Investments and insurance are two important pillars of financial security. While good investments empower you to live the upside that life has to offer, adequate personal insurance insulates your finances against the downside of risks to life & health.
It is important to have the best of both, but limited financial ability may push one to prioritize one over the other till both can be provided for. The decision can be made easier through financial planning under rational and logical considerations.
One needs to prioritize purposes basis the context of an individual’s life dynamics. For instance a person with no financial dependents may not need to ensure income substitution in case of an untimely demise, but must absolutely prioritize health insurance for a financial cushion in case of unforeseen medical expenses and then seek to invest towards financial security. For some with a family that is financially dependent on the person, it makes sense to prioritize health insurance for the family along with an adequate life cover through term insurance and then invest toward the family’s financial security.
Many may find themselves in a situation where it is imperative to secure all three angles but may not have sufficient financial back up to ensure adequate allocation towards all three products. For such a case, it is advisable to not try to prioritize one over the other, but in fact, allocate towards all three even if the allocated amounts are inadequate.