Latest articles on Life Insurance, Non-life Insurance, Mutual Funds, Bonds, Small Saving Schemes and Personal Finance to help you make well-informed money decisions.
The answer to this is simple. All of it until your insurance portfolio is sufficient to take care of your family’s financial needs in the case of your premature death. Once this level of insurance has been achieved, you can then invest your savings in other avenues.
In one’s earlier years as the family is young and vulnerable, and also because a larger portion of the working and earning life will be lost if death were to take place at that stage, a greater proportion of savings should go towards life insurance. Once the desired level of insurance portfolio has been built, the proportion of your savings allocated to paying the life insurance premiums may come down along with your rising income. Till then, life insurance must be accorded top priority.
Remember, insurance also represents your savings and one should aim to save at least 20-25% of one’s gross income at any stage of one’s career. A prudent person must live within an expenditure limited only to 75-80% of his income. If you earn Rs.3,500 per month, think of your salary as Rs.2,800 only. Similarly, when you earn Rs.5,000 a month, keep your expenses around Rs.4,000. That is the only way of building a capital for looking after your future needs and those of your family.
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