As your liabilities rise, so should your insurance cover. Here's all you need to know

As your liabilities rise, so should your insurance cover. Here's all you need to know  10th March 2023

In a world of uncertainties, a financial product like insurance is no short of an overlooked superhero that always comes in clutch and saves the day. Be it your home, vehicle, health, or business, general insurance India protects various assets essential for your life's unaffected functioning.

While the penetration rate of general insurance India only slightly lags behind the global average, it is a fact that can only be celebrated in isolation. Policyholders also need to periodically assess their situation to determine whether their policy provides adequate coverage in terms of insured sum and coverage benefits instead of sticking to the same policy to skimp on premium.

It is necessary to upgrade your policy as your financial situation changes, which is a game of balancing your assets and liabilities. Liabilities refer to events that certainly result in monetary outflow in the present or the future.

If you notice an increase in your liabilities or anticipate the same in the upcoming future, here’s why you should consider increasing your insurance coverage.

1. Inflation:
The cost of living only increases by the day. The official figures released by authorities are usually conservative. Still, upon careful research, one can identify that understated inflation exists in every industry and is only set to grow over time. While some rising costs are necessary to fuel economic growth, consumers ultimately feel the pinch on their finances.
Any assets you may have purchased are bound to depreciate over time and lose value, while any loans compound into more significant outflows, resulting in an imbalance of finances. Consider availing of general insurance India plans to protect your assets and yourself from defaulting on existing liabilities.

2. Diminishing earning power:
Over time, an individual's earning capacity inevitably stagnates, if not reduces. While strategic investments may compound your wealth over time, the lack of a continuous flow of income may put you in a challenging financial position. As liabilities continue to increase, a simultaneous addition in terms of revenue is essential.

3. Dependents’ financial stability:
Like numerous other vital issues, your primary well-being directly impacts that of your dependents, especially if you're the sole breadwinner of your family. Whether uncertainties come your way in the form of accidents, health issues, disabilities, or unforeseen calamities, it is always best to increase your policy’s insured sum after a careful risk assessment. Always take stock of such a situation and purchase general insurance India to protect your assets and finances. This way, you can minimise the financial impact of the event on your dependents.

4. Increased number of dependents:
If the number of dependents on you has grown recently, it is time to evaluate your policies’ insured sums. Irrespective of the kind of insurance, except those relating to tangible assets, ensure that you carefully assess various plans under general insurance India. This is essential to identify the best policy that provides adequate coverage and perks for your extended family.

5. Increased personal liabilities:
If you are taking more significant debt to fulfil any financial goals, consider increasing the sum offered by the insurer on the related asset. This may be in the form of education loan insurance, home or motor vehicle loan insurance, etc. It also applies to health insurance by upgrading your policy to a more comprehensive policy after accurate medical diagnosis and detection of significant health risks.

Through careful assessment of the situation and risk analysis, potential policyholders can purchase the best plans under general insurance India and derive the most significant value for their investment, whether their liabilities stay stable, diminish or increase!

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Disclaimer: The information provided above is for illustrative purposes only. To get more details, please refer to policy wordings and prospectus before purchasing a policy.