Indian Insurance Industry - Insurance in India has growth in recent years - Principles of Insurance Insurance Interest Good Faith
HOW MUCH & WHAT / WHO SHOULD BE INSURED
This is one of the most frequently asked question by the people interested to buy insurance cover. At the same time this is one of the most tricky questions for which there are no standard answers. Everybody will like to have higher insurance cover, but it costs in the shape of premiums.
As a thumb rule, number of people recommend that you should have insurance coverage equal to about 4 to 6 times of your annual income. Thus, if you have an annual income of about Rs. 2 lacs p.a., it will be good idea to have insurance coverage of about Rs.10 lacs. In the normal circumstances, such sum along with the interest accrued will be able to take care for the necessities of the life for the dependent family.
Regarding the question who should be insured for life, it is advisable that first of all the bread earner should be insured. In case only husband is in employment, first of all it should be insured that he takes life insurance cover so as to protect the earning capacity in case of his demise. The insurance for other members of the family like wife and children should be done only when the bread earner has sufficient insurance cover. However, if both husband and wife are working, it is good to go for insurance for both as it will protect the earning capacity of both the members.
However, the medical insurance coverage should be done for all the members of the family rather than merely for the bread earner of the family.
If you are a owner of a house, it is good idea to have insurance for the house. The premiums for long terms are quite low for such insurance products.