When my cousin was 25 years old he had bought ULIP. His premium was 1 lac rupees per annum and his income was 75 thousand rupees per month at that time. The sum assured was 5 lacs. After 5 years he is now happily married and has a two year old child. One day he asked me to help him in his investments. I was surprised to know that his insurance was still the same ULIP and rest of his money was invested in Mutual funds, stocks, FD. He also had a 400 sq. yard plot. Although he was smart to diversify his portfolio but not smart enough to decide how much insurance he needs. Unknowingly he had brought his family into a very dangerous situation. Imagine what if unfortunately he meets an accident which results in his sudden death or makes him incapable to continue his job. Now because of his investments he would have no financial problems for 3-4 years. But after these 3-4 years what would he do, how would he earn money? These are the questions that should come to his mind now. Now that he has a very good investment already so instead of spending one lac for the ULIP he should have chosen to spend 88000 rupees for the ULIP and 70000 rupees for a pure risk cover term policy and 5000 rupees for a health insurance. This means that although he is not reducing his ULIP premium to a great amount still he is getting insurance cover of around 80-90 lacs and Health insurance up to 3 lacs. So what if he does not get any returns on those 12000 rupees which he will spend every year on the insurance, at least he is financially protecting his family with lot of money. This amount can be used by his family to start a business or buy a property which would earn them regular money in his absence. Don't forget this also means that his other investments can continue and multiply over years. If you are still not certain about getting insured then there are few more things that I want you to read. Consider your close cousin in place of my cousin and try to find answers to these questions.
1. What if he had spend lavishly before marriage and had just started investing a year back ?
2. What if he had invested only in stocks and his investments had reduced considerably due to crash in the stock market ?
3. Cost of treatment is increasing at a rapid pace. But my cousin did not have Health insurance. What if all the savings had been used up in his treatment ?
4. What if he had retired parents to look after and a sister ready for marriage ?
5. What if he had taken up a home or personal loan ? There are many what ifs but what is important is to realize that a small insurance / health insurance is also like having no insurance. There is an increasing number of casualties reported every year & the resources ( new diseases, frequent floods & earthquakes, terrorist attacks, naxalite attacks, train & airplane accidents, global warming etc. ) are increasing too . So please get insured. I helped my cousin you should help yours.
1. What if he had spend lavishly before marriage and had just started investing a year back ?
2. What if he had invested only in stocks and his investments had reduced considerably due to crash in the stock market ?
3. Cost of treatment is increasing at a rapid pace. But my cousin did not have Health insurance. What if all the savings had been used up in his treatment ?
4. What if he had retired parents to look after and a sister ready for marriage ?
5. What if he had taken up a home or personal loan ? There are many what ifs but what is important is to realize that a small insurance / health insurance is also like having no insurance. There is an increasing number of casualties reported every year & the resources ( new diseases, frequent floods & earthquakes, terrorist attacks, naxalite attacks, train & airplane accidents, global warming etc. ) are increasing too . So please get insured. I helped my cousin you should help yours.
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