Why including insurance in financial planning is a must for the Gen Z

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KEY HIGHLIGHTS

  • We often ignore the soaring healthcare cost and the possibility of more than one family member falling ill in the same year, that mere sum insured amount is not enough to protect us and our family.
  • We also tend to take risks in careers when we are young. We change our jobs more often than when in our 40s or 50s, we take a break in between jobs and sometimes we can lose jobs.
  • Any of these can impact our healthcare protection immensely. A Mediclaim policy gets discontinued when we change or lose jobs.

New Delhi: The Coronavirus pandemic has been an eye-opener for young adults who are otherwise assumed to be at low health risk. The pandemic has made us realise that a deadly virus can affect anyone anytime irrespective of age, and the treatment costs can go through the roof. The young generation is also increasingly falling prey to common health risks such as lifestyle diseases, climate change and pollution-related ailments.

While after the 2nd wave and mainly driven by health awareness, we witnessed significant growth in first-time insurance buyers in the age between 25-35 years, it’s time that Gen Z start considering health insurance purchase as a part of their financial planning to meet their current healthcare requirements and cover future financial loses. Rakesh Jain, CEO of Reliance General Insurance, told why including insurance in financial planning is a must for the Gen Z.

Ensuring protection at all time

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When it comes to healthcare, salaried individuals generally find themselves content with having only a Mediclaim policy with a standard sum insured amount of Rs. 3-5 lakh offered by employers. What we often ignore is that considering the soaring healthcare cost and the possibility of more than one family member falling ill in the same year, that mere sum insured amount is not enough to protect us and our family.

We also tend to take risks in career when we are young. We change our jobs often than when in our 40s or 50s, we take a break in between jobs and sometimes we can lose jobs. Any of these can impact our healthcare protection immensely. A Mediclaim policy gets discontinued when we change or lose job. Hence, we will be financially unprotected against any kind of healthcare related expenses during this time. While this may seem like a farfetched incident, if occurred it will surely burn a hole in the pocket.

It is thus imperative for salaried individuals to invest in an individual/family health insurance policy that can act as a safety net with additional coverage. Moreover, your personal healthcare will always be active and offer protection irrespective of your employment status.

If you are a self-employed individual, such as a freelancer or a business owner, having a an individual/family health insurance policy is of paramount importance as you will be entirely dependent on this policy for financial protection against any healthcare cost.

Benefits of starting early on

Starting an investment in health insurance policy from a young age has a lot of other benefits. It will help you save lumpsum money in future healthcare. Since, insurance premiums are calculated considering the age of the policyholder, you will pay a lower premium if health insurance is bought early on in your life.

Health insurance as a tax-saving instrument

You can also save money by availing tax benefits. Under 80D, you can save up to Rs. 50,000 in tax for insuring yourself, parents (below the age of 60), spouse and children. If your parents are senior citizens (i.e., above the age of 60), you can avail an additional tax benefit of Rs. 50,000.

Unfortunately, the average health risk is growing at an alarming rate in India, and as we have witnessed in the recent past, it doesn’t spare the young population. Therefore, investing in insurance early on is not only crucial but necessary for young people to ensure financial protection and hassle-free quality healthcare for themselves and their families.

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