Managing Risk in an individual’s Life:

In common man’s language it is anything not wanted by us but still taking place in our lives such as premature death, disease and disability due to accident or it can be any financial risk.

Based on above we can say there are 3 D’s to be taken care of to manage basic risks in the life of an individual:

  • First D – Death or Dying prematurely - We have life, death is sure but when not sure?
  • Second D – Disease (Getting illness) – We have body, it may fall sick but when not sure?
  • Third D – Disability due to an accident (Permanent or Temporary) – likewise we may have accidents but when & of what magnitude not sure?
  • There are other risks also like loss of personal belongings/assets of an individual like Car/TV/Jewellery or Cash etc. due to any reason such as theft or fire etc. But managing above 3 Ds is crucial & not worth ignoring.

By managing risk, we mean compensating the financial loss (monetary loss) suffered due to risk posed by these 3 Ds

First Risk: Premature Death

i.e. person dying without fulfilling his/her financial liabilities such as children’s education and/or marriages, family/dependent’s living expenses


Here you buy an insurance to cover death risk only i.e. whatever premium you pay, you pay it for your death benefits for the use of dependents in your absence so that they may live a life without your income or any other income and fulfill their life goals in normal manner the same way they might have done in your presence. It means if you survive the insurance term period you get nothing. That is why it is the cheapest. A person of 30 years can get an insurance of 1 crore life cover just by paying approximately Rs. 10,000 annualyfor next 30 years. However it is surprising that the said amount spent may be equal to yearly insurance cost of a car of few lakhs but people think many times (even months/years) to buy insurance for their most outstanding vehicle i.e. their own bodies, and value a “BIG ZERO (0)” to this best ever creation by Almighty God which nobody can value (as it is rare & priceless actually) in true sense.

Second Risk: Getting inflicted with or catching an illness/disease

i.e. the person or any person in his/her family dependent on him/her falls sick and requires proper treatment with or without hospitalisation under the observation of professional physician


Under family floater health insurance plan, a complete family is given protection for any health related issues i.e. treatment of any illness/decease/sickness e.g. 2 adults (Parents) plus 2 or 3 Children (A family Unit) via a single cover e.g. 3 – 5 lakhs which (the entire limit of 3 or 5 lakh) can be utilized by any one or all or any of the family member/s during the insurance period of one year subject to certain policy conditions by paying an annual cost in the form of premium for the same.It is normally more cost effective & convenient as compared to taking different individual mediclaim insurances for each family member. A man of 35 years of age with his spouse and 2 children (Below 25 years) can enjoy a family floater health insurance of 3 lakh by paying an annual premium of Rs. 11,000/-

The family health insurance policy covers the individual, spouse and children normally. Some insurance companies also offer family health plans that cover dependent parents, siblings and parents-in-law.

Third Risk:Becoming Disable due to an accident (permanent or temporarily)

i.e.a person becomes incapable to carry on his job or business needed for his basic survival for some time or in some cases for his entire life after meeting with an accident. In case of Pure Term Life Cover at no 1 above, dependents get the security shield amount or insurance money on the death of life assured. What is the survival guarantee for all (Insured Person and dependent family members) in case the life assured survives any fatal accident and becomes temporarily/permanently incapable to resume to his job/work/business. This is where the accidental insurance with disability income cover comes into the picture. Of course it provides cover for accidental death also but more importantly it is a source of livelihood on surviving any fatal accident & injuries thereafter and living without attending to one’s work & thus without regular source of income. There are accidental policies in which one can get 5000 to 15000 per week of disability income maximum upto almost 100 weeks. Such insurance may cost approximately 1500 annually for a cover of Rs. 10 lakhs for an individual from age 18 till age 70and can be renewed till life time of that individual

In all the above 3 situations i.e. death of bread earner, illness or disability after accident of the insured person, if a proper life or health or accidental insurance cover is not present, it will surely eat up our valuable savings or investments meant for meeting our other life financial goals. Hence having all the above mentioned insurances is a must under financial planning for any individual with dependents.

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