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You must know this: The hierarchy of insurance needs

Published May 23, 2016, 9:46 am IST
Updated May 23, 2016, 9:46 am IST
It’s all about securing yourself before you do it for your near and dear ones.
A good insurance plan is the cover against uncertainties of future.
 A good insurance plan is the cover against uncertainties of future.

Life is unpredictable and the only thing that facilitates taming of the beast called future is -- Insurance. A good insurance plan is the cover against uncertainties of future. We all know the importance of having an insurance plan and don’t need another morally induced convincing type of article to manifest the same. However, we usually get stuck at a crucial and practical step of buying it – How to prioritize buying of insurance amidst hoards of life saving and money making options?

Let me assure you that this article is a practical one that clears your confusion and helps you prioritize, not asking you to buy all in one go but to plan in a phased manner. So hang on!


There are some mandatory insurance plans that you must buy and also renew from time to time otherwise it leads to a legal case, primarily motor insurance and international travel insurance. Apart from these there are plans that one should necessarily have to lead a safe and secure life. Health insurance, personal accident, term insurance and critical illness plans are some of the important insurance policies that ensure smooth financial functioning in the wake of a life threatening emergency.

Prioritizing Is the Key

If I would have my way, I would buy everything under the sun without even a blink because it is all about safety of me and my family. But the harsh reality of life is that at an early stage of career you might have limited salary and lesser amount to spare for savings. This, though changes when you climb the ladder of professional success – salary increases and so does saving.


The question here is which one is absolutely critical to buy, which one to prioritize and the order of purchase to follow henceforth so that one can plan accordingly.

Let’s give you the priority order of insurance plans

  • Health Insurance
  • Personal Accident Plan
  • Term Insurance
  • Critical Illness Plan

These four are absolutely must to buy and that too, ideally before your 30th birthday, in the order of priority. The formula that works here is – the sooner, the better. You can phase out buying, do your research, plan accordingly but don’t rest till you have all of them.


Health insurance is an absolute must during these times of rising medical costs and falling health standards. Today, there is no age for disease. One day you think you think you are young and healthy and the other day you might be doing rounds of a hospital. The worst part of ill-health apart from mental and physical trauma is the financial constraint. All your planning and saving is thrown out of the window. Thus, buy a good health plan with your first salary even if you are in your early 20s. This will safeguard you against all financial bumps. It eases your road to recovery. Health insurance comes in all sorts of range and with customizations like top-up, super top-up, deductibles, etc. Take your time to understand the policy well and choose the one that is the best confluence of cost and benefits. You can start with a basic health plan and then keep increasing the sum assured or adding family members, as the case is.


Personal Accident plan, especially the one that covers disability is an important insurance plan. India tops that chart when it comes to road accidents. With this statistics it becomes all the more crucial to have a plan that not only covers you in case of an accident but continues to give payout if there is a long period of financial obstruction due to a temporary or permanent disability.

Term insurance is a financial guarantee for the family members who are dependent on you monetarily in case of an unfortunate incident. Term insurance is usually as cheap as Rs 8000 for a sum assured of Rs 1 cr for a 30-year-old. It is definitely do-able. Compare online to find the best deal as there is a lot of competition in term insurance offerings. Also, you can buy a term insurance online which comes even cheaper.


Critical Illness Plan can be brought with your basic health plan as an add-on or as a separate plan. When an illness is critical it has direct financial consequences, and so having a critical illness plan can be a life saver. Again, if you buy the plan early then you get more benefits and it comes cheaper too.

There will be always a push and pull that would happen depending on your stage of life. You might have heard the air hostess repeating these lines whenever you would have boarded a flight to travel – please make sure to secure yourself first, before securing anyone else. The same logic applies to insurance coverage --- initially, it’s all about covering yourself, then your dependents later on in your life. This is the reason personal accident cover must be bought even before a pure life insurance coverage. However, the critical illness cover can be de-prioritized in this order, as when you are young, the chances of critical illness are less. However, before you turn 30, it’s advisable to buy this cover too. The final mantra is to plan your finances properly and buy insurance plans as soon as you can to secure your future finances. It is basically spending money now to save money in future.


Article contributed by Yashish Dahiya – CEO& Co-founder,