I am the lone earner in my family. I keep on travelling for work. What insurance plans should I buy?

I am a single-earning member in a family of 5, and my work involves travelling out of town most of the month. What protection plans should I buy to ensure my family is adequately protected?  

- Ramesh  

Reply by Nitin Deo, Chief–Underwriting, Claims and Reinsurance, Zuno General Insurance   

Congratulations on identifying a crucial need. Insurance is the most effective way of financially protecting yourself against unforeseen expenses due to ill health. There are two types of plans that you should be considering—a health insurance policy that will cover you and your family against hospitalisation expenses and another personal accident policy for yourself that offers financial protection in case of an unforeseen accident. 

There are several health insurance policies available which offer coverage on a floater basis for the entire family. It would help to opt for a minimum Sum Insured of Rs 15 lakh or above since this amount will cover your entire family. Alternatively, you can opt for two policies that cover yourself, your spouse and two children in one plan, and your parents can be covered in a separate policy. Income tax benefits will be separately available for both plans as there is a special limit in the income tax rules for coverage of dependent parents. 

Since your work involves travelling, you must consider buying a personal accident policy to compensate your family with a one-time lump sum in case of accidental death. These policies are an extremely efficient way of protecting your family’s financial well-being in case of an unfortunate accident resulting in the loss of life of the earning member of the family. You can also add disability benefits for a nominal increase in premium. In case of an accident leading to disability, a percentage of the total sum insured, as specified in the policy, is paid if the accident results in permanent disability. These policies are quite affordable, and the usual metric is to opt for a minimum of 7-10 times your annual income. 

Thus, if you have both policies, one would protect you against hospitalisation expenses and the other in case of death or disability due to an accident.   

Apart from these covers, you must also buy a pure-term plan. This is the purest form of term insurance. The plan provides coverage for a predetermined period. In case of your untimely demise, the nominee receives a death benefit that could be either a lump sum or a recurring amount. This way, you can protect your family from financial losses in case of any uncertainty. 

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)