Rishabh started his career in a bank. He earns enough to take care of his family’s expenses. He also has a car that his parents gave him when he graduated. Rishabh has a surplus of funds in his bank account at the end of each month and wants to start investing. His idea is to assemble a group that can be easily accessed if necessary. You are considering starting a SIP in a mutual fund. However, his parents wanted to buy a life insurance policy. Did Rishabh think about all aspects of your financial situation before deciding on your investment plan?
Rishabh does a good job of looking at investments early in his career. However, it is important for him to first secure his income and savings in emergencies that may alter his financial stability before committing to an investment plan. There may be situations, such as medical emergencies or accidents, that require a large amount of money that you cannot handle, given your current financial scenario. There may also be circumstances that may affect your earning potential. In such a case, Rishabh may not be able to make ends meet, let alone invest.
Insurance will help you deal with such possibilities. Life insurance is necessary for him at this stage only if he has dependents who support them with his income. Insurance policies will be more relevant to the topic, helping you deal with unforeseen requests for your income.
You will be covered by a health insurance policy against acute medical bills, while the comprehensive vehicle insurance policy will cover any loss of property or life suffered by Rishabh or other parties interested in a traffic accident. Personal accident insurance will provide compensation in the event that income is temporarily lost due to accidents.
These three policies together will help Rishabh deal with any unexpected financial crises he may face. These are the situations that would lead to debt and have long-term financial consequences. Rishabh will do well to shoulder the costs first to protect himself. Then you can look at investments with the confidence that there will be no interruption to your income.