Insurance is your most trusted ally during financial distress and forms the cornerstone of financial planning
While awareness among individuals regarding insurance has gone up in recent years, India lags way behind among emerging economies as far as insurance penetration is concerned. As per the Economic Survey 2018, insurance penetration in India stood at 3.49% in 2016-17, up from 2.71% in 2001. On the other hand, countries like Malaysia and Thailand had greater insurance penetration than India at 4.77% and 5.42% respectively.
Offering a financial cushion to you, your dependents and assets in case of an eventuality, the apathy towards insurance stems mainly from ignorance. Also, most people believe that buying insurance is a tedious process and a waste of money. If you too are one among them, it’s high time to change this attitude because of the following reasons:
A Financial Net Against Nasty Surprises
Life is uncertain in a manner that it can throw up nasty surprises anytime. Who would have predicted the high rainfall during monsoon last year in Kerala which led to severe loss of life and property? At the start of the millennium, in 2001 the Gujarat earthquake killed thousands within minutes, rendering many homeless. The recent crash of the Boeing 737 Max 8 of the Ethiopian Airlines, killing all 157 people on board means a disaster can strike any time.
All these happenings have led to tremendous financial and emotional losses for those who bore the brunt. While very little can be done about the emotional loss, the extent of financial damages suffered can be tamed in such situations through insurance. For instance, while a home insurance compensates for the losses due to damages suffered by your home, a travel insurance comes handy in case of any mishap during a journey.
Easy Buying
Most people tend to give insurance a miss because of paucity of time. However, things have changed and today you can buy any general insurance policy you need with just a few clicks. Insurers, riding on the digital wave, have made it possible to buy insurance online without you requiring to visit branches or agents.
According to a report by Google India and Boston Consultancy Group, the online insurance industry in India is expected to cross ₹20,000 crores by 2020. Since insurance companies save on overhead and distribution costs when you buy online, you get the benefits in form of reduced premiums. Not only buying, you can also renew an existing policy online within a few minutes from the comfort of your home or office. You can buy a policy online either directly from the insurer’s website or an aggregator.
Favourable Proposals by IRDAI
Of late the Insurance Regulatory and Development Authority of India (IRDAI) has come up with several proposals to benefit policyholders. For example, to eliminate the difficulty of vehicle owners to renew their two-wheeler or car insurance policy annually, IRDAI has instructed insurers to offer three and five-year third-party liability cover for cars and two-wheelers respectively.
This mandate not only ensures price stability but also insulates you from yearly hikes in third-party premiums. Also, a recent diktat has unbundled personal accident cover from motor insurance policy. It means, if you already have a personal accident cover (standalone or otherwise) of the minimum threshold (₹15 lakhs), you don’t need to purchase it while buying a new car. Also, you don’t need to buy a separate personal accident cover each time you buy a car. A single personal accident cover is applicable for all the cars you own.
Faster Claims Settlement
In the past, claims settlement was a tedious process involving a bunch of paperwork. Following scrutiny, it took several days for claims to be settled. This acted as a deterrent for the industry. However, today, thanks to digitalisation, claims settlement is a relatively hassle-free affair that can be done online or through dedicated apps
You need to fill up the claims form, upload the relevant documents and upon successful validation, the amount is directly credited into your account. Quicker claims settlement means, you can avail the funds when you need them. Most insurers today have a dedicated claims settlement team who work round the clock, and even on holidays to aid you while making a claim. Constant updates are provided on the status of your claim through SMS.
Tax Breaks
Though a tax break should be the last thing on your mind while buying insurance, yet it’s a fact that buying insurance can lower your tax liability. For instance, premiums paid towards health insurance qualify for tax deduction under section 80D of the Income Tax Act, 1961.
You can claim a maximum deduction of ₹25,000 in a fiscal paid towards health insurance for self, spouse and children. In case you are paying premiums on behalf of your parents, the same too qualifies for tax exemption.
By buying relevant insurance products, you get the much-needed peace of mind, knowing that you have a financial backing in case of a mishap.
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