5 Times Insurance Saved People from Financial Disaster

Life does not always go as expected. You could experience a medical emergency, a serious accident, or significant damage to your property. All of these can take a considerable toll on your finances. For many, having the right insurance coverage has meant the difference between falling into debt and remaining on solid ground. 

Below, we will provide five real-life examples that illustrate how having the right coverage was not just a relief, but a total and complete financial lifesaver. So, let's unfold how insurance can help you prevent significant economic losses. 

5 Real-Life Examples of Insurance Preventing Financial Loss

Insurance is valuable in cases where unexpected situations threaten your financial well-being. In a crisis, insurance helps an individual or family mitigate severe losses with a plan to recover and replace what has been lost. The following five real-life accounts illustrate the fact that protects someone from a financial burden. 

1. Health Insurance Against Expensive Medical Bills

Health care costs are one of the fastest-growing categories in India. A straightforward surgery or treatment in a private hospital can cost lakhs, and any complex ongoing care, such as cancer treatment, can suck the entire family's savings dry in less than one year. Health insurance relieves some of this burden by assuring that the hospital or treatment costs will not ruin a person's financial plans.

How health insurance helps:

• Covers hospitalisation and surgeries: Most typical policies will cover the costs of bed charges, doctor charges, surgical charges, and prescriptions, if hospitalisation or a surgical procedure is required. That means families will not have to seek funds when an emergency happens. 

• Cashless treatment in network hospitals: Many insurers partner with network hospitals to provide cashless treatment. That means insurers can provide insurance directly to the hospital for treatment. Cashless removes the burden of getting large amounts of cash upfront. 

• Protect savings from becoming depleted: Insurance allows for a means not to use fixed deposits, liquidate property to pay for the doctor or hospital, and recover most expenses. 

• Additional benefits under the policy: Many insurance products offer additional benefits in addition to emergencies, for example, maternity cover, annual health check-ups, and other minor procedures, which give consumers a much broader benefit.

2. Personal Accident Insurance After Road Accidents

Road traffic accidents are common in India and can result in serious injuries or disabilities. The challenge extends beyond medical expenses to the loss of income, which can be an even greater burden, particularly if the injured person is unable to work for weeks or months. With accident insurance, the policy provides income support during a difficult time.

How accident insurance helps:

• Provides a lump sum payout for severe cases: If a person is permanently disabled or dies due to an accident, the insurance will provide a lump sum payout as a cash payment to support the family's financial needs.

• Provides income replacement for temporary disability: If an injury is short-term, insurance policies often make compensation payments similar to salary payments to ensure essential household expenses are covered.

• Covers clinical and rehabilitation costs: Accident insurance can also cover physiotherapy and other medical support services, as well as rehabilitation after discharge from the hospital, which are often expensive but necessary for recovery.

• Provides support for dependents shopping for death: If the insured person dies as a result of an accident, the payout can be helpful for their dependents to manage their essential household expenses and plan for the future, as well as giving them time to grieve without the added financial stress of current expenditures.

3. Term Life Insurance Securing Family's Future

In many families in India, one member's salary supports the entire family. When that individual dies unexpectedly, the financial loss is enormous. The most cost-effective option to ensure your dependents are protected is term insurance.

How term life insurance helps:

• Extensive coverage at low premiums: Families can purchase insurance policies worth crores for just a few thousand rupees per year. This is a substantial amount of money to cover any medical emergency.

• Helps manage family's daily expenses: A term life insurance helps them continue their everyday expenses without depriving them of any lifestyle changes.

• Covers long-term goals: A term insurance policy allows the beneficiary to manage expenses for a child's education or marriage without the income of the earning parent.

• Pays off debts, i.e., outstanding loans: For example, families can pay off personal loans for their houses, cars, businesses, etc., and avoid losing any of those assets.

4. Critical Illness Insurance Covering Costly Treatments

Lifestyle-related diseases such as cancer, heart attacks, and kidney failure are increasing in India. These diseases will require specialised treatment that is often expensive and not typically covered by health insurance. Critical illness coverage offers a solution to this problem.

How critical illness insurance helps:

• Lump sum payout upon diagnosis: Critical illness insurance provides a fixed amount upon diagnosis, eliminating the need for ongoing reimbursement for treatments that health insurance typically covers. Patients can use funds as needed. 

• Covers specialised medications or advanced treatments: Patients do not have coverage for expensive, medically necessary medications from conventional health insurance. The benefit allows patients to choose their treatment option without worrying about the associated costs.

• Useful for income replacement during long recovery periods: If patients cannot return to work during their treatment, the proceeds can help cover household expenses, alleviating any undue stress regarding care costs.

• Lowers the dependency on utilising loans or liquidating assets: Patients will not have to sell their jewellery, property, or other investments because of the payout from the policy to accommodate treatment costs.

5. Property Insurance Protecting Homes and Businesses

India is susceptible to natural catastrophes, primarily floods, earthquakes, cyclones, and fire and theft risks. Property loss from such disasters and risks is generally worth lakhs or crores of rupees. Property insurance provides peace of mind and a shield to protect finances in the event of a loss.

How property insurance helps:

• Covers structural damage to homes and offices: Property insurance covers damage to a structure by fire, flood, or an earthquake; as a result, it pays repair or rebuilding costs.

• Covers contents and valuables: Household contents, such as furniture, jewellery, and electronics, or goods of a business, such as stock or machinery, can be insured for loss.

• Supports business continuity: For shop owners, warehouses, and factories, property insurance allows property owners to operate again after damage without a permanent shutdown.

• Gives peace of mind for families and businesses in difficult areas: Firms and families prone to disasters (flooding and earthquakes) will be more prepared and able to face being fully financially devastated.

Life is unpredictable, and you may experience a financial setback without notice. That's why we need insurance—to alleviate the worries of expenses when life takes an unexpected turn. Insurance will help protect you from being thrown off your financial steadiness when facing a surprising medical emergency, car accident, or travel emergency. Protecting yourself appropriately will provide you peace of mind and confidence while facing the unknown, knowing you have a safety net to catch and support you as best they can.