SAVINGS PHILOSOPHY- 003 INSURANCE

SAVINGS as a definition that I read somewhere, means , a deffered consumption.

So once you have a job and before you have your first pay in hand, the first requirement as per Abraham Maslow's pyramid you will have to pay for the "ROTI"-yes even before the first pay check.

Then after the first paycheck comes to the bank it will be the "KAPDA", unless of course papa has been generous.

It is from the 3rd constituent, that's right, THE MAKAAN, that starts our vicious cycle of savings and the same being never enough.

So let us first understand that to save we must always start from our very first pay check as that will instill in us the determination of our purpose.
You might ask me that there will be taxes to be paid, insurance to be done, etc. etc.


We'll take all of them into consideration.


First , if your remaining salary allows you and your employer does not provide for your insurance- go ahead and take a TERM INSURANCE of AS MUCH sum assured as possible.


As you must have found out by now- term insurance is the cheapest insurance of securing your income for your parents or dependents at this stage.


It is important to understand that any other form of insurance is expensive and even if you are assured money at the end of maturity - it is your own money that is being returned at a very very less appreciation. We will soon see that this excess premium that you will save will earn more for you than from the insurance.


So go in for a moderate amount of coverage (the premium that you can afford) but for maximum duration that is offered- later you can take an additional policy when your salary goes up.


The beneficiary at this stage can be your parents/dependents and can be changed later to your wife/children etc.


Second type of insurance that you must goin for is a health insurance (that is if your employer does not cover youin some form),You can take a floater policy soas to cover your dependents.


Third insurance that one must go for is a householder's policy if (and when) the house is your own.





After doing the above you have covered all the risks,eventualities, emergencies that could have led to any outgo of your limited resources. You can keep adding to these 3 types of insurances as your income and responsibilities grows.

You can take specific health insurances for cancer, diabetes, specific women insurances.

There are also health insurance products from some life insurers where you have a very large amount as sum assured and the policy premium remains constant for the entire period of the policy.

It is important to understand that the premium is a factor of your age hence it is best to secure yourself early in life- that is the philosophyof planning- always for long term.So that you have more money to spend at the most important juncture of your life.