Strangely, when businesses were contracting due to the demonetisation move, one industry saw record inflows—insurance. The surprise announcement seemed to drive people towards covers. True, sitting on cash was not an option then and moving resources to mutual funds and insurance products might have seemed a prudent move. However, the demonetisation decision clearly highlighted one thing very clearly—risk. It brought people face to face with uncertainty and made them realise that there is only so much they can predict.
In today’s age, risks are heightened by economic and political challenges world over—slowing economies, protectionist mindsets, growing radicalism et al. These are causing unexpected policy changes and impacting businesses and lives. Rapid technological changes are also posing threats to the traditional ways of doing business and making the future more challenging for everyone—including the working class.
A heightened risk with respect to certainty of employment is translating into higher stress levels at work and giving rise to rapidly rising health risks. Young managers and achievers in their 30’s kicking the bucket is not unheard of in HR circles today.
In light of the above, two insurance policies that are a must for individuals today: a life insurance cover and a health insurance cover. While the former provides financial protection from any sudden loss of life, the latter guards against any unexpected financial burdens imposed by new health problems. Hospitalisation is an expensive affair, and the cost of a major procedure can send most middle class family financials into a spin. Starting early on your insurance covers is the best approach. Lower risks and claims in early years help you build bonuses that can provide you and additional cushion in later years.
Protect Your Assets
Most Indians have traditionally invested a large portion of their life savings in building or buying their homes. Protecting your house, perhaps your most valuable asset, is therefore a nobrainer. There are two aspects to this. The first, taking a cover for the house, and its contents, against any loss or damage due to manmade or natural disasters (riots, air-strike, fire, lightning, storms, floods, earthquake etc) as well as against burglary. The second, is to protect against dispossession of your home due to untimely demise of the individual repaying the home loan—a life cover taken solely to pay off the home loan. Securing your home is the first thing you must do after buying/ building one.
Have you covered all your risks? If not, the time to do so is now. It is never too early, but you can be too late.