• Manu Nedunkandathil, CFP

INSURANCE - BUY WHEN YOU CAN, NOT WHEN YOU NEED IT

Updated: Mar 21


Image Courtesy: Canva

One of the interesting encounters in the Mahabharata is the one between Dharma (Yaksha) the father and Yudhishtara the son. The encounter is known as the Yaksha Prashna. The meeting happens on the shores of a lake where Yudhistara finds his brothers lying dead. As Yudhistara is about to take water from the lake to perform the last rites of his brothers, Yaksha appears and repeats what he told all his brothers, “This water belongs to me, and you cannot take this water without my permission. If you want to take water, then you have to answer all my questions correctly.” And thus began the Yaksha Prashna, full of deep wisdom and philosophy. Yushishtara successfully answers all the questions and was able to revive all his brothers. One of the questions Yaksha asks Yudishtara is that "What is the most wonderful thing?" To this Yudishtara answers, “Day after day countless creatures die, but those who remain behind believe themselves to be immortal. Nothing can be more wonderful than this.”


This belief of immortality is natural to us humans. Whenever we read about some bad event in the newspaper or watch it on the TV news, we develop an innate detachment to the same. Not that we don’t sympathise with the effected, but we absorb the news as something happening in the parallel world. As if we are the spectators watching a match. We seldom think that this event is as much probable in our life as it was in theirs.


In my line of work, this attitude becomes very apparent especially during the discussion on insurance and more particularly on life insurance. There is a tendency on the part of the client to delay the decision on taking an insurance or giving it a complete miss in the whole scheme of things in planning of his finances.


Some years back, while I was employed with a reputed financial consultancy firm, I had the opportunity of advising a young client on his investments and risk management. The client was working for a well-known travel web aggregator and was drawing a handsome salary. As a part of my suggestion, after calculating his life insurance need, I asked him to take a term life cover with a sum assured of Rupees 1 crore, which he declined to follow through. However, rest of my suggestions were promptly accepted and implemented. Later that year I left the firm. Two years after leaving the firm, I heard that the client had passed away suddenly within a year of my meeting, leaving behind a grieving wife and a young son with meagre savings to fend for themselves.


This general aversion to insurance can’t be explained. Often, I have observed that the clients love their cars more than they love their life. They have their cars insured for a higher amount than their own life. A case of misplaced priorities perhaps.



INSURANCE PENETRATION - A COUNTRY-WISE COMPARISON


2019 Data, Courtesy: IRDA Website

Our society has transitioned from a joint family setup to a nuclear family setup. The former by default provided a safety net to the financial dependents. There was always someone from within the family who will pitch in with support and ensure the survival of the family in the event of the absence of the head of the family. The latter, though more preferred now, does not have any such luxuries. As families start growing apart, fending for themselves in their own cocoon of small world, the social safety nets are becoming weaker.


Life is full of surprises. The only thing certain about life is its uncertainties.


One minute you are on the road looking at the scenery and the next minute you know you are in the scenery looking at the road.”

-Unknown


The pandemic has certainly shown us the vulnerabilities of our families. The time is ripe more than ever that we take all the possible actions required protect our dependents from unpleasant surprises. A small amount spent on buying an adequate insurance cover will go a long way in safeguarding the family’s saving and ensuring a smooth life for dependents in the event of an unpleasant surprise. Buy insurance when you can, because when you need it, it may be too late.


As they say, “A stitch in time saves nine.”

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