Insurance planning is the systematic assessment of financial risks an individual or family faces and the structuring of appropriate insurance coverage to protect against those risks. It is one of the six domains of comprehensive financial planning and is often the most neglected — people tend to buy insurance products based on what is sold to them rather than based on what they actually need.
The key categories of insurance an Indian financial planner must address:
Life insurance: the primary question is whether the family can maintain its standard of living if the breadwinner dies. The answer is a coverage amount, not a product — term insurance delivers the highest coverage per rupee of premium. Endowment policies, money-back plans and ULIPs combine insurance and investment poorly and are often mis-sold.
Health insurance: with healthcare inflation running materially above general CPI, adequate health coverage is non-negotiable. Base cover, super top-up, and critical illness rider structures are the standard architecture. Employer group cover alone is insufficient given its portability risk.
Disability insurance: the probability of disability is higher than the probability of early death over a working career, yet disability coverage is systematically underinsured in India. Income replacement in case of temporary or permanent disability requires specific coverage.
The IRDA regulatory context: all insurance products in India are regulated by IRDAI (Insurance Regulatory and Development Authority of India). The agent and distribution channels, product design and settlement processes are all IRDAI-governed.
Source: FPSB India CFP Module 4 curriculum; IRDAI annual report.