Getting covered for life's emergencies is crucial and it pays to sign up for the best health policy at the start of one's career

CONSIDER THIS. You have just landed a well-paying job, after your post-graduation from a premier institute. Your ascent towards the career you have always dreamt of has started - a journey that seems simple and sans hurdles, given the minimal responsibilities you have to shoulder during the initial years. Your parents - as is the case with several urban Indian families today - are yet to hang up their boots, and are not dependent on your income, which translates into complete financial freedom for you. However, amid the euphoria generated by the first pay cheque, it is easy to forget the basic step that every earning individual needs to take as a shield against unforeseen emergencies. This does not necessarily mean signing up for a life insurance policy, which may seem like the most natural thing to do, with agents of life companies chasing you. Life insurance is critical, no doubt, but not necessarily so during the initial couple of earning years. There are other covers that need to be considered, though, which could add to your newlyacquired financial independence.

HEALTH INSURANCE

No matter how fat your pay packet or how robust your family's financial situation is, the first thing you need to do upon securing a job is to buy a health insurance policy for yourself as well as your family - if they are not covered by one already. This is applicable even to those who are covered under their employer's group health insurance schemes, as individual mediclaim comes in handy when you switch jobs, besides offering tax deduction of up to Rs 15,000 under Section 80D of the Income Tax Act. Moreover, the sooner you start, lower will be the premium.

PERSONAL ACCIDENT POLICY

You could look at supplementing your health cover with a personal accident policy. "This policy should be the ideal cover for those who have recently started working. It could feature three components - temporary disability, permanent disability and a death cover," said KK Agarwal, executive vice-president, IFFCO-Tokio General Insurance. If the insured is unable to resume work temporarily due to the accident, the insurance company will pay a weekly compensation. That is, if the sum insured is Rs 1,00,000, the policyholder will be entitled to receive say 1% of the amount or Rs 1,000 every week, subject to the maximum period specified under the policy. "This kind of cover is critical particularly if one relies on a two-wheeler to commute to work," said certified financial planner Prerana Salaskar-Apte. "However, find out if such a policy is offered complementary to your credit card. In such a case, the basic health cover should suffice." In case of permanent disability, the claim payable will depend on the type of handicap. Before signing up for the policy, ascertain if the coverage includes partial/temporary disability or merely permanent and total disability.

CRITICAL ILLNESS COVER

"Else, they could opt for a critical illness policy offering a wide coverage, including total disability caused by accidents," said Gaurav Garg, managing director and CEO of Tata-AIG General Insurance. The policy is primarily meant to cover the insured in the event of certain ailments like cancer, kidney failure, paralysis and so on. The claim - a lump-sum - is paid out upon the diagnosis of specified diseases. While health insurance could take care of the hospitalisation costs, this cover could help meet other expenses, particularly if the policyholder is not in a position to work while undergoing treatment. Both life and general insurance companies offer this cover. Like in case of health insurance, it makes sense to start as early as possible, since age plays a role in determining the premium.

Source : http://epaper.timesofindia.com/