Start insurance planning before starting family

Ankush Sinha, 35, is planning to start a family. He has been saving regularly for a house, foreign holidays and his retirement. About 12 years ago, he took a life insurance policy worth Rs. 25 lakh. He feels he is covered sufficiently with this policy and investments in case of any emergency. He believes he only needs to top up his life cover as he prepares for family life. Is this the right approach?

Sinha is planning well, but he needs to continue funding for his goals. The risk of an untimely death could disrupt his investment plans and leave his family without a stable income. A term insurance policy is ideal for covering such risks. However, it’s important to review coverage at each life stage, and starting a family is a good time for this. He should consider inflation, his financial situation, dependants, and his family’s needs in his absence.

Just as death is a possibility one cannot ignore, so is the loss of earning capacity. A personal accident policy meets the need for replacing loss of income. Sinha must look for a comprehensive policy, which covers all contingencies: death, permanent total disability, permanent partial disability, and temporary total disability.


Hospitalisation due to illness, accident or serious ailment may strike anyone in the family at any point of time. It can be a huge financial drain for the family. In the absence of a health insurance plan, Sinha may not only have to dip into his savings, but also resort to borrowings from friends or relatives in case of a shortfall. So, he must cover the risk of rising medical costs by opting for health insurance.

Insurance providers offer products that evolve with changing needs. Choosing the right insurance product is a critical part of financial planning as insurance is a risk management tool and should not be confused or mixed with investments that serve a completely different purpose. It is important to identify key risks and manage these by purchasing appropriate insurance plans.

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.