Every strong house needs a foundation before you decorate the rooms. In money, that foundation is just two things: term insurance and health insurance. They quietly hold up everything else.
But here is the strange part. Nearly half of Indians still do not have term insurance, and most who have health cover have too little. And these are not careless people. They plan their Goa trip down to the last hotel, but skip the one thing that protects the whole family. Why?
Their reasons are not silly. They are very human. Let us look at it honestly.
The feeling of getting nothing back
This is the biggest reason, and it deserves respect, not a lecture.
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A term plan works like this. You pay a small amount every year. If you die, your family gets a big sum, say one crore. If you live, you get nothing back. To someone whose father always bought LIC policies that returned money, this feels like a loss. I paid for twenty years and got zero rupees back, they think. What a waste.
There is truth in that feeling. We hate paying for something we cannot see or hold. We will happily spend fifty thousand on a phone we can touch and show off, but resist spending a few hundred on protection we hope never to use. The phone feels real. The risk feels far away.
But think about your bike helmet. At the end of the year, if you did not have an accident, do you feel cheated that you wore it for nothing? No. You feel lucky. Term insurance is the same kind of thing. The return is not cash. The return is your children finishing school and your family keeping their home if you are suddenly gone. It is cheap exactly because most people survive. That is good news, not a bad deal.
The belief that nothing will happen to me
Most of us quietly think, I am young, I am healthy, I will do this later.
This hope is not a fault. It is what keeps us going. But later has a habit of never coming. And insurance has a tricky rule: it is cheapest when you feel you need it least. A plan that is cheap at age thirty becomes costly at forty. And if a health problem shows up first, no company may agree to cover you at all. Not thinking about a bad day does not stop the bad day. It only removes your shield.
The fear that they will not pay the claim
This worry is everywhere, and it is fair. Almost everyone has heard of a claim that got rejected or a hospital bill that was only half paid.
But here is the other side. Most rejected claims happen because something was hidden while buying, like an old illness or a smoking habit that was not told. When people tell the truth and buy from a good company, the large majority of honest claims do get paid. So the lesson is not that insurance is a cheat. The lesson is simple: tell the full truth, pick a trusted company, and read what is covered. Fear should make you buy carefully; not make you buy nothing.
The thought that there are bigger bills right now
Home loan, school fees, vegetables, petrol. With so many real bills today, protecting against a someday problem slips down the list.
This pressure is real. But the numbers are kinder than people expect. Term cover for a young person can cost less than one restaurant dinner a month. Health cover costs more, but it is still tiny next to one big hospital stay, which can wipe out years of savings in a week. The small thing people skip is the very thing that stops one bad event from breaking everything.
The plan to start investments first
This one is common among young earners, and it comes from a good place. There is so much excitement around SIPs, mutual funds, and stocks. Everyone wants to see their money grow. So the thinking becomes, let me first start my investments, build some wealth, and buy insurance later.
The wish to grow money is healthy. Starting early really is the biggest advantage in investing, so the instinct is not wrong.
But there is a quiet danger here. Investments are like building the upper floors of a house. Insurance is the foundation under them. If you build floors with no foundation, one earthquake, one serious illness, or one early death can bring the whole thing down. Imagine someone who proudly built a ten lakhs portfolio over five years, and then a long hospital stay forces the family to sell all of it, plus borrow more. The growing was real, but it had nothing protecting it. The smarter order is to do both together: spend a small amount on the two pillars first, and let the rest go into investments. Protection does not delay your wealth. It guards the wealth you are working so hard to build.
Where avoiding insurance quietly backfires
The deepest trap is not skipping insurance. It is buying the wrong kind because it feels nicer.
On the life insurance side, to avoid that getting-nothing-back feeling, many people buy endowment or money-back policies that return some money at the end. It feels satisfying. But these mix insurance and saving together, and usually do both jobs poorly, giving only about four to five percent return and a very small cover. So, you end up with weak protection and weak growth at the same time.
Health insurance has its own quiet trap. To save a little on premiums, people pick a small cover like three or five lakh and feel they are now protected. But a single big surgery in a city hospital can cost far more than that today, and the rest comes straight out of their pocket. Others skip personal health cover completely because their office gives them one, forgetting that this cover ends the moment they change or lose the job, often at the worst possible time. And many avoid buying cover for their parents because the premium for older people looks high, even though parents are exactly the ones most likely to face a big hospital bill, and paying that bill fully from savings hurts far more than the premium ever would. Tiny cover, office-only cover, and skipping parents all give a false sense of safety.
A simple way to decide
You do not need to become an expert. You just need to build the floor before decorating the house.
One, ask if anyone depends on your income. If yes, take a pure term plan of about ten to fifteen times your yearly income, running till you retire. Buy it young, and tell the truth on the form.
Two, take health cover that matches today’s hospital costs, not a small five lakh. The cover from your office is a nice bonus, but it vanishes the day you leave the job, so do not depend only on it. And if your parents depend on you, plan for their cover too, even if the premium feels high.
Three, keep protection and investment in separate boxes. Insurance is for protection. Mutual funds and other investments are for growing. Do not force one product to do both.
People avoid these two pillars for reasons that are emotional and understandable, not foolish. But feelings are a poor guide to risk. Term and health insurance are boring. They give you nothing to show off. Most years, they seem to do nothing at all. And that quiet nothing is the whole point. We protect the phone in our pocket without a second thought. The two pillars simply ask us to protect the people in our home the same way.
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