" So you think you dont need an insurance?"...... "Think again"

General argument of an individual who thinks he has ample wealth stashed away for his family after he is gone: "I don't have to worry about life insurance"

Seems right. But the logic is pretty flawed.

This reminds me of an Insurance ad on TV some time back which starts with: " So you think you dont need an insurance?"...... and ends with "Think again"

"What do I need Insurance for?" - if this is the question lingering in your mind...then read on to get the answer:

Let's say you have worked out that your spouse and two children will need a kitty of Rs 10 million to maintain their current lifestyle and pay for huge one-time expenses like marriage and education. You total your assets and you are pleased: your home, bank deposits, stocks, gold are worth more than that.

Dont stop here, assume the worst.

Agreed you are in a great health today, but catastrophes do happen!

You fall really ill and have to undergo the treatment (that cannot be done in India) somewhere abroad. Now the treatment there costs a hell lot of a money.

Now you are neither a NETA nor a corporate chieftain, neither the government nor the company will pick up the tab.

But you dont have to worry - you have the assets - encash and get yourself treated....

By the time you recover, the kitty has substantially reduced in value.

Granted, these are extreme scenarios. Let's hope neither happens to you. But do you see the point?

As long as you are around, the possibility of spending a substantial portion of your wealth on health-related reasons also exists. You cannot wish it away. In such cases, you will have to tap into your wealth. Which means, when you are no longer around, your family does not have the kind of financial security you planned for them.

Lesson to be learnt: You might be rich, but you still need to be protected against calamities and catastrophes.

Assume you do have enough wealth to take care of any eventuality, including an expensive medical treatment abroad. Even if a sizeable chunk of the money is taken away, there will still be enough for the family. The crucial question is: what is your wealth made of?

Most wealthy families have no dearth of assets for the survivors. But it takes a long time to unlock the wealth out of the assets. For example, if real estate property, like a mansion or an apartment at a prime location, constitutes most of the wealth, it might take months (if not years) to sell it and collect the cash. If you live in an expensive apartment or house, it may not be possible for your family to sell it and relocate. Ever. What if a huge portion is locked up in the share market and the market is totally bearish (which means the price of the shares have fallen) when your family needs the money? If they sell, they incur a huge loss. They are stuck. What if you have included your jewellery under your assets? Would your family be eager to sell? Don't confuse wealth with high income. The two are different. You could be a high earner but you could be spending just as much and, as a result, your savings could be quite low. This might also mean your family demands a lot of money which makes it all the more necessary that you have life insurance. Lesson to be learnt: If your wealth is in the form of assets, your family may not be able translate it into cash when they need it. Remember, the only people who can ignore life insurance are the super rich. And if you need a monthly income, howsoever high, you cannot be classified as super rich. Remember the saying, 'If you can count what you own, you are not wealthy'. Only if you are in the same league as Bill Gates, Azim Premji or Tiger Woods, can you afford to ignore life insurance.

" So you think you dont need an insurance?".................."Think again"