A Strong Foundation

Make life insurance count by taking the right policy at the right stage in life and for the right quantum of cover.

- Preeti Kulkarni

When it comes to life insurance, most Indians possess a policy because life insurance still turns out to be the first brush with financial instruments for many. But dig deeper on the quantum of cover and you may find the average sum assured to be a few lakhs at best, with many being grossly under insured. Although everyone knows that death is inevitable and that life insurance is a necessity to provide for financial dependents, people put off taking a policy or take one for the wrong reasons.

With these facts, when you meet Mumbai resident Vishal Paleja, 37, a father of two, you will be surprised to note his clear thinking with life insurance. “I chose a term cover, as my first priority is to secure my family,” he states. Paleja,who runs a garment business, explains that the type and amount of cover was arrived at after a need analysis, factoring in his work profile, responsibilities, goals and cost-benefit study. “There are endowment policies, but they have high premiums for a similar cover and do not meet my needs,” stresses the astute businessman. His protection cover comes at a cost of `18,000 a year.

Welcome to a situation where several Indians are embracing life insurance with a clear view of taking it as a protection than taking it as a savings and investment tool. “Take the cover at young age and when you are in good health, since you may not get the cover at later stage or might have to pay a hefty premium for pre-existing diseases such as hypertension or diabetes etc,” advises Mimi Partha Sarathy, managing director, Sinhasi Consultants. Yes, it does get expensive if you postpone the decision to take a life insurance policy beyond a certain age.

Size and type