Building Your Financial Pyramid- Series-II (Level 1 Protection)

In the previous article of the series, I introduced you to the “Financial Pyramid”. Now, it’s time to dig deeper and figure out each aspect of it. A building stands tall and strong with a solid foundation and the same applies to our lives as well. Imagine, if the architect of your building tells you that he directly started working on the 3rd & 4th floor of your residential building and then later, in the end, he plans to build the foundation. Would you even think of buying a home there? Building a Financial Pyramid is very similar to this. It has 5 different levels and each level emphasizes on taking up each step in order before moving on to the next level. If you don’t build a strong foundation, your family’s finances are sure to collapse.

The first step of the Financial Pyramid is “Protection”. It stands as a solid foundation enabling you to face-off life’s uncertainties and this eventually helps you focus on your goals.

Let’s discuss on the bare essentials you must cover no matter what!

1. Life Insurance- Not just a mere policy, but a sum insured that would take care of all your family’s financial needs in your absence, is critical. A Pure Term Plan is the best option to opt for.
2. Health Insurance- Any illness or hospitalization can wipe off your savings. Medical insurance for all your family members is essential and the sum insured should be of a considerable amount. A family floater is the best option to go with, and a super top-up can be looked at for ensuring a higher coverage.
3. Will- This is often most ignored but, irrespective of the size of your assets, having a simple will in place makes life very easy for your family after your demise.
4. Debt Repayment- Modern-day slaves are not in chains, they are in debts. This sphere of debt can never let you make the most out of life! You need to have a plan in place to reduce your existing debts as this can delay your financial freedom to a large extent.