Financial Independence on India’s 75th Independence Day

Posted on: Aug 10, 2022 | | Written by:

Financial Independence on India’s 75th Independence Day

As our country gears up to mark the 75th Independence Day from the British Raj, it is time for you to look closely at your personal independence. And focusing on financial independence is especially important, as you need money for a lot of things that make life comfortable. This again means you need to take savings and investments seriously. But what will happen if an emergency strikes? Will you be dipping into your savings? Or have you planned something else for that? Well, this is where insurance comes into the picture.

Health, home and motor Insurance policies can protect you financially in unexpected situations, so that your savings don’t get drained. Whether you require sudden hospitalisation, or a calamity destroys your house, or your expensive car meets with an accident, without insurance, you might end up burning a massive hole in your pocket. So, read on to know why insurance is essential and how the different types help.

Why is Insurance Your Best Friend?

When it comes to financial management, two principles are key to making sure that your money remains as safe as possible. First, you should always hedge your bets, and second, you should diversify as much as you can.

Insurance primarily works based on the first principle, where you hedge your bets by paying someone else to take on the risks that you would have otherwise had to bear on your own. Now, this might not make much sense on a single person basis. But insurance works not for one person, but for a very large group of people and by pooling the cost of risk cover they pay. This really scales up the amount they have, to a large extent.

Plus, there is only a minimal chance that all those who are holding insurance will need to recover their losses by making a claim at the same time. Hence, insurance is your best friend on the journey to financial freedom because it takes off your risk for a very small cost and protects you if the loss occurs. A very simple cost benefit analysis can reveal that insurance is a very good deal for everyone.

How do Different Types of Insurance help in Securing Financial Freedom?

Different kinds of insurance policies have different uses, and work differently to protect your savings from various unforeseen expenses and money challenges. Here is a look at three basic kinds of insurance that everyone must have.

• Health Insurance:

Across the country, the cost of good healthcare is super high. Even the smallest surgery can run a bill of lakhs of rupees. And if you do not have enough money in hand and a medical emergency arises, you might end up paying out of your savings, or worse, you might need to borrow for that. Health insurance is an absolute must have because it reduces the burden of healthcare costs by a significant margin. Plus, you can get cashless cover where you only pay a small amount and get the treatment started while the hospital and insurance company sort the rest among themselves.

• Motor Insurance:

Comprehensive motor insurance is also a must have. Even a very small new car can cost over INR 5 lakhs in India and the most basic of two wheelers can cost around 75,000 or over. If your vehicle gets stolen or damaged in any accident, you will either be left high and dry or end up having to bear all the repair costs from your pocket. And it will not be cheap. Comprehensive motor insurance keeps you compliant with the law through third party insurance and covers your own risk via own damage cover built into it. This simplifies vehicle ownership considerably.

• Home Insurance:

Not many people appreciate the importance of home insurance, but if you are a homeowner, and specifically, if you are servicing a home loan, you need to consider getting home insurance. Many people have suffered catastrophic financial problems because their home was broken into or because it was damaged or destroyed in a natural calamity like earthquake, fire, flood or tsunami. Your home is perhaps the bedrock of your financial stability and it must be protected against every possible risk. This is where a good home insurance policy can be of great help.

Conclusion

To wrap up, you can only achieve financial independence when your savings and investment have reached a self-sustaining chain reaction where it makes more money than you can spend. For this, you need to protect your savings smartly. And insurance can help you with just that.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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