning.

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