In a portfolio with a varied asset mix, what should the optimum share of insurance be?
In any generic financial planning model, protection needs must be met first, before any talk of growth or appreciation of investments arises. Even the creation of new assets has to wait till an individual protects his most valuable asset: the ability to get up everyday and earn a living. When we talk of protection , clearly, it is insurance that comes first. A risk-versus-reward pyramid must necessarily be built around insurance, as you first guarantee the source of asset creation. Insurance is not fighting for a share of the same pie as investments in, say, mutual funds or the stock market; instead, insurance money is protection money required as the foundation for other investments. Given its role as a protection instrument, what is the right time to buy an insurance policy? What benefits accrue to the early investor? The right time to buy an insurance policy is when you think you need it the least. Opt for a policy when you are young and healthy and finetune it as both income and ne