Nov 2022
3 mins read
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4 Types of Insurance You Should Have in Your 40s
Life begins in the 40s, they say! From a financial perspective, however, the real business of life begins right on the day one becomes financially independent. To make sure your 40s and beyond become the best years of your life, it’s best to start holistically planning your finances as early as possible. An integral part of financial planning is to have the right types of insurance plans. Here are the four most important insurance policies that should be in place in your 40s:
1
Life cover
Life above all else; and
in investment terms, life coverage before everything else! Hedging your life
risk is extremely important, especially if you have family and loved ones dependent
on your income. Assessing your life cover should be meticulously planned to
include your financial milestones. Here is a handy calculation to assess your
ideal life cover based on how life insurance works in India:
Ideal Life Insurance coverage = Annual Income X 20 (Years left to retirement) according to the Income replacement method¹
Ideal Life Insurance coverage = Annual Income X 20 (Years left to retirement) according to the Income replacement method¹
2
Health cover
If your employer offers health coverage for yourself and your family, then you may only need to assess if it is sufficient as per your needs. However, in case you and your family are not covered, then look through the many options to buy health insurance online. It is prudent to include all your family members by taking a floater health insurance for family. Use this calculation to decide how much cover you need:
Ideal Health Insurance coverage² = 50% of
Annual Income + Last 3 years’ Hospitalisation Cost.
3
Comprehensive motor insurance cover
Owning a vehicle is one
of the first priorities when one becomes financially independent. Ideally, in
your 40s, you should protect your car or bike with comprehensive insurance to cover
damage to one’s own vehicle and also opt for riders for enhanced benefits; it’s
always a better choice instead of just opting for the mandatory third party
insurance plans.
4
Cover your liabilities
If you have liabilities, especially ones where the financial outlay is substantial and the term is long, like in the case of a home loan, you should ensure that you have adequate cover for them.
For example, most home loans can be taken along with a term cover, where the sum insured is aligned to the outstanding amount of the loan. It diminishes as the loan amount reduces on repayment.
Another option is to avail of life cover inclusive of your large outstanding liabilities. We have already covered why life insurance is required, so bundling it with large liabilities makes sound sense.
For example, most home loans can be taken along with a term cover, where the sum insured is aligned to the outstanding amount of the loan. It diminishes as the loan amount reduces on repayment.
Another option is to avail of life cover inclusive of your large outstanding liabilities. We have already covered why life insurance is required, so bundling it with large liabilities makes sound sense.
The core philosophy of insurance is to reduce financial stress and provide mental peace to the policyholder and their family. What better way to put away your worries and start enjoying your 40s.
Source:
1. https://www.livemint.com/money/personal-finance/dont-go-by-thumb-rules-while-determining-term-insurance-cover-11619252046087.html
2. https://www.moneycontrol.com/news/business/personal-finance/-1614907.html
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(CIN - U74900MH2008FTC187029)
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All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindiamf.com/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
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