Welcome all, to the new year 2014.
What an unusual title to this post you might think...but the truth is that most of us have not insured ourselves adequately, neither life or health wise. We have just made Investments in the name of Insurance, without even considering whether our Long Term Financial Goals will be met through these "investment" choices or not.
Why do we "invest" in Insurance?
1. For generations together Insurance Agents have been brainwashing investors into thinking that taking a simple term cover is a stupid thing to do.
2. Advertising and marketing has reached newer highs (bringing newer lows to investors)
3. There is a fixation for "guaranteed returns"
This year though, things are different. IRDA(the regulatory body of Insurance products in India) has implemented various changes which has forced insurance companies to change their product structures and offer "newer and better investor friendly products".
But seriously, I do not wish to talk and waste this space on these changes, simply because, the fact remains that all of us really need two types of Insurance products in our lifetime...
If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance.
Suze Orman
How to calculate your life Cover:
1. Assess time left for your retirement.
2. Cover your debts/loans so that they can be paid off straightaway. Home loans already have this provision.
3. Provide for future expenses by estimating inflation, including education for children.
4. Estimate what living expenses are going to be and the investment needed to yield that much return.
OR
You could use this simple excel tool to calculate how much life cover you require.
Once this is done you can go to step 2 i.e taking a mediclaim/health insurance cover.
Health insurance should be a given for every citizen.Jesse Ventura
Health care costs are escalating at a much higher rate than inflation. In 2013 they were up by 22%, needless to say, having a family health cover is a wise choice, unless you would like to destroy your savings by paying medical bills.
As a thumb rule a basic family cover of at least Rs.5 lacs is very much recommended. What more, you can claim a tax deduction for the premium paid(subject to IT rules).
Fun is like insurance; the older you get, the more it costs.
Kin Hubbard
All aspects of a Financial Plan are interlinked, if you buy insurance as investment then your fixation for Guaranteed returns will ultimately pinch you very hard in the pocket, not necessarily right away but surely in the years to come. More importantly, buying illiquid insurance products will only diminish your choice of savings.
Buy Insurance as Insurance only and not as an Investment.
Ninad Kamat
CERTIFIED FINANCIAL PLANNERCM
Image source: http://www.ahealthiermichigan.org
Quotes source: www.brainyquote.com
I will need your appointment, sir. :)
ReplyDeleteHello Yogesh,
DeleteWe can schedule a Skype call, pls contact on my e-mail, ninadkamat@gmail.com
Buying an endowment policy or ULIP without understanding what it is, is the mistake most of the ppl I know have made
DeleteNice quote by Suze :)
Right.... its a great pleasure in knowing that you have been creating a lot of awareness at your workplace regarding correct investments...Keep up the good work. :)
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