Buying an insurance policy in the past was a matter of choice, however, today it has become a necessity. What we need to understand is the a need to buy an insurance cover.
Have you ever enjoyed the thrill of sky diving? Imagine, if you jump off a plane without a parachute, all the while thinking that nothing will happen to you. Our life without adequate insurance is similar to this, as most of us are living with the notion that I am here forever and would live my life without a parachute.
The grim reality of today is something that we all should comprehend. While the "Old and elderly are yearning for death, there are many youngsters dying an untimely death". For starters, we do not want to scare you, but yes there is need to note that age is just a number today. There are 90 year olds, who are running marathons and 35 year olds are dying of heart attacks.
Most grandfathers to date are able to enjoy ghee and paranthas, while youngsters are staying away from all the fried food. The point we are trying to make is there is a stark difference in the way our ancestors lived and the ways in which millennials look at life. Similarly, time has come for us to look beyond our day-to-day lives and our financial security.
Buying an insurance policy in the past was a matter of choice, however, today it has become a necessity. What we need to understand is why is there a need to buy insurance?
1. Nuclear family structure - With the advent of growing number of opportunities in cities and towns, more people want to leave their smaller towns and migrate to urban cities. Also, lifestyle changes and the generation gap has led to fewer joint families and growing number of nuclear families. This means there is no social structure to take care of our family in case of an eventuality.
2. Higher stress levels leading to chronic health issues - Whether we like it or not; urbanisation, competition, the urge to satisfy our lifestyle needs, peer pressure and innumerable goals have made us dynamic, but have also gifted us increased amounts of stress. The growing number of heart attacks in the 30+ age group and increasing levels of sugar and cholesterol in individuals are making our lives riskier. Moreover, heart diseases remain the leading cause of death in India for over two decades now.
3. Single earning member of a family - In India, most adults need to earn money to make ends meet. This is one positive, but when an entire family is dependent on a single earning member things can get tough if something happens to that individual. Further, even as women take up full- or part-time careers, they do not consider themselves as the sole contributor to the families finances.
4. Growing number of road accidents - According to reports, more than 4 lakh road accidents occurred in India last year, resulting in more than 1.5 lakh deaths. What is shocking is that 46.3 percent killed in road accidents were aged between 18 and 35 years.
Hence, we all need to take a step back, relook at your finances and get our insurance planning right before it is too late. Here are a few tips that could help you:1. Insurance planning is different from tax planning. So do not mix the two.
2. Understand the concept "principle of utmost good faith" before you an buy any insurance cover.
3. Do not plan your insurance to please relatives who are agents. This relationship could become a costly affair.
4. Your insurance needs have to be calculated systematically and scientifically. Engage a financial planner before you buy insurance.(The writer is CEO & Founder of Confidence Investments)