I Did Not Understand Insurance Until It Was Almost Too Late

I had the insurance policies that young working adults in Nagpur are expected to have - a health policy through my employer, a term life policy my father had insisted on when I started earning, and a basic personal accident cover that a bank had bundled with an account I had opened at 23.

I paid the premiums with the unexamined regularity of someone who understands that these are things you are supposed to have without understanding specifically what they are supposed to do.

At 27, an accident - minor in outcome but significant in medical cost - produced a claim process that exposed the full extent of my ignorance. The health policy I believed covered hospitalisation turned out to have a sub-limit structure I had not read that capped my coverage for certain procedures at a level well below what those procedures cost.

The gap between what I had assumed I was covered for and what the policy actually covered was paid from my savings, which it cleared substantially. The education that followed was overdue.

I spent three months reading and asking questions and speaking to an independent insurance advisor whose job was not to sell me a product but to help me understand what I actually had and what I actually needed.

The knowledge I acquired was not complicated - it was just specific in ways that the marketing language of insurance products never is. I understood what sub-limits meant and why they mattered. I understood the difference between a floater policy and individual coverage in the context of a family.

I understood what critical illness coverage was and why the name was accurate. I understood that term life insurance at 27 cost almost nothing and that the cost increased significantly with age, which meant that deferring it was deferring it at my own financial expense. I restructured my coverage comprehensively.

The restructured policies cost more per year than the previous ones. They also actually cover what I was assuming they covered before. The most expensive insurance lesson is the one that arrives at the moment a claim does.