Page 82 - Life Insurance Today January-June 2020

Five financial mistakes you should

avoid

W hen it comes to financial month. Most of the money seems to investment is a problem most planners

slip through the cracks. Discipline is
planning, everyone has
encounter. According to Suresh
their two cents to contrib- sorely lacking and there are no bud- Sadagopan, founder, Ladder Financial
ute, but often the advice can be mis- gets drawn and therefore no ‘expense Advisories, “People tend to look at how
leading or end up doing more harm limit’ adhered to," she said. much returns an insurance product can
than good. Mint has been covering the give rather than focusing on how much
stories of families who went from mak- Not having a budget can mean protection it is offering and at what
ing financial mistakes to seeking pro- lifestyle expenses eating away your price. People also do not realize that
fessional advice and correcting them, potential savings without you even insurance is a long-term contract and
in a segment called My Plan. Since realizing it. So keep a tab on where decisions they take now will affect
2009, we have covered hundreds of your money is going and cap discre- them for a long time," he said.
families and from their stories, a pat- tionary spending. The covid-19-induced
tern has emerged. Most people tend lockdown taught many of us how to Both Sen and Sadagopan said that
to make the same money mistakes. spend just on our needs and not in- many people do not have the neces-
We tell you what these mistakes are so dulge wants all the time. sary amount of life cover. When it
that you can steer clear of them and comes to life insurance, it’s best to
what you can do to prevent yourself Making insurance blun- keep things simple and opt for a term
from falling into the same trap. plan with adequate cover.
ders
Most families we have interviewed
Failing to make a budget Also, having a suitable health insur-
over time have had one common prob- ance for your family and yourself, in-
The first and most obvious mistake is lem area: insurance planning.
to not adhere to a budget. Given the Whether it is looking at life insurance dependent of what your employer pro-
consumption-driven environment we more as a savings and investment vides, is a must.
live in, it’s easy to fall into the trap of product or relying on the employer for
wanting more than you can afford, health insurance, people tend to get Not ready for emergencies
whether it is a luxury car or the latest insurance planning horribly wrong. Another area that concerns financial
smartphone. “Nearly everyone has had a unit-linked planners is that people tend to ignore
the importance of having a large
insurance plan (Ulip), endowment or
This is one of the main problems cash-back plan at some point in time. enough emergency fund in place, and
Deepali Sen, certified financial planner The high expenses and long tenure of this can land them in serious trouble.
and founder partner of Srujan Finan- these make them unsuitable," said “Not having an emergency fund has hit
cial Advisers LLP, encounters when Sen. people especially hard because of the
dealing with clients. “They lack a good covid-19 crisis, which has resulted in
grip on the amount they spend per Clients treating life insurance as an job losses," said Amit Kukreja, Sebi-

All you need is love. But a little chocolate now and then doesn't hurt.

82 January - June 2020 Life Insurance Today