For each individual who has financial dependents, it is very important to contract life insurance coverage.
The objective of contracting insurance is to obtain financial protection against a risk, when there is uncertainty about the moment and / or the occurrence of an insurable event. For example, death is certain, but no one knows when. This uncertainty creates two types of risks: the risk of dying prematurely and the risk of living too long.
The risk of dying prematurely would put economically dependent people in great financial difficulty and make their lives miserable.
On the other hand, the risk of living too long can make a person end up using the entire retirement corpus, which will again generate financial difficulties for the person himself.
Life insurance
While the risk of living too long can be managed by purchasing a lifetime pension plan and other plans to make the best use of the retirement corpus, the risk of dying prematurely raises greater uncertainty.
This is because a person cannot accumulate enough corpus to replace all his future earnings. Furthermore, with the uncertainty of how soon a person would die, it is also uncertain how long the remaining useful life would have left to begin accumulating a corpus.
Since insurance companies are in a better financial position to manage such risks, by taking out insurance, a person transfers the risk to the insurer. To accept the risks, insurance companies collect premiums from policyholders.
Therefore, for each individual who has financial dependents, it is very important to take out life insurance coverage.
Since term life insurance products cover only the pure risk of death, it is the cheapest life insurance product. Therefore, it is recommended to take out temporary insurance to cover only the risk of premature death.
Health Insurance: What Happens to a Policy After the Death of an Insured Member?
Health insurance
People get sick with communicable diseases, such as the common cold, viral fever, loss of movement, malaria, etc., as well as with non-communicable diseases, such as diabetes, hypertension, etc.
However, there are uncertainties about how often a person may get sick and the severity of the illness.
The uncertainties about getting sick, coupled with the rising cost of treatment in private hospitals, make it necessary to purchase health insurance.
With the rising cost of hospitalization, the uncertainty of getting sick poses a great risk of all savings being depleted due to some serious illness resulting in repeat hospitalizations.
The purpose of purchasing health insurance is to transfer the risk of the cost of hospitalization, which is uncertain, by paying a premium, which is safe.
Therefore, unless they are covered by a health plan that covers life, they should all have adequate health insurance coverage to protect their savings in case of hospitalization.
Life insurance vs medical insurance
Compared to life insurance, everyone needs health insurance coverage, while life insurance coverage is necessary for those with financial dependents.
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