your insurance policy is the cash cow
insurance is usually tricky. everything you own comes with an offer for insurance. your car needs one, people get some for their homes or office spaces. obviously, there is one for you, one for your health. some also buy insurance for wealth creation. that’s a lot of policies and way too many premiums.
it is expensive and counterintuitive to creating wealth. some of these products need to be bought but health and wealth can be combined if you play your cards right. Insurance companies have started to offer different products, which make financial sense too.
let’s imagine a lunch box with two partitions. one for dessert and one for the mains. at lunch time, you realise, you’re not hungry. but you would like to pick on the dessert. you eat some. now, let’s say you come back to this box at dinner. the expectation is that the box will stay the same. but what if the box increases in size. your dessert doesn’t increase but the mains get bigger because you could be hungrier than you expected yourself to be.
this is how this works. the dessert is your health policy and the mains is your investment. the investment grows while your health remains untouched.
the main course is the wealth plan that invests into debt and equity. dessert is the health plan which is fixed. if one dessert (health rider) is over, more can be bought by additional payment. some include riders for critical illness and disability due to an accident.
it’s smarter to pick a plan that gets you a share of the profits the companies make. this way whenever the insurer makes money, it is passed on to customers as bonuses.
since it is three-in-one, costs are lower. it’s like a Subway sandwich. whoever likes whatever topping chooses only those. more the toppings (riders) chosen, higher the premium. it is cheaper than buying a new sandwich (policy) for each topping. also, not to forget the multiple documents to be submitted. And as age goes up, the premium increases too.
fat hospital bills after Covid have gotten everyone worried. the riders help cover the costs. a caveat here. if there is a need for cancer/heart health plans due to family history, regular health plans work better.
just piling up covers won’t help. it’s like buying 10 sets of chopsticks when you don’t even know how to use one.
insurance is considered the most boring way of wealth creation and investing but it has plenty of nuances. what do you want? a prix fixe or à la carte?