What amount should you invest in insurance out of your income?

Investments are necessary because they allow you to create a steady source of income and also support your major life expenses. Unforeseen events and poor financial planning may put your family in trouble financially. Hence, you should know how to protect your loved ones from a financial crisis even if you are not with them. Building a wealth portfolio allows you to focus more on your financial goal that will help experience peace of mind. Another thing is that it gives ways to multiply your income in various ways. As an investor, you should know the options available in the markets for investment purposes from different sources. 

The insurance industry in India is growing and you should have insurance coverage to overcome financial losses. Plenty of choices are available for you when you want to buy a new insurance policy. However, you should spend time understanding the features of insurance policies in detail. This will help you to make an informed decision while investing your money. Not only that, you can select an insurance policy that will cater to your needs when it comes to coverage and other things. 

How much amount should you invest in insurance?

Although buying insurance is a wise decision, you should know what percentage of the amount you should invest from different sources. 

Life Insurance 

A life insurance plan is necessary for you because it provides a death benefit for your nominee after your demise. Different types of life insurance plans are available in the market currently but the most popular one among them is term insurance which offers coverage for a specific period.  A term insurance policy provides high life coverage at a small premium. 

The premium rates of term plans are very low when compared to other plans in the market and that’s why they are becoming popular among policy buyers. When you want to invest your money in an insurance policy, you should follow the thumb rule for meeting your exact needs. Ensure that your sum assured amount is at least 15 to 20 times your current income. 

This will help your family to receive sufficient compensation that gives ways to take care of your debts and liabilities with ease. Not only that, it allows your nominee to manage regular expenses. 

For example, if you are earning Rs. 50,000 per month, then you must choose a life insurance policy cover which is 20 times your annual income. That is you should select a plan with coverage of Rs. 1 crore. While buying a new insurance policy, you should consider keeping certain things in mind that will help gain more benefits. You can even utilize a term insurance calculator for this purpose which allows you to get an approximation.

Health Insurance

With rising medical expenses, the burden of treatment expenses when you suffer from a critical illness is gnawing. Hence, you should purchase a health insurance policy to save your hard-earned money. 

Buying the best health plans enables you to receive treatments in listed hospitals during emergencies. If you want to get the maximum benefit from a health insurance policy, then you should have sufficient coverage which suits your family. You should know how much to invest while buying a plan. Insurance experts say that you should invest 2-5% of your salary in health insurance which will help accomplish goals to a large extent. 

For instance, if you are earning a monthly income of Rs.1 lakhs, then you should buy a plan that costs between Rs.2000 to Rs. 5000. At the same time, you should consider purchasing a health care plan when your family members suffer from a critical illness. Also, you can buy add-on covers or increase the sum insured periodically as your income increases. 

How to choose the best life insurance plans?

Do you want to buy the best life insurance for your family’s needs? Then, you should follow certain tips that will help you in deciding. The first thing is that you should set your goals by evaluating your purpose in detail. You should also think about the tenure of a policy because it allows you to pay premiums on time. Moreover, you should compare the premiums of insurance policies online to evaluate the offerings and costs.

As a policy buyer, you should give more importance to some other things that allow you to select the right one accordingly. They include your income, lifestyle, occupation, income, liabilities, age, health conditions, etc. An insurer will evaluate them in detail to determine whether you are eligible for a plan or not. You should read reviews of insurers online to select the best one among them accordingly. 

Things to follow while buying a health insurance plan

If you want to buy the best health insurance policy, then you should keep certain things in mind. You should select an adequate sum insured amount that covers medical expenses during emergencies. With medical inflation, healthcare expenses are increasing and you should select a policy that offers maximum coverage.

The second step is to select the right coverage type while buying a new plan. Some other factors you should consider include cashless hospitalization, premiums, inclusions, add-on covers, exclusions, claim settlement ratio, claim process, and so on. 

Conclusion:

Both life insurance and health insurance plans are important for you because they allow you to ensure high-level protection.  At the same time, you should know how much percentage of salary should be saved while buying a plan. This, in turn, provides ways to spend your money wisely to ensure financial security in life. Furthermore, you can secure your family from financial risks when you are not alive. Similarly, health insurance lets you get coverage for critical illnesses in listed hospitals that don’t cause any burden on your family. It even helps you to save your money that will provide peace of mind.