Firstly, an insurance (any kind of insurance) is always your B-Plan (Back-up Plan). There is a room for B-Plan only when you have A-Plan (Actual / Primary Plan). B-Plan is for use when A-Plan for some reason doesn’t work or fails. So, obviously there can’t be B-Plan if there is no A-Plan in first place or if the A-Plan is successfully executed.
Let me elaborate to tell what I mean.
You have so many financial goals and responsibilities towards your family – Funding your Children’s education & career, Getting your daughter married, Owning a house for your family, Ensuring post retirement income for spouse (& yourself) etc. The A-Plan to achieve these goals is work, earn and save & invest. So, if you work for several long years or till your retirement, you are going to work / execute A-Plan. But, what if fate doesn’t allow that and some accident hits to leave you dead or disabled? Your future income will no more be available to the family. Then what about those goals? That’s where B-plan (Life Insurance and / or Personal Accident Insurance) kicks in ensures that the goals are still achieved.
Once you have worked enough number of years and achieved all your financial goals, your A-Plan is successfully executed. There will be very little or no adverse financial consequences, in case of your death / disability at that point of time. So, B-Plan (Life and Accident Insurance) is redundant or not required.
Similarly, One of your financial goals should be creation / accumulation Long Term Emergency Fund for your old age health care expenses. You need to have this goal very early / from the beginning of your working career. So, by the time you will be able to create a sizable fund exclusively earmarked for your & spouse’s old age health care. Your A-Plan is to build this corpus over a period of time (say in 10 years) or by the time you turn 50 years old (age since when Health Insurance premium rates start increasing sharply). While you are on the course of saving and investing for this goal, what if a critical illness hits you? Or you are required to get hospitalized for some accident / prolonged sickness? You will be ill prepared to pay for such huge expenses; it will turn all your plans upside down. So, in such case B-Plan is having health insurance and critical illness insurance.
Once you have achieved your goal of creating Long Term Emergency Fund through A-plan (Saving & Investing), B-Plan (Health & Critical Illness Insurance) is not required or you may switch to a cheap super top-up /deductible policy (a kind of economic health insurance which pay only if the hospital expenses are beyond a pre-determined (deductible) limit.
Let me elaborate to tell what I mean.
You have so many financial goals and responsibilities towards your family – Funding your Children’s education & career, Getting your daughter married, Owning a house for your family, Ensuring post retirement income for spouse (& yourself) etc. The A-Plan to achieve these goals is work, earn and save & invest. So, if you work for several long years or till your retirement, you are going to work / execute A-Plan. But, what if fate doesn’t allow that and some accident hits to leave you dead or disabled? Your future income will no more be available to the family. Then what about those goals? That’s where B-plan (Life Insurance and / or Personal Accident Insurance) kicks in ensures that the goals are still achieved.
Once you have worked enough number of years and achieved all your financial goals, your A-Plan is successfully executed. There will be very little or no adverse financial consequences, in case of your death / disability at that point of time. So, B-Plan (Life and Accident Insurance) is redundant or not required.
Similarly, One of your financial goals should be creation / accumulation Long Term Emergency Fund for your old age health care expenses. You need to have this goal very early / from the beginning of your working career. So, by the time you will be able to create a sizable fund exclusively earmarked for your & spouse’s old age health care. Your A-Plan is to build this corpus over a period of time (say in 10 years) or by the time you turn 50 years old (age since when Health Insurance premium rates start increasing sharply). While you are on the course of saving and investing for this goal, what if a critical illness hits you? Or you are required to get hospitalized for some accident / prolonged sickness? You will be ill prepared to pay for such huge expenses; it will turn all your plans upside down. So, in such case B-Plan is having health insurance and critical illness insurance.
Once you have achieved your goal of creating Long Term Emergency Fund through A-plan (Saving & Investing), B-Plan (Health & Critical Illness Insurance) is not required or you may switch to a cheap super top-up /deductible policy (a kind of economic health insurance which pay only if the hospital expenses are beyond a pre-determined (deductible) limit.
Comments
Post a Comment