Life's uncertainty catch hold of all of us some or other time in our journey. Usually it catches us unguarded in a tight corner. We humans are conservative in our nature and prefers to think that we are guarded and calamities and catastrophe is not for us. We always associate misfortune to be in other's court till we meet head on in our own courtyard.
I never believed in Insurance till I was dragged in a situation where by our family went through a night mare of medical trials and tribulations due to medical emergency situation of my brother-in-law. The agony is both mental and physical not only for the victim of circumstances but also for the family members. As he was not adequately covered by an insurance, family came down in financial worth by several Lakhs of Rupees. We didn't have ready cash with us but by the grace of god and generosity of our friends and relatives,we came out of the situation. Four years past we are still in debts.
What kind of insurance do we need? As a common man I knew one insurance that is mandatory to drive a vehicle on the road, i.e. Motor Insurance. It gives cover to the driver, co-passengers, vehicular damage and the affected co passengers on the road! Some other products of General-Insurance are insurance of Shops, houses, establishments, commodities, merchandize against theft/ loss/ fire and accidental damages.
What does adequate cover mean? My brother-in-law was covered through corporate Medical insurance of Two Lakhs therefore he received rupees Two Lakhs of reimbursement in a year. It was a great help in need but covered only a fraction of the total money spent. This means his medical insurance was there but not of much significance in the time of need.
Besides there is the greatest need to insure our own life, i.e. Life Insurance. Can insurance prevent death and deformity to come close to us? No. then, why to insure our life? We insure our life to secure the future of our dear ones when we are no longer there for them. I being the earning member need to secure future of my family members when I will not be in a position to earn for them. For this I need to procure "Term Insurance" to give maximum protection to our life and "Accidental Insurance" to give maximum cover in case of accidental death or disability. A life cover of an individual say an earning member of family, is considered adequate if the amount of compensation after his death can enable his family to maintain the same standard of living after his demise. This value is termed as "Human Life Value" of an individual. It is achieved by simple mathematical computation. HLV=Annual income X 15 times (approx. at the present rate of Interest)
Most of the products sold in market is a mix of Insurance and Investment propositions. We as humans don't want to invest incessantly till our death and get nothing when alive. Hence "term-Insurance" is not very popular. We want returns and money back schemes attached to insurance in the form of lucrative package.
Let not that situation come into your life where by your family members think of buying medical insurance for you after detection of a disease or life cover after your death!!!!
Painfully we fail to realize that Insurance is sold only to a healthy and alive individual who has net worth of his life!!!! A judicious approach would be to go for a composite recipe of different insurance products.
Understanding Insurance Need of a common man. How much insurance is considered adequate? How the money invested should be distributed proportionately between the various risk covers so as to have financial securities in the event of unforeseen eventualities?