Insure yourself against loan (popularly called credit life insurance), so the responsibility is not left for someone else to fulfill, should something unforeseen happen to you
The requirements of a generation to be self-sufficient and self-made have been replaced by a practical generation Y looking to build on the existing base, enhancing opportunities for themselves and bettering their quality of life.
Increased access to temporary cash via credit cards and loans, makes it easy to take financial discipline and responsibilities for granted, and be blissfully unaware of financial risk management, till faced with a discomforting situation.
Here are some follies people make during investments.
Taking a loan and not insuring against it: A loan is granted as you are deemed ‘able’ to repay it. In turn, you go for one since you are confident of paying back. Insure yourself against loan (popularly called credit life insurance), so the responsibility is not left for someone else to fulfill, should something unforeseen happen to you. This is best taken from the loan provider since they will be processing the claims procedures in the event of a contingency.
Not providing for your family’s financial security: The fulfillment and security experienced from having a family is truly unparalleled. But creating dependents and not providing for their financial security is breach of an unspoken promise. Alongside the physical and emotional security, one needs to be mindful of this aspect too. Whether it is to prevent your family’s’ future from being overturned in case of premature death or to ensure quality education for your kids, opting for a term plan and/or a child plan can prove to be a crucial support to be prepared for unplanned exigencies.
Not planning for retirement: All of us go through the cycle of being non-income generating (as children and retired persons) and income-generating. This cycle roughly translates to 25-30-25 years, with most individuals wanting to reduce that middle number of years of “working to make a living”. Comfortable sustenance in retirement years is to be planned from savings of the income generating years. You could choose from the more consistent retirement plans, or the more dynamic unit-linked insurance plans, lending the dual-benefit of an investment option and an insurance cover to build a corpus in case of unanticipated occurrences.
The writer is managing director and CEO, IndiaFirst Life Insurance
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