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.
Hi, Thought provoking article and very relevant too. In my case , my younger brother who is married and earning somewhere around 6k-7k per month as temporary worker in a factory . No health or life insurance. Whats the best possible to solution in terms of method and products to ensure that he is well covered ?
Same problem with Me. Still I have enrolled his name in Prime Ministers new scheme of insurance. But please let us know any other option which will cover less earning people in good manner.
Hi Sagar
Something is better than nothing. But PM’s insurance scheme might not be sufficient.
Term plans are the cheapest and the best available insurance options. A premium of 5-10K can give you a good coverage.
If this amount looks a tad high, I suggest the premium amount to be accumulated in RD slowly so that there is no one-time burden to pay the premium.
So if annual premium is Rs 6000, the person looking to buy the insurance should start a RD of Rs 500 for 12 months. This way, he will have the money (12×500=6000) to pay the premium next year. Another option is to select the monthly mode to pay the premium (but that will turn out to be slightly costlier).
But I wont suggest waiting for an year (to accumulate funds) to purchase the life cover. Cut down certain expenses, borrow a little from family or friends and purchase the life insurance cover. For premiums next year and beyond, start a RD.
Hi Sandeep
Right life insurance amount can differ from one case to other. But my guess is that for starters, a total of 10K would be sufficient to put in place some health+life insurance for your brother.
I suggest if its not possible for him to bear the cost now, you should help him out with this. 🙂
Also, there may be restrictions on the cover that one can buy depending on one’s income. That will have to be checked too.
Thank you sir. I am happy to bear the cost. I tried Lic’s online e-term but on the website, it is mentioned following will be required for income details
3.Your Income Details ( Form 16 / ITR for last three Years or P&L Account)
for 25L , premium comes around 6.5k
any idea how would they handle the application when the above mentioned documents are not available?
or do you recommend private entities ? i have one with hdfc and kotak.
LIC need 3 lakh per annum income minimum. Hdfc, Icici ,max, kotak also need 2.5 to 3 lakh income per annum. i recently bought a online term plan from Bajaj Allianz becuse they can issuse a term plan for a person having income 1 (One ) Lakh per annum. means person earning above 8000 Rs Per month Can take bajaj policy.
Also you can check Offline term plans from same companies, but please note that offline are little bit costilier than Online term Plans.
Also ensure that your brother is covered under PMJJY( Pardhan Mantri Jiwan Jyoti Yogna) and PMSBY (Pardhan Mantri Surakha Bima Yogna ) in each cover is 2 + 2 Lakh that is 4 lakhs. And Premuim is 330( PMJJY) and 12 ( PMSBY ) that is 330+12= 342 Rs Per Annum
Thank you Jatinder for your time and valuable comment. It seems it is impossible to adequately insure less earning folks. I read somewhere that in the US one can insure relative / family member if they are dependent
Yes in India It is not easily possible to get Term Insurance For peoples whose income is below taxable amount.But In OFFline sales peoples can help by some tacticks to get term Plan. But Again These will be little bit costlier too.So call Toll Free Number Of Five To Seven Top Insurance companies and ask Your Query and Visits Their Branch Also.You can also ask can You Take Policy On Behalf of your Brother.
Really Really important point to consider.