There are two questions that are most commonly heard when it comes to insurance. Is insurance affordable or not and whether insurance is needed. Although both questions are valid, the first is of lesser importance. Insurance is not about affordability, it’s about protecting yourself and your loved ones against eventualities you cannot afford and those which will create a tremendous setback.
To answer the questions about the necessity of insurance, its best to ask oneself the question, can the bread earner of a family afford not to have a flow of income. This may not be a decision of choice but of circumstances. Can a bread earner afford to get disabled? Can a bread earner or non-bread earner earnestly afford to go through a significant critical illness? Can a person really afford to fall sick, bear the hospital expenses, besides the potential loss of income? Can someone afford to let their child lose out on educational opportunities for lack of funding? Can one afford to live the long road from retirement to death without access to a decent pension? Can one afford to have their precious things stolen, or have their house washed away in floods? If you answer affirmatively to all these questions above, then you are one of those rare people who can bounce back from any financial uncertainty.
But the point is, most of us do not have the means to recuperate from large setback in life without a sound financial backing, hence the need for insurance. Now talking about affordability, let’s take an example to assess the cost of getting insurance to cover the above stated contingencies for a average individual. If you are looking at a life cover for 1 Cr for a monthly, tax free income of Rs. 60,000, the cost comes to under Rs. 1000 per month. In other words, should the worst happen, you and your family is secured to gain a monthly income of Rs. 60,000 a month. You will agree with me when I say these costs are at par with what you would spend on a night’s entertainment or even a monthly parking charge. If we look at a critical illness and disability cover of 10 lakhs each, the cost is an insignificant addition of Rs. 300 and Rs. 40 per month.
After being enlightened on the cost economy of buying insurance, you must be wondering why people are not jumping to buy necessary protection covers. There is a psychological reason behind it. We, as human, somewhere believe we are invincible. We feel the eventualities discussed here would not happen to us. Another big reason is the lack of awareness. Not many will take the time to explain the concepts of insurance, primarily because they are low cost products giving very little monetary advantage of a distributor. Ultimately the one thing about insurance that needs to be noted is that it is solely for the purpose of protection. Insure yourself and your loved ones to keep them cushioned incase the worst happens.