Insurance is a transfer of risk, not a way to grow money

The purpose test

Before comparing policies, ask what you are protecting against: an income that stops, a hospital bill that arrives without warning, or a liability that would fall on someone else.

If a product does not clearly answer one of those, it is probably an investment wearing an insurance label — and should be judged as an investment.

The two that matter most

Term life cover

Pays a lump sum if you die during the policy term. No maturity value — which is exactly why the premium is low for a large sum assured.

Health cover

Pays hospitalisation costs up to the sum insured. Check room-rent limits, co-pay, sub-limits and waiting periods for existing conditions.

Riders

Add-ons such as critical illness or accidental disability. Useful when they match a real gap, not by default.

Nomination

The simplest thing to get right and the most commonly neglected. Review it after any major life event.

How much cover is enough?

There is no universal multiple. A common way to frame it is to add up what would need to be funded if the income stopped tomorrow.

• Income your dependants would need, for as many years as they would need it.
• Outstanding loans, so nobody inherits a liability along with a loss.
• Specific future costs already committed to, such as education.
• Less existing cover and liquid assets that would genuinely be available.

Why claims fail

The most common cause is non-disclosure at proposal stage — an omitted condition or habit. Disclose everything, even if it raises the premium; a policy that pays is worth more than a cheap one that does not.

The second most common cause is a mismatch between what the policy covers and what the buyer assumed it covered. Read the exclusions before purchase, not at claim time.