On Sunday afternoon I have received a forwarded message from one of my close friend working in one of the very reputed Life Insurance Company as a sales head (North India), the message was” I meet with a person and I was asked about my profession, and after knowing that I am an Insurance Professional, the person replied that ohhhh you belong to the fraternity who beg everyone to buy Insurance Products. I replied, YES we beg because we don’t want your family beg in case of any misfortune happen to you”.
I am sure that few of the readers might also have received the above SMS as it’s a small world.
It was Sunday afternoon, and I was just relaxing, but this message has given me a piece of thought and I just started recollecting about my Insurance cover and the expenses I am having as liberality towards myself and my family. I realized that so far I am having the life insurance cover of 7 Lac and my average monthly expenses are some near to 1.5 Lac PM.
It struck to my mind that what if I die today??? Do I have enough savings to take care of my family and help them maintaining the same life style they are enjoying in my presence??? The answer was NO.
I dialed the mobile of my friend and asked him about the kind of Insurance need for myself, my friend suggested me to work on all the liabilities I am having in terms of loans (Car, House, PL, etc.) and the monthly expenses I am having so far as well as the kind of life I would like to spend after my retirement.
The time I started calculating I found that I am not even insured for the amount my family need to settle my loan amount taken on house and car only. There after I start calculating my and my family life style expenses. The amount I discovered my family would need in case of my sudden death was whooping 2.5 Crs.
The other way around I started calculating the average yearly saving I need to do to secure my retirement in next 20 years and covering my Insurance need came 4 Lac PA., which is 15% of my annual salary.
Fare enough to invest 15% of income as a long term goal and having lock in period for significant time as otherwise as a layman in finances I may dilute my savings in Bank/ FDs in every incident I may be needing fund, so considering long term commitment in Insurance plan the option of investing in Insurance products suits my need and nature. I was also told by my friend that Insurance products are now a day has the different investment options including Equity investment option as was earlier available in Mutual Funds only and its getting managed by professional Fund Managers. While discussing the products with my friend I raised the question about the charges Insurance product are deducting from the premium which are higher then the charges of MF and other investment products. But the same was clarified by my friend as Insurance products are giving you the life coverage as well as the charges are fairly nominal if considered in long term view.