4 min read
As a financial planner, I spend most of my time talking to clients about growth, returns and long-term wealth creation. But some of the most important conversations I have are not about any of that. They are about the gaps in a financial plan that can put a family’s financial future at risk, even when the investments are doing well.
A portfolio is only as strong as the protection built around it.
So let me take you through five areas that I believe every family should look at. As we go through them, score yourself on how well prepared you are in each one — by the end, you may be surprised by where the gaps are.
Table of Contents
Quick Summary
- Five protection gaps can put a family's finances at risk even when investments are performing well: health cover, life insurance, an emergency fund, personal accident cover, and succession planning.
- Around 40.5 crore Indians — close to 30% of the population — have no health insurance, and outdated cover can be nearly as risky as no cover at all.
- Term life insurance needs depend on income, dependents, liabilities and existing assets — there is no one generic number that works across families.
- A general savings habit is not the same as a ring-fenced emergency fund; without one, a job loss often forces selling long-term investments.
- A nominee is not the same as an heir — a Will and updated nominations need to work together for succession to actually go as intended.
Five Areas Every Family Should Review
Here is where I most often find families exposed, and the questions worth asking yourself in each area.
1. Health Cover Comes First
Health cover is the most common failure point I see. A ₹15 lakh hospital bill is not rare anymore in most Indian cities, and a NITI Aayog analysis puts the number of Indians with no health insurance at around 40.5 crore — close to 30% of the population. The mistake I see most often is not the absence of a policy but a policy that has not kept pace. A cover that felt adequate in 2018 rarely covers what a serious hospitalisation costs today. Check both: whether you have cover, and whether it is still enough.
2. Life Insurance: The One Nobody Wants to Plan For
Life insurance is uncomfortable to think about, which is exactly why it gets delayed. But the logic is straightforward: if the family’s primary source of income is lost, the EMIs and school fees still have to be paid. Term insurance exists to close that gap, and the right amount depends entirely on your income, dependents, liabilities and existing assets — there is no generic number that works across families.
If you want to know how much life insurance you may actually need, we have a free Life Insurance Need Calculator on our website. Visit our Financial Tools page and you can calculate your requirement in just a few minutes.
3. The Emergency Fund Most Families Think They Have
The SEBI Investor Survey shows Indian households saving around 15% of income on average, which sounds reassuring until you realise general savings and a ring-fenced emergency fund serve very different purposes. Without a dedicated buffer, a job loss or a slow patch in business often means selling long-term investments just to cover this month’s expenses. The test is simple: could you cover a few months of expenses without touching your portfolio?
4. Personal Accident Cover: The Most Overlooked Gap
Life insurance addresses one kind of risk, but an accident can affect your finances even when you survive. A fracture that keeps someone off work for three months creates a real income gap. A serious accident that results in permanent disability can affect a person’s ability to work for years, or in some cases permanently, creating a financial risk that life insurance alone does not address. This needs its own policy, separate from life insurance, because life insurance only pays out on death.
5. Succession Planning: Making Sure Your Wealth Reaches the Right People
Succession planning decides whether the wealth you built actually reaches the people you built it for. Many clients assume that naming a nominee settles the matter. It does not. A nominee only allows an institution to release an asset, not necessarily to inherit it — the actual rights depend on the asset type, the applicable succession law, and whether a valid Will exists. A Will and updated nominations need to work together. Ask yourself plainly: would your family know what you own, where it is, and how you want it distributed, if something happened to you tomorrow?
Check Your Score
Tally how many of the five areas above you are genuinely covered on, then see what it means:
| Score | Meaning |
|---|---|
| 0–1 | Your wealth is highly exposed |
| 2–3 | You have some protection, but important gaps remain |
| 4 | Strong foundation, with one area to address |
| 5 | Comprehensive protection – subject to adequate coverage and correct documentation |
I would caution against treating five out of five as the finish line. I have reviewed plans with every box ticked where the health cover was set a decade ago, the nominee was an ex-employer’s default entry, and the Will predated half the assets it was meant to cover. Protection is not something you arrange once — it has to move with your income, your family, and your wealth.
Conclusion
I have been doing this kind of review for families for more than 25 years. If you would like us to look at where your own plan stands, you can reach out to us at +91 97272 66571 or mail your query at celebratinglife@ascentsolutions.in.
