A wake-up call to analyse your insurance needs
Socio-economic and administrative challenges aside, this pandemic has also opened a pandora’s box in terms of financial preparedness of a vast majority of population across the globe. The problem becomes acute in society like ours, where social security like quality healthcare at affordable costs for all or an unemployment allowance for all, is almost negligible.
The Financial Challenges
To be sure, these challenges are not new. It is not the case that, had Covid-19 not struck us, we would have had deep penetration of financial security.
No. In fact, these are prevalent issues. The current situation has just given us time and space to think about financial planning and its importance. Even in financial planning, this entire situation has forced us to think, talk and ask about insurance. Personally, we have had several people other than our regular clients approach to seek advice on insurance products.
The concern is two-fold.
One, what if I contract the infection? Will I be able to afford the treatment in a hospital of my choice, which could be different from military hospitals?
Two, what if I contract the infection, and then succumb to it? How will my family bear the treatment expenses to whatever extent needed, and what will they go through, financially, in my absence?
With the virus being able to spread through even the most innocuous of human interactions like a hand-shake, we might not be in a position to guarantee that we will remain safe through any measures. After all, we all need to have some activity outside the confines of our homes. It could be as simple as stepping out to get your groceries. Even if you aren’t stepping out, someone is stepping out from your house, or someone gets stuff for you from outside. The point is that there is no sure shot way to guarantee that the spread of the virus will remain outside your home.
In such situations, we are all prone to medical exigencies. Accordingly, it is best to be prepared. While the government and government agencies are doing their best to provide healthcare to covid-19 positive patients, it is no secret that the capacity that the government run facilities have is quite limited. Moreover, those facilities may also not be of your liking for various reasons. This leaves you with the only option of going to private healthcare facilities. It could also be that you or your immediate family is covered through government facilities like military hospitals but there are other important people in your lives who are not – your grown up children, parents, a close relative, etc.
In that case, the challenge changes from quality of healthcare to cost of healthcare. Dealing with those costs might not be a cakewalk for many. Hence, having a health insurance policy could be immensely beneficial. Moreover, already there are instances of the hospital bills for Covid-19 patients running into seven figures quite easily. That should give you a sense of the minimum health insurance that you or the affected person must have.
Now coming to the other aspect. What if after your best efforts and best healthcare, you as a breadwinner of the family, are forced out of the equation of life? Sounds harsh, we know. But, this is something that at least 28,000 families in India are dealing with right now.
This should prompt you to think if you have an adequate safety net for your family in your absence. This should cover all your existing debts and expenses for your important life goals. For instance, if you have a home loan of Rs 50 lakhs, plan to spend Rs 50 lakh on your child’s foreign education and would need another Rs 50 lakh for retirement, then your life insurance should give your surviving nominees at least Rs 1.5 crore. A note of caution, these numbers are purely indicative for the ease of understanding. The actual amount of life insurance you need could also depend on some other factors, but you should get the drift.
While there could also be other forms of financial risks in life, it is extremely crucial that you cover yourself and your family for health risks and for life risks.
Also, while the emotional void of a loss cannot be filled, modern financial systems give us a choice, somewhat, to have a say in the life of our loved ones even after we are gone. Make good of that opportunity to make the life of your family free from financial stress, in case you aren’t with them. The unfortunate spread of the pandemic is probably the best wake-up call we could get to analyse our own insurance and other financial needs. So, just have a close look at the safety techniques talked about above – medical insurance, life insurance, preparation of Wills, home insurance, critical illness and disability insurance, to say the least.