🚀 Why insurance is crucial in your financial independence journey?

Financial Independence isn’t just about calculating your corpus and hitting a target. It’s a holistic process that requires planning for various aspects of life beyond just savings and investments. One of the most crucial yet often overlooked elements is insurance.

Like many (probably 80% of us), I once believed that additional insurance—whether life or health—was unnecessary since our employers already provided coverage. In fact, I used to argue at home that paying for extra insurance was like flushing money down the drain.

The logic seemed simple: both Ranjani Mani and I had excellent health and life insurance from our workplaces.

But my perspective changed about five years ago when I started looking at the long-term picture. With frequent job losses in the tech industry, one inevitable question hit me: What happens to my insurance coverage if I no longer have a job?

With rising healthcare costs and an increase in lifestyle diseases, having personal health and term insurance is non-negotiable.

👉 Here’s what I did to address this:

1️⃣ Term Insurance:
The LIC money-back policies I had taken in 2008 made no sense—coverage in lakhs is barely useful. I opted for a pure term insurance policy with no riders. A good rule of thumb: your term insurance should cover at least 20-30% of your required corpus. For example, if your financial independence goal is ₹5CR, aim for at least ₹1CR in term insurance. Get it as early as possible—premiums are much cheaper when you’re younger.

2️⃣ Medical Insurance:
I took two policies—a base family floater (e.g., ₹20L) and a separate top-up policy from another provider (e.g., ₹1CR). You’d be surprised—the ₹1CR top-up is relatively cheap because it only kicks in after the base coverage is exhausted. This could be a lifesaver in your 50s if a major medical emergency arises.

I was late to act on this, but I’m glad I secured these in my late 30s. Whether you have a job or not, insurance is critical for financial independence.

Without it, one medical emergency can wipe out your entire corpus. Don’t overlook it.