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Buying an insurance policy should be the first step in the financial planning process, but most individuals, especially young people do not give it the attention it deserves. They rely on their employees for health insurance coverage and do not need to have life insurance. When buying life cover, follow the 15x rule. That is, buy a policy that provides a cover amount equal to 15 times your annual income. So, a person earning Rs 10 lakh per annum should buy a policy that assures a sum of Rs 1.5 crore.
This ensures that insured dependents have up to 10 years, to support themselves before creating a new source of income.
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