Shouldn’t you just be bothered about getting you and your immediate family’s life and health insured?
Ofcourse you should be.
Immediate family comes first. And you don’t want to leave their health and post-your-death-family-expenses to chance. Isn’t it?
So definitely, you should first buy proper health and life cover for yourself and your family.
Suggested Reading – How to find what is adequate insurance cover?
But as the title of this post suggests, it makes (a lot of) sense to have your close relatives – other than spouse, parents, and children – be insured too.
I will tell you why.
The debate about lending money to your relatives or not is a long one in itself. Everyone has their own views when and whom to lend and when and whom not to.
But when money is needed for medical reasons or sadly, after the death of a relative, your hard-thought-notions about ‘your-money’ can change overnight.
What will you do if one of your close relatives (say first or second cousin) is in financial trouble?
Most often than not, you will help them (assuming both sides are not on fighting terms).
And if money is needed for some medical expenses, then you really can’t say no.
And god forbid, if this relative dies without making proper financial arrangements for his/her immediate family, chances are high that you (among many others) will slowly have to take up his/her family’s responsibility too.
You just cannot turn down requests for money in such cases, no matter how smart you are. Also because you don’t want to come across as a person who doesn’t help family members. That’s evil.
But had this relative of yours, been wise enough to purchase a proper health and life insurance cover, the situation would have been much better. He or his family would not have to depend on others for financial help.
People have their own financial goals and problems to deal with. And even if they really want to help, it can get tough at times to do so.
Take your own case. If you are already running a tight ship financially and a close relative needs money for a medical emergency, will you be able to help him? Will you be able to take this new and unexpected financial responsibility?
The ideal answer is yes (ofcourse). But in reality, it can strain your finances a lot.
And the financial responsibility that we are talking about can either be temporary or permanent.
Temporary in case of some one-time health-related fund requirements (like hospitalization or surgery). Permanent in case of death and ongoing need to financially support the dependents of the relative.
It’s not easy to say no in such circumstances.
We are humans and we should act like one. Hoarding money is not the ultimate aim of life. We should help others as much as we can.
But if a small step by your relative can cover some of these risks, it doesn’t hurt for you to spend time to convince them to purchase a health and life insurance policy (even if it’s inadequate*). You might even have to ask them some uncomfortable questions. But it’s necessary.
And if you succeed in convincing your relative, keep pushing till they act on their newfound conviction.
*This will reduce the risk of future financial liability for others (like you) to some extent.
It’s very easy to say that it is your relative’s problem and not yours.
But when bad times come, we all get sucked into these situations. And you don’t want to screw up your finances just because someone else was not responsible enough for theirs.
I agree with you if you think that this is a very far-fetched thought.
But the risk is real.
You should carefully assess how people close to you are covering the health+life risk for themselves. You will know exactly where the risk is, whom you will not be able to say No to, and whom you should be convincing.
So think about it.
Getting you and your immediate family’s life and health insured is most important. But also important is to convince (or force) those people to get insured – to whom you will not be able to say NO in times of need. Also, ask them to put in place an Emergency Fund.
PS – Replace the words ‘close relatives’ with ‘close friends’ and the discussion is still valid. You cannot say no to many of your friends too.