02-Feb-2022: ABOUT LIFE
Life is an Excellent Gift of God to Mankind. But nothing in life is ever
certain. Unexpected accidents, hospitalisations, business setbacks, ever
decreasing work-force (resulting in retrenchments), terrorism can all mar our
well-laid plans. In extreme cases we end up with loss of earning power. Thus
the future may be uncertain. But one thing is certain. One needs to plan for
it. It is a human tendency to postpone planning till retirement. But the later
one starts saving the harder it is to do so. With longer life expectancy,
rising inflation and declining interest rates, it is imperative that we start
planning now.
- Conversely life is also full of opportunities for all of us to seize, like:
- Financing our children's education (children are our biggest assets),
- Buying our dream home (a place of protective roof on our head),
- Taking a well-earned vacation (after all why we are earning – we need to enjoy life and need to recharge our energy for earning our livelihood),
- To save for the time when we cannot earn sufficiently to sustain ourselves (saving for the rainy day, old age, retirement),
- We may wish we could safeguard our opportunities and protect against the uncertainties,
- And finally, for our sheer investment needs.
This is where “INSURANCE” comes in. This is explained in short in the
following Part-2:
The Story of Insurance
There is an interesting story about how insurance works: Let’ say a class has 50 children, and they decide to go for a picnic. The teacher tells the children to keep Rs. 50 each for any expenses or emergency. During the picnic a student loses his entire Rs. 50 and he was crying as his parent may scold him.
The teacher found a solution and asked each of the rest students to contribute
Re 1 to the child who lost. Now each student has Rs. 49 including the one who
lost. Everyone was happy as Re 1 loss is insignificant. This is how the
Insurance works. Re 1 may be taken as premium. Chances of loss of life or
property may be 1 in 50, as not everyone faces loss. Calculation / prediction
of this chance is done by a highly accurate and sophisticated mathematical
branch called Actuary Science.
