Seven habits of highly effective financial ensurers......

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai. Feedback can be sent to reachyourviews@gmail.com)

Ensuring your and your family's financial future is paramount in today's dynamic world. Insuring the precious life is the key to the financial ensurance. Though human life is invaluable, for practical reasons, its better to value the life. And life insurance is a great tool to do that. 

The fundamental objective of taking a life insurance is to leave a sum to our family/dependents on our absence. In essence it means, what's the individual's worth and what would the family deserve in one's absence.

Here is a check list of the seven habits of highly effective financial ensurers:

1. Never treat insurance as an expense:

 



















The first and foremost error most of us do is to treat insurance as an expense and as an unnecessary outflow. It is not, for the simple reason that your precious life is covered for a sum which is quite affordable. It ensures your and your family's financial protection.

2. Never mix insurance and investment - Hybrid is a bad idea:

 

• The primary objective of the insurance is to insure the lives. 
• There are other avenues like mutual funds which offer investment solutions , particularly for equity investing. 
• It is a bad idea to combine insurance and investment in an insurance policy.
• Keep insurance and investments separate.
• Take enough and more insurance cover.

3. Never underestimate your life's worth: 

Your life is worth more than what you think is. Definitely more... So never under insure. Its not a good idea to have very low cover or at times no cover at all... After all its your life and its about your family's expectations from you. Higher cover is not better, its the best.


The ideal way to arrive at a value is -

Your annual salary * 10 times (at least) should be your cover at all times.

4. Never buy an insurance just for tax saving purpose:

Saving for taxes is very fine, but one should not buy an insurance only to fulfill the tax obligations. In the process you end up buying very little insurance for yourself. And if someone starts with a salary of Rs 5 lacs and based on that buy an insurance, after few years the person would certainly be under insured because his salary levels would have gone up significantly.

5. Buy an insurance which covers your whole life:

 
























Buy an insurance which should cover your whole life and not only a part of your life. In essence it means you should have a cover till your survival. Thanks to medical innovations, people live longer compared to the past. And the risk to life is higher at the later stages in life.

6. Have up to date insurance cover:

People grow quite fast on the career and salary ladders. Its better to upgrade insurance cover commensurate with those levels. If one's salary is 10 lacs, insurance cover should ideally be 100 lacs. If the salary in a few years time go up to 25 lacs, the insurance cover should also proportionately increase to 250 lacs. So be up to date in your insurance cover.

7. Take the cover at the earliest; remember there is a huge cost for the delay:

Buy the right insurance cover but buy it now.. Remember there is a cost of delay for such things. Earlier is not better, its the best. 



(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai. Feedback can be sent to reachyourviews@gmail.com)