I have a car loan (Rs. 8 lakh) and a home loan (Rs. 40 lakh). What kind of life insurance plan should I take to ensure my loan burden is taken care of if something were to happen to me? What are the premiums like? Also, if I take a disability health insurance, will it cover my loan EMIs in case I am not able to work temporarily or permanently? Please advise how I should adequately insure myself?
—Jeevan Shah
You should take a standard term insurance cover with a sum assured of Rs.1 crore or more. Choose a lump sum benefit option. Under this option, the nominee gets the full sum assured at one go. This amount can be used to settle outstanding loans. The excess could be used for the nominee’s welfare. A thumb rule is to take a cover equal to 10 times your annual income. The sum assured should be enhanced to cover known financial liabilities.
