Insurance – What comes in your mind when I say, are you fully insured? I am damn sure that 96.51% population will say “NO” because only 3.49% people are fully insured as per the data provided by Economic Survey 2018.
Today I will talk not about how insurance came into existence and what is its history? Nobody really cares. But I am going to enlighten the facts about how much insurance cover do you need, to fall into the financial security net and why?
Most of the people in this list have insurance but the Sum Assured is not more than Rs. 3-4 lakh. What is the value of this Rs. 4 lakh in today’s scenario; where everything is getting costlier like health, education, marriage expenses, home rent or EMI, travel? And the risk is getting bigger day by day because of the inevitable circumstances like change in life style, pollution, increasing traffic, global warming and the list goes on. If we do a fixed deposit of this money in the bank, this is what generally members of the deceased family do, they will not fetch more than Rs.24000-28000 in a year or Rs.2000-2300 monthly.
Now imagine that only Rs.2000 a month is left behind for the family of 3 (we assume that the family consists of 4 people and the earning member of the family is no more). Isn’t it a joke on the part of the family in grievance? This Rs. 2000 is not going to help them in any manner.
Do you still feel that Rs. 4 lakh sum assured is sufficient money for a family? No, then what you think what amount is considered to be fully insured?
Let’s take an example: Mohan is having a package of Rs. 6 lakh per annum. Out of these Rs. 6 lakh, he spends Rs. 1 lakh on himself. Rest of the money i.e. Rs.5 lakh goes to the family expenses, education, commuting, health and miscellaneous. Now imagine one day Mohan met with an accident and doesn’t come back home. His family still needs those Rs. 5 lakh every year for regular expenses for the rest of their life. Mohan was smart enough to have a term policy with Sum assured of Rs. 80 lakh. If his family deposits this money in the bank in the form of Fixed Deposit, they can easily get Rs. 5-6 lakh per annum every year and can spend their life without any financial crisis.
Insurance cannot compensate the emotional loss but if the family gets this kind of amount, then the rest of the life they don’t have to deal with the financial disaster.
What do you think whose fault is this that you are not fully insured, is it your family? Or you want to blame the government for this also. We are responsible for not taking adequate amount as insurance cover. Generally, people take insurance for tax saving purpose only but what about the savings for the future of your family and your life security. Yes government is also responsible for the lack of awareness amongst the people to educate them for the adequate amount of insurance cover.
Don’t expose your family to such financial risk! Take an insurance policy of at least 15-20 times of your current income.
Now I will tell you some points for you to consider while purchasing an insurance policy:
- Don’t postpone the decision to purchase the insurance…… because premiums are lesser when you are young, and increases as you grow older. How much you invest in insurance doesn’t matter what matters is when you start investing in insurance.
- Buy sufficient insurance cover.
- Always have a purpose for insurance cover like child’s education, retirement plan, tax saving, marriage etc because insurance can financially protect your family when there is a reason for insurance.