Insurance is taken to prepare for the unexpected. It is all about taking the right protection.

Key Points

• One must prepare for the unexpected events. Life is full of surprises unknown and unforeseen
• Disability income insurance can help fill the gap if you are no longer able to work
• Life and long-term care insurance can provide valuable protection for your family

In today’s world, life is on a fast lane. People live longer and work longer. Traditional retirement life has now been redefined. However, the values of family and friends and their priority still remain intact. This changing dynamic may mean there are more of life's surprises for an individual. To counter these changes, one needs to be prepared for the inevitable changes.

These three types of insurance can help

A. Disability income insurance
Loss of income is a worry that one needs to keep in mind during one life’s planning. Income is one’s largest asset so it's important to consider protecting it. If you are approaching retirement, it's also important to keep in mind that any loss of income can impact one’s retirement savings — and future — in two ways:

• Limited or Zero contribution to retirement corpus
• Withdrawal from retirement corpus to meet current needs

Also, Insurance coverage from employer is always not enough. Most policies cover only 2/3rd or less of the salary. These also do not cover variable components. Hence, the assumption that one is covered by employer insurance is not right.

B. Life insurance
Life insurance provides the comfort that something is in place for your loved ones if something happens to you.

• Survivor income: Life insurance is about protecting your loved ones. That's especially true during retirement when the death of a partner can have a dramatic effect on the surviving partner's retirement income. In that situation, life insurance benefits can help fill the gaps in pension and allow your partner to maintain the same standard of living.
• Wealth transfer: Retirement is often the time when people consider how they would like to be remembered. This includes efficiently passing assets to family or other causes they care about. Life insurance can be an efficient transfer vehicle.

C. Two main types of life insurance

• Term life insurance: A plain vanilla insurance policy. These can be bought for a period of 10, 15, 20 or 30 years. When the term ends, people who want to continue coverage usually must buy a new policy at a higher rate.
• Other forms of life insurance: These policies, also called cash-value insurance, are often considered for longer-term needs, and for retirees, it can be a great way to supplement their retirement income. These include cash back policies, endowment plans and ULIP plans among others.

Both types of policies provide security via tax-free benefits and cash value insurance also provides the opportunity to grow assets.

D. Health Care insurance: Health care costs can be substantial specially as one moves into the second part of their life. Even for someone with a good amount of retirement savings it can turn out to be huge. Thus, such insurance can help in planning for contingencies. These days there are more types of extended or long-term care insurance available than before.

• Traditional health insurance: These policies usually cover nursing home and home health care costs for a set number of years. Premium costs depend on your age, health and amount and type of coverage.
• Life insurance with optional coverage for extended care provisions: Many life insurance policies offer optional riders that allow you to access the policy benefit for chronic illness or long-term care expenses.