Insurance

FEAR is generally caused by the unknown. What you are not sure off causes you to be uncertain. When you are uncertain you get fearful about the outcome.

Earlier I always used to talk about how investments would lead you to have the confidence to take the risks of life without being fearful .

However I have recently started analysing different kinds of risks that I face – so as we grow older, medical costs is a big issue. Next I have only one house in which I presently live – so there’s always the risk of a catastrophe that can hit.

I actually listed at least 5 or 6 different things which are high risks, that can suddenly wipe out my savings and investments.

Based on the ideas given by Garrett Gunderson, in his book Killing Sacred Cows, I have gone about figuring out if there’s insurance available to me to cover each of those risks.

While I knew about health insurance, I didn’t know about the concept of top-up that can add a quantum leap in your coverage at a very small premium. The caveat is that you should have the base medical insurance in place. Since I identified the risk and put a value to it, I was able to identify a product which would give me coverage to that risk.

Once you can list out all your risks and start putting a monetary value to them, chances are that you may also get a company who will be willing to cover the risk for you at a price. Once you have covered the monetary value of the possible risk, then its no longer a risk.

Insurance is a different kind of leverage, you are covering a large monetary risk by paying a small premium.

Once there is no risk, the fear reduces. Once fear reduces, you get the confidence to look at bigger things and aim for them. Insurance helps you get that confidence.

Till next time then.

Carpe Diem!!!

I read an extremely interesting concept today. I have considerably got convinced about the idea, still digesting a few things, but thought of sharing to see what you think.

I have always been aware of insurance being necessary. As a matter of fact in my posts on advice to young women, I had layed great stress on both health and life insurance.

Quite frankly given the high inflation in healthcare costs, I would anyway recommend you to take the highest possible health insurance. On life insurance however I was generally of the view that you should take term insurance to cover the major risks that you envisage.

One of the key things in financial independence that I keep harping about is the ability to take decisions without the fear of having a job in the future.

One of the reasons that financial independence becomes a moving target is because as you grow in life, your finances improve, you get used to a better lifestyle. To be able to achieve that lifestyle if you leave your job, you need to have a much higher level of assets. So you again start saving and investing for the next higher level but by then your target amount has moved further.

This happens primarily because FEAR, the What if eventuality.

This is where if you have more than adequate insurance of different types, you transfer the risk to the insurance company and your fear can reduce. This is where I have to delve deeper on how you can leverage this ideato become more fearless.

I will keep you posted as I delve deeper into this subject.

Till next time then.

Carpe Diem!!!

ANIMESHJMATHUR

Buying confidence with insurance

Insurance to eliminate fear