New Delhi, Oct 28 :
As one with an avid interest in investor psychology, it is interesting to note that even those that plan things meticulously often fail to plan for the only thing that is inevitable (death) after one is born in this world.
Leave alone a clear-cut ‘Will’ that details the assets they hold and whom they wish to bequeath it to; most do not even have any life insurance. Those who have it rarely bother to top-up their cover, thus allowing time to render their initial cover insignificant.
As it is, life insurance penetration in India is dismally low, at less than 5%, and what is more disappointing is that more than half among those, are underinsured. A primary reason for underinsurance among the few that have life insurance is the Indian obsession with deriving ‘returns’ for any money expended.
Many just cannot reconcile to the fact that after their term of Life Cover ends at a specified age, they will not get any pecuniary benefit or returns for the premium paid.
Now, if one starts looking at pure (term) life insurance as an ‘investment’, then the only way to maximise returns would be to hope to die soon after taking a policy, before the next premium becomes payable. The return on investment in such a case would be phenomenal!!!
On a more serious note, while many recognise the emotional turmoil and void left behind by a death in a family, most still prefer to turn a blind eye to the huge financial void too that it often also leaves behind. I have seen far too many cases of families used to leading a very comfortable, if not luxurious life, suddenly finding their world turning upside down following the death of an uninsured or under-insured breadwinner.
It is heartbreaking, even from a distance, to see the way the dreams and aspirations of the children, especially in such families, come crashing down. It is thus prudent for everyone who has even a single financial dependent to not just insure but adequately insure themselves.
How one arrives at the figure of ‘adequate’ insurance to ensure that every dream one has for loved ones is met is not something that can be captured merely with an arithmetical calculation as many websites and ‘experts’ profess.
It requires a detailed evaluation session with one’s advisor, who can take a holistic view of where exactly one stands with their current investments and what it would cost ‘financially’ to replace one in the event of an untimely exit.
A no-frills insurance term plan will usually serve the objective of pure life insurance most cost-effectively. And for those that live in the big cities and towns especially, it is worth looking at a critical illness cover top-up too.
Rest assured, if one remains healthy and stays on after adequately insuring oneself, nobody will complain. But do not make the mistake of not insuring or underinsuring yourself. It could make all the difference to not just the lifestyle but also the dreams and aspirations of one’s loved ones.
So, this Diwali, act to secure your family’s future.
