we all should buy insurance and we all know this especially life insurance, health insurance, and two wheeler insurance are already compulsory but apart from these 3 important insurance plans, many other insurance plans are sold unnecessarily to us but we can avoid those.
Why to pay the premium unnecessarily we are going to talk about 5 insurance plans to avoid buying you should avoid with them, we’ll discuss life insurance and we’ll see what the cases in which you can avoid life insurance also.
5 Insurance Plans That You Should Avoid Buying
There are various types and kinds of insurance plans that are available in India, where there are some important ones but there are also some that are not worth your investment.
Here are the 5 Insurance Plans that you should avoid buying in 2024:
#1 Home Loan Insurance
The #1 insurance plan to avoid buying is Home Loan Insurance when people buy a house, many people borrow a home loan for it and people don’t pay attention there.
When we receive the loan sanction letter, an insurance premium is also added to that and generally, we don’t pay attention to that component and this component is added to your EMISo in a way, you’re getting the premium of this insurance in a loan form so you are paying interest on that.
So that is something that seems to have no such benefit of this insurance and we can definitely avoid this one here is the reason for that, why we are buying or bank is selling the home loan insurance?
The main objective of the bank is, if it happens in a case when the person who took a home loan dies then they can do the recovery easily.
On the other hand, the objective of the borrower is not to put the liabilities on his family. So the purpose of both is getting solved but we are getting this insurance expensive our purpose can also be solved with term insurance.
In case of all the eventualities, someone’s life is at risk and that person dies due to some reason then you get all these covers in term insurance.
Term insurance is already the cheapest insurance and maybe that’s why the sellers sell it less you have to see your own benefit and your benefit is to increase the term insurance which means whenever we’re buying a home loan or increasing our liability or borrowing any type of loan.
The portion that is getting increased in our liability, we can increase the same portion in our term cover, which means, either we can buy an extra term policy or we can increase the cover of our existing term insurance.
#2 Flight Insurance
Moving on with the #2 Insurance plan to avoid buying. The second type of insurance we should avoid is Flight insurance. Whenever we travel by air, you might have noticed an insurance premium is automatically added but you can also uncheck that box.
This is because there is no such benefit from that insurance as well because it is covering such an eventuality that if there occurs any accident during the flight or any mishap happens in which loss of life is there it is covering such events. These events are also covered in term insurance.
#3 Child Insurance Plan
Moving on with the #3 Insurance plan to avoid buying, is Child Insurance Plan. Many people sell these child insurance plans which means if you have kids, then you can secure their education in the future.
Such plans are there in the market or insurance against a child’s life is also sold but firstly, we should understand the purpose of the insurance. Firstly, if your children are not earning right now ultimately, the insurance covers the events such as loss of earnings.
So that the family of that person doesn’t suffer but since your children are not earning now, there is no need for life insurance. Otherwise, you’ll pay the premium unnecessarily then there are education plans about which we already discussed and all these things are already covered in term insurance plans. So we need to buy a comprehensive term insurance plan.
#4 Credit Card Insurance Plan
Moving on with the #4 Insurance plan to avoid buying. The 4th insurance that we can avoid is a Credit Card Insurance plan.
Many people are unable to make credit card payments so for that, so credit card companies sell insurance plans. That means if you are not able to pay your credit card bill due to any reason like unemployment can be a disability or accident can be reason. As we discussed before, all these things are already covered in term insurance.
Secondly, instead of buying an insurance plan for credit card and increasing the spending on credit card, it’s better to maintain financial discipline and buy less using credit cards. And for events such as unemployment, or any disease for some time you can make an emergency fund about which we discussed multiple times. In that, keep a reserve of your 6 monthly incomes as an emergency fund.
#5 Disease Insurance Plan
Moving on with the #5 Insurance plan avoid buying the 5th insurance plan we can avoid is Disease Insurance Plan. Many different types of plans are now available in the insurance market.
Some say to buy cancer specific insurance plan if, in the future, you suffer from cancer then this insurance can cover such an event. There are many heart specific plans many were covid specific plans are there in the last 2 years.
But the reality is there is no benefit of such insurance plans because you don’t know from what type of disease you will suffer in future. So it’s better to buy a comprehensive health insurance plan, which covers maximum diseases and pre-existing diseases.
So we discussed about 5 such plans which we should avoid. Now let’s talk about Life insurance in some cases, there’s no need of life insurance.
Do You Need Life Insurance Policy?
What is the purpose of life insurance policy? If anyone dies, then the family need not to suffer that means we want to replace the earnings of that person. But if the family income is already good then maybe life insurance is not required.
And in which cases can this happen? If your spouse is already earning well then they don’t need an insurance plan or if you have some income-generating assets like many people have an extra rental income.
So they might don’t need many people have good savings, and good interest incomes so in cases where income generating assets are there or monthly income is good In such cases, life insurance is not needed.
And when this happens? It generally happens in your 40s or 50s when you build sufficient assets so the requirement for life insurance decreases because your children also grow old and they also become independent. But insurance is a must for the people who are just starting their careers and are in 20s or 30s because liabilities can increase in the coming time.
So when we buy insurance, we should buy it as soon as possible because the premium is less so broadly speaking, as we discussed earlier.
