When health, motor, personal accident insurance are more needed than life cover

Ishaan has just taken up his first job. His income is more than adequate to take care of his requirements. He has some money left in his bank account at the end of every month, and he wants to start investing. He plans to build wealth that he can use as his needs change over time. He is also considering a life insurance policy for protection. Has Ishaan given sufficient thought to all aspects of his financial situation before he begins investing?

Ishaan is doing the right thing by considering investments early in his career. However, it is important for him to first secure his income and savings against emergencies that may derail his financial stability, before he commits to an investment plan. There may be situations, such as a medical emergency or an accident, which may require a large sum of money that Ishaan may not be able to manage wit his current income. Or there may be circumstances that may affect his ability to earn an income itself. In such a situation, Ishaan may not be able to meet his expenses, let alone make investments.

Insurance is a way to ensure Ishaan makes provisions to face such eventualities. Life insurance is necessary for him at this stage only if he has dependants who he supports with his income. More relevant would be insurance policies that help him deal with unexpected demands on his income. Ishaan should prioritise health insurance that will provide him a cover against steep medical bills. A comprehensive motor insurance policy will cover any loss to property or life suffered by Ishaan or other involved parties in a motor accident. A personal accident insurance will provide compensation in the event of temporary loss of income caused by accidents.


Together, these three policies will help Ishaan deal with any unexpected money situations he may face. These are situations that may even push him into debt, and will have long-term financial consequences. Ishaan will do well to first incur the expense to protect himself. He can then consider investments with the confidence that there will be no disruption to the income.


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