Insurance

Insurance is a risk mitigation tool and not an investment tool. This is the fundamental attribute of the product which cannot or should not be altered. This is more an accessory and not the core item of anyone’s portfolio. At the same time, it plays a vital role in not disestablishing your wealth plan should some unforeseen circumstances happen during one’s lifetime trying to hijack your financial freedom. This has a more pronounced effect when the objective of savings in a particular goal is meant for children or retirement savings. So insurance is an integral part of a wealth plan but not your main source of wealth creation.

Broadly classified into Life, Health, and General. You need to give some one-time attention while implementing risk mitigation for life and health. General Insurance will come into play as and when a scenario arises such as Car or personal insurance or travel insurance.

Life Insurance:-

The most critical part of risk mitigation is the Life Insurance to ensure no derailment of your long-term objective. Here we suggest going with a Pure Life term with no return of capital and keeping it as simple as it. Don't meddle with it too often. When your risk in Assets accretion increases with an increase in liability then you need to review the life risk cover otherwise it can remain static.

Health Insurance:-

This is the secondary level risk mitigation that you need to look into to avoid any slippages in wealth creation due to the sudden medical emergency occurrence. You need to have a family floater to start with and have an increasing cover as time goes by. Some of the plans from Care Insurance (care plus) and HDFC Ergo offer” Optima Restore or Optima secure” as the case may be.

You need to keep a reasonable cover from 5 lacs onwards may be up to 20 lacs cover as you age. Generally, the incidence of cover becomes more critical as members age beyond 40 and so do premiums. However, the good part of today’s plan is that they provide perpetual cover even if you have claims in a particular year. If the cover requires a medical test better go for it as it becomes mandatory for ages above 45 or higher cover. So go for it and plan it early to remain safe. Please do remember all these covers protect you in your country of residence.