Insurance Coverage for Financial Freedom: Why adequate insurance coverage is necessary for financial freedom, know here...

Insurance Coverage for Financial Freedom: On the occasion of the 78th Independence Day of the country, all of us must assess and evaluate financial security. The standard of financial freedom can be different for each person. Such as creating a sufficient corpus for children's education, wealthy retirement, and family future. It is worth noting that without adequate insurance coverage, financial freedom cannot be achieved in a true sense. Insurance sector expert and Policy Bazaar co-founder Tarun Mathur explained how different insurance products can help you achieve financial freedom.

Health Insurance Policy
Medical costs are rising rapidly at the rate of 14%, and people may face financial stress due to different health checkups. Corporate health policies also have a limit on room rent, so if the cost is high, you will have to pay the additional amount yourself. Also, the network of hospitals where you can use cashless services is often limited. Also, these policies do not provide adequate coverage for old-age parents, who need more medical care. That is why an individual health insurance policy should always be included in corporate coverage. This type of policy offers many benefits.

Term Life Insurance
Term insurance is a very important product. It ensures that if something happens to you, your dependents are financially secure. You can choose from different types of term plans depending on your needs. Pure Term Plan offers coverage of Rs 1 crore to Rs 5 crore at an affordable rate, which is a good option for them. Besides, there are term plans with return of premium (TROP), which refund the premium paid by you on the maturity of the policy, though these plans are twice as expensive as regular plans. Some schemes, called “no cost return of premium” policies, offer a one-time exit option. The premium paid is returned and the cost is similar to that of regular schemes.

Investment cum insurance plans
Investment schemes are meant to achieve goals such as your child’s education, saving for a happy retirement, etc. There are several types of these.

Unit-linked insurance policies
Unit-linked insurance plans (ULIPs) are a good option for investors who have a risk appetite. When the market is doing well, these plans often offer very high returns, sometimes as high as 12-15% on the money invested. Investors can choose to invest their money in different types of investments within ULIPs such as debt, equity, or hybrid depending on their preferences. Apart from this, there is also an annual tax benefit of up to Rs 2.5 lakh on the premium of these schemes.

Guaranteed Return Schemes
New-age guaranteed return schemes offer returns of up to 7-7.5% which can beat rising inflation. These returns are tax-free on annual premiums up to Rs 5 lakh. As you invest Rs 20,000 per month for 5 years in these schemes, by the end of 5 years you would have invested Rs 12 lakh. Now, in the 10th year, you can expect a fund of Rs 20.5 lakh, which means you can earn a profit of more than Rs 8 lakh on your investment. You can also invest Rs 40,000 every month and be eligible for benefits of around Rs 17 lakh, and still be within the tax-free limit.

Annuity Plans
If you want a tension-free retirement life, investing in annuity plans can be a good option. Annuity plans are a good option for retirement planning as they offer flexibility and security. You can choose an immediate annuity if you want to start your income immediately or a deferred annuity if you want to receive it later. Moreover, these come in lump sum or regular payment variants, which makes them incredibly flexible while offering guaranteed returns.

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