No one can predict when a calamity can strike us. it is important that apart from insuring yourself adequately, you need to insure your health, household, car, etc
No one can predict when a calamity can strike us. it is important that apart from insuring yourself adequately, you need to insure your health, household, car, etc
The rains in Chennai have brought about immense damage to property and lives. It is sad to see that even today, governments announce token amounts as ‘compensation’ to the ‘next of kin’. Smaller amounts are awarded to those who lose property, homes, crops etc. A tokenism that politicians use as a tool for selfies and build the next vote bank.
No person should be really looking to a bust government for succour. It is a waste. I do not see ‘next of kin’ queuing up to collect insurance money. No insurance for where and when it is needed. Yet we see state-owned insurance behemoth LIC and other insurance companies making record profits after collecting record premiums. The tragedy of life is that those who need insurance cannot afford it (or think they cannot) and those who can, will seldom need it.
We are all paying 'insurance' premia for wrong things. What we need insurance are in these areas:
A pure life insurance policy. Where a lump sum is paid to the ‘next of kin’, if there is a fatality. Pay a small premium every year. This premium is a pure expenditure. For example, if the government has announced a compensation of '4 lakh in the event of a death. For a '4 lakh payout, the annual premium would be less than '500. For a payment of a couple of thousand rupees every year, this could be almost '25 lakh. I urge the readers of this column to spread the word. This is far more useful than the illogical children’s policy, etc.
A medical insurance policy is a must. Often, your office may have some coverage for your medicals. However, your problems start when you move out of your office to another one where there is no such coverage. Instead, it would be useful to have a very small mediclaim policy covering all the family members. The key is to establish a policy as early as possible, so that nothing is ‘excluded’. In medical policies, many companies exclude what they call as ‘pre-existing’ conditions. These ‘pre-existing’ conditions could be high blood pressure or diabetes etc. At a high age, you are more likely to be the victim of such exclusions. Therefore, even if your office has a cover, take a policy for a small amount. Over the years, you can establish a good record and when the office cover vanishes, you will not have to worry. Again,
this is an expense, with no predicted or forecast return.One policy that most of us do not have or ignore is a household policy that covers things in the house, including the house. It covers disasters such as fire, floods, earthquake, terrorism and burgulary. If you have an own house, you can cover the rebuilding costs. If in a rented one, you can have cover for what you have in the house.
You can opt only for the things in the house if you are in a rented one. It could include valuables to gadgets and electronics. These policies are not very expensive and is a small price to pay when there is a loss. The efforts you would have to take would be to retain invoices wherever possible and itemise every thing that you want to be covered in this policy. It is also a good way for you to maintain a record of what valuables you have.
We all take a car insurance policy only because it is legally mandatory. I doubt if we actually bother to make a claim for small repairs, etc. It is only when the cars get stolen or get totally damaged in an accident or a disaster that the policy comes in useful. We do not bother about this cost of the car insurance (especially if it is an office owned car) because we think it is legally compulsory. If given a choice, I wonder how many would actually insure the car.
In fact, it is not legally necessary to insure the car. What insurance is legally needed is to be insured for any compensation to be paid in case of an accident — to anyone in the car or anyone involved in the accident. Or simply called as “third party liability”. It is up to us to insure the car for any damage or theft.
Just extend the insurance to your health, wealth and life. Surely, they are as useful or important as the car is.
One suggestion to those who can afford it: Please initiate a life insurance policy for your domestic help, drivers and anyone else who is within your circle of influence.
It will go a long way to providing someone with an umbrella should the need arise. This is a help that will not be appreciated by the poor unless there is a catastrophe. So do not expect instant gratitude in return.
The writer is an independent analyst and can be contacted at balakrishnanr @gmail.com
