Financial planning is one of the most important aspects of life yet, ironically, it’s one of the least talked about. And when it comes to insurance, things get even messier.

Working in this sector has given me a close look into human behavior and the psychology behind money decisions. It’s unfortunate that insurance still needs to be pushed like a product. Sometimes it feels like we’re selling a commodity, not offering protection.

Take vehicle insurance, for example. Most people pay for it out of fear… the fear of getting caught by the traffic police. But when it comes to life or health insurance, there’s no such ‘checking officer’ so there’s little discipline and even less urgency.

People carry myths, half-baked assumptions, and misplaced priorities that pushes insurance in the list of ‘good-to-haves’ rather than ‘must-haves’. So, in this blog, I am busting the most common myths about insurance in financial planning to help you see it for what it really is: a must-have shield!

Myth 1: My company gives me insurance. That should be enough.

A big chunk of my clients include corporate employees from different industries, and the first objection they have for insurance is that they are covered under the group insurance of their company. 

Having a cover under company’s group health policy is good, but is it really enough? 

Let’s say your company offers you a protection of ₹3 lakhs and a medical emergency costs you ₹5 lakhs (which is very common these days), who’s going to bear the additional ₹2 lakhs expense? Not only this, there are a few more questions you need to ask yourself if you believe the company’s health insurance is enough for you. 

• What if you leave your job or your company lays you off?
• What if there’s a limitation in the group policy that you are not aware of?
• What if the coverage is too basic… just a tick in the box?

An employer insurance is a good add-on to have, but it shouldn’t be your only line of defence. 

Myth 2: Insurance is too expensive.

This one makes me a little sad. When a client says, “Urmila, insurance is too expensive. Let’s do something better with my money”, I literally give a sigh.

Yes, paying insurance premiums might feel like an added burden. But, this only happens till you realize the cost of not having it.  Do you know what is truly expensive? A sudden diagnosis. A hospital bill. And a financial hit when a loved one is gone. 

No, insurance is not expensive, especially when you start young. Premiums are way lower and affordable for young and healthy individuals. 

Myth 3: All insurance policies are the same.

It hits differently when I see people checking every minute detail while buying a phone, talking extensively on the features of different vehicles, but assuming every insurance policy is the same. 

I’ve seen the smartest of people picking up insurance policies without understanding what they are signing up for. They go for a certain policy just because a friend or a friendly insurance agent told them so. 

Sometimes they mix insurance with investment which neither gives solid protection nor a meaningful return. Some pick an insurance full of terms and conditions that are only revealed to them when the insurance gets rejected. 

Buying insurance without understanding it in detail is like buying a shoe without trying it on. It might cover something but won’t fit you comfortably as per your need because all insurance policies are not the same. 

Myth 4: I’m healthy. I don’t need insurance right now.

Young adults today believe in living lives here and now, which is good in many senses, but not when it comes to contingency planning like insurance. This is not something you buy when you need it; it is something you buy and keep for ‘in case you need it’. 

It’s nice if you feel healthy and believe you’ll always be like this but it’s not practical. Emergencies don’t wait for old age. You don’t go shopping a fire extinguisher when your building catches fire, right?

Moreover, you should also understand that

• You get the best premiums when you’re healthy
• You get better policy options with no exclusions
• You save money in the long run

Myth 5: Only earning members of a house need insurance

I see this myth as a shadow of patriarchy that sees the value of only the ‘breadwinners’ of the family. Term insurance is definitely essential for someone who is earning for the family but that doesn’t mean other members of the family don’t need protection. 

Here’s how it actually works:

• Health insurance is needed for everyone, including non-earning members like children, homemakers, and elderly parents
• Term insurance is crucial for anyone whose absence would cause a financial vacuum. And yes, even homemakers fall in this category today.
• Accident and critical illness policies don’t care about your salary slip; they care about how quickly you can get care and compensation in tough times 

A balanced insurance plan protects the whole family, not just the income.

Final Thoughts

Why I initiated this discussion on myths and misconceptions regarding insurance policies is because it is the first step towards a financially secure life. I’ll keep it very simple. Here’s what you should do if you want to secure your financial foundation –

• Buy your own policies. Don’t rely only on employer coverage.
• Start early. Don’t wait for illness or age to catch up.
• Understand what you’re buying. Don’t just sign where they ask you to.
• Work with a financial planner. Someone who checks on your cover like a ‘traffic police’ of your portfolio… but for your benefit.
• Review your cover annually. When needs change, so should your policies.

No one checks your health insurance card at a red signal. But life throws red signals when you least expect it. Make sure you start your financial planning with insurance. Because money can grow only when it’s protected from uncertainties.