Getting a Term Insurance doesn't mean your family is secure
I’ve spent years wearing two hats—one as a wealth manager and another as an insurance advisor who helps families navigate the nightmare of insurance claims.
We spend so much time debating which company has the best CSR (Claim Settlement Ratio) or which plan is 500 bucks cheaper, but we almost never talk about what happens when the money actually hits the bank account.
Your family is grieving. They are emotionally wrecked. Suddenly, a ₹3 or 4 Cr credit SMS pops up. Many would’ve never seen that many zeros at once. And that’s when the "vultures" show up.
I’ve seen it happen with clients as well as close friends. The uncle who suddenly has a great real estate deal in a "prime location" or a "business opportunity" that needs exactly ₹20 lakhs. The friend who tells your spouse to "dump it all in the stock market" because the market is booming. Overwhelmed and confused by the suggestions, the money stays lying around in a savings account.
Without a "salary" coming in, the family starts spending the corpus for daily expenses, not realizing that with 6% inflation rate that money won't last nearly as long as they think.
While I have helped families who got insured through me, but for those who've got it directly or through local agents, it's better for your family to have a "guide" to follow:
- Put 1 year of expenses in a liquid mutual fund or a simple FD.
- Clear any high-interest debts (personal loans/credit cards). Do NOT clear the home loan immediately if the interest is low and you need liquidity.
- Take 50-60% of the remaining amount and put it into a low-risk debt mutual fund or a conservative hybrid fund and set up an SWP. This way a monthly income hits the bank similar to a salary.
- The remaining 30% should go into an index fund or a flexi-cap mutual fund. This ensures that 10 years from now, the money hasn't lost its value to inflation.
If you have a term plan but haven't sat your spouse/nominee down to explain the "How-To," you’re only half-protected. Don't just buy a policy. Build a plan.