A cover against the contingency of damage to the vehicle due to an accident and personal accident cover are optional; if you have personal accident cover as a part other financial products — this is a common freebie now — you can give such plans the miss;

A householder's policy covers the house and belongings such as durables and furniture. Jewellery and works of art do not fall within the purview of such a policy. The cost of insurance cover for your house will not be stiff; the moment you add household articles, the cost can spiral. So, if you do not want comprehensive cover, pick and choose the products to be covered to keep premiums minimal.

You need to take an additional cover for jewellery. There are also polices that cover jewellery kept in vaults, though one tends to assume that such safe-keeping automatically makes them risk-free.

Plan your life cover

When taking life cover, use a combination of whole life and term plan to derive optimum benefits.

To enhance your cover beyond 60, you can opt for a whole-life plan. They are more expensive than term plans. An optimum mix can, however, reduce your overall costs.

This would save you the trouble of paying premiums later when it may be difficult to handle such nitty-gritty. A whole-life policy without bonuses can also reduce the cost of your plan.

If you want to take separate policies, allocate the premium according to your respective incomes.

Allocate a higher portion of the sum assured (or the payout) to the male; the risk of death of a male is higher.

Be careful with health cover

When you buy health insurance:

* Ensure you, your parents and children are also covered.

* Renew your medical insurance every year.

* Take higher cover as you age even if it means a higher outgo.

* Check the exclusions and see if the policy is of use to you before you opt for one.

* Run a check on the facilities offered, such as the number of hospitals your insurer has tied up with for a cash-less facility, the speed at which claims as settled and the norms for eligibility.

Savings products

In India, savings products form a substantial part of one's insurance portfolio, though it should be the other way around. Tax concessions and the lack of enough long-term products have only enhanced the popularity of insurance products.

Savings products should, however, come last on your priority list as returns are not superior to other options. The phasing out of guaranteed returns has eliminated a key incentive to go for such insurance products. You can now plan your savings portfolio based on performance.

For instance, were you to plan for your child's education, you could invest in small savings schemes with long-term maturity, such as Kisan Vikas Patra (KVP) or National Savings Certificate (NSC), every year. Such an investment will give you regular cash flows. Return on these are better than those offered by insurance products despite tax benefits in the latter.

For those who have exhausted the limit under small savings, mutual funds and debt-oriented unit-linked insurance schemes could be considered.

Cutting costs

TAKE a mix of whole-life and a term plan for optimum cover; buy a higher proportion of desired cover through term plans.

Invest in other savings products such as small savings before even considering savings-oriented insurance.

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