Consequences of Inadequate Protection Plans

The most misunderstood concept among Indians is Insurance. People don't know the purpose behind taking an insurance policy and how actually insurance work. The two major misbeliefs with regard to insurance is that:

I) I have already taken an insurance policy and it is sufficient for me

II) The future projected lifetime cash flow is more than enough to buy an insurance policy 

It is an altogether wrong idea to get into insurance without understanding your own need. Insurance is the tool to compensate for the financial risk in case of causality of the insured person/asset. It mitigates the risk that arises out of the uncertainty and the objective is not to earn profits but to protect the losses. 

However, people buy insurance mainly because of the investment returns and protection goes into the back seat. Very few actually calculate how much sum assured (SA) is enough for them and whether their existing policy suffices enough to provide that kind of protection in case of any mishappening.

One must cover the following types of protection plans to get Sampurna Suraksha.

1. Life Policy - Term Plan with SA of 15x of your annual income
2. Health Policy - Medical Floater Policy with SA of  1x of your annual income (including top-up plan)
3. Personal Accidental - Temporary & Permanent disability features with SA of 5x of your annual income
4. Critical Illness - Income protection with SA of 5x of your annual income
5. Vehicle Comprehensive Insurance - as per IDV of vehicle
6. Home Insurance - As per the current market valuation
7. Travel Insurance - As & when required
8. Business Insurance - Keyman to protect the business
9. Liability Insurance - As per profession

Some of the good quotes about insurance are:

• My name is ‘Insurance’ and I am not an ‘Investment’
• Insurance is like Parachute if you don’t have it when you need it the most… probably, you never need it again!
• Buying insurance is like fixing a leak in the roof... the longer you wait the more expensive it gets.
• You don't buy life insurance because you are going to die, but because your loved ones are going to live!
• No insurance can fulfill your emptiness in the family, but at least it can financially support them.
• You need life insurance if somebody will suffer financially when you die.
• It's not about your need; it's about what your family needs if you aren't there.
• If a child, a spouse, or a parent depending on your income, you need life insurance.
• By the time people realize they need Life Insurance, it may be too late to get one.

Remember, an Insurance premium is less expensive than you think!