Why You Need a Larger Life Insurance Cover, Not More Cash at Home

 

For long term requirements, you can consider unit linked insurance plans (ULIP) from life insurance companies. Ulips combine life insurance coverage with typically high growth from equity investments. What's more, you will get annual deduction of upto Rs 1.5 lakh for premiums under Section 80C. That's not to forget the maturity proceeds being tax free under Section 10(10)D.

That leaves us with medical emergencies. Even there, excess cash at home will not help. Here's why. Heart procedures are costly and some like a heart transplant can cost Rs 14 lakh## or more, while Rs 12 lakh# or more will be the tab for treatment of advanced cancer. In short, major medical emergencies will cost you different amounts and all of them are likely to be large. Worse, these amounts will keep rising. Then, you are likely to fall short since inflation will be silently devouring the cash. So, having cash at home will not particularly be handy in many emergencies, especially medical ones. So, is there a better way to replace cash stashed at home for emergencies?

A much smarter move is to have health insurance plan or life insurance riders for critical illness and medical expenses along with your term insurance plans. In such as arrangement, you don't have to worry about the specific eventuality since a range of them are typically covered by the plans. Let's take the case of a health plan like HDFC Life Easy Health Plan.

Under the coverage option called Daily Hospital Cash, you can get upto 1% of sum assured per day if you are admitted to hospital in a non-ICU room. The benefit would double to 2% of the sum assured, if admitted to an ICU room. Under the Critical Illness Benefit, 100% is paid as lump sum on occurrence of any of the 18 diseases. On other hand, under the Surgical Benefit scheme, the 138 specified surgeries are covered under four categories. They provide lump sum benefit of 20%, 40%, 60% and 100% of the sum assured, depending upon the category of the surgery.

What you pay for these benefits is nominal. You can get a health cover of Rs 3 lakh at an annual premium of Rs 2,714**, if you are a 35 year old male and go for Daily Hospital Cash and Critical Illness Benefit. The five year cover amount starts from Rs 25,000 and goes up to Rs 5 lakh.

Clearly, the comparison between keeping cash at home for emergencies, especially medical emergencies, and buying insurance is stark. There is little doubt that buying insurance provides you with a far superior and lower stress alternative to keeping tens of thousands of rupees in cash at home.

# http://www.newindianexpress.com/cities/bengaluru/Defeated-by-High-Costs-Cancer-Patients-Give-Up-on-Treatment/2014/06/19/article2288205.ece1

## http://timesofindia.indiatimes.com/india/Hearts-meant-for-transplants-end-up-in-trash/articleshow/18066828.cms

* http://www.labourbureaunew.gov.in/showdetail.aspx?pr_id=mcAPxQrX%2beA%3d

** HDFC Life Easy Health product brochure

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