Insurance Basics: Protect the Plan Before You Grow It
Insurance is not an investment. Its job is to protect your family’s cash flow if something goes wrong. Get cover right first, then invest aggressively for goals.
Term life insurance
If others depend on your income, term life insurance is usually the cleanest solution: high cover, low premium, no complicated investment wrapper. A common starting heuristic is cover of 10–15× annual income, adjusted for debts, spouse income, and existing assets.
Buy early when you are healthy. Disclose medical history honestly — claim rejection later is far costlier than a higher premium today.
Health insurance
Employer group cover is helpful but often insufficient and ends when you leave the job. Maintain a personal family floater sized for your city hospitals. Look at room-rent limits, restoration benefits, waiting periods, and network hospitals — not just the headline sum insured.
What to be careful with
ULIPs and traditional endowment plans mix insurance and investment, often with high costs and low transparency. If you want market-linked returns, term cover + mutual funds is usually clearer. Always read exclusion lists and claim settlement ratios from reputable public disclosures.
- Do not treat insurance as a tax-saving product first.
- Avoid agents pushing premium sizes you cannot sustain for 20–30 years.
- Keep nominees updated after marriage, childbirth, or divorce.
Continue reading
Disclaimer: This guide is for educational purposes only and is not investment, tax, or insurance advice. WealthWire is not SEBI registered. Consult a qualified professional before making financial decisions.