How to become insurance-free and make crores instead of paying pricey premiums?

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August 08, 2021 4:32 PM

Mullick has shared several interesting insights on growing money in the book. The one shared below is particularly interesting as it shows it is possible to become insurance-free.

How to become insurance free?How to become insurance free? Representative image

Why do you buy a term life insurance policy? The most obvious answer anyone may give is to ensure the financial security of the family if something happens to the breadwinner. But, have you ever thought about other ways to achieve this goal of financial security?

Before the arrival of the concept of life insurance, people covered themselves and their families against financial uncertainties by building wealth in the form of Gold or land. When cash became the main driver of all financial transactions, people even hoarded cash in their homes to be ready for any unexpected life events.

But now there are multiple ways of building wealth or securing yourself against financial insecurities. While term life insurance is considered a good option for this purpose, Author Deepak Mullick has shown in his upcoming book “SimplyMutual: the 1% formula to gain your financial freedom” that you may financially secure yourself also by building a significantly large corpus by investing in equity mutual funds through a goal-based approach.

When Mullick became a first-time dad at the age of 30, he wanted to build a corpus of Rs 1 crore so that his family will get the amount if something unexpected happens to him.

After calculating all sources of his income, Mullick assumed he may be able to add a corpus of Rs 20 lakh every five years. So instead of buying a single term life cover of Rs 1 crore, he purchased five term life insurance policies of Rs 20 lakh each with 5, 10, 15, 20, and 25-year maturity.

Mullick had planned that he would keep ending a policy as soon as he would add an amount equal to its maturity value to his corpus. This way, every five years he would add Rs 20 lakh to his corpus and stop paying a premium for one policy. By 25 years, he would have a Rs 1 crore corpus for his family and won’t need to pay the pricey premiums required for a term life insurance policy.

However, Mullick didn’t have to wait for 25 years to build a corpus of Rs 1 crore.

Mullick shares in the book that with a systematic approach he was able to build Rs 1 crore in just 7 years and cancel all the insurance policies! And that Rs 1 crore has grown into a lot more since then.

If Mullick had purchased a term life insurance policy of Rs 1 crore, he might have ended most of his earning years in paying insurance premiums. But through clever planning, he not only became insurance-free but also grew his wealth “a lot more” than Rs 1 crore.

Equity Mutual Fund: Here’s the 1% formula to get Rs 1 lakh/month salary pension and retire by 45

Mullick has shared several interesting insights on growing money in the book. The above one is particularly interesting as it shows it is possible to become insurance-free.

However, one needs to always keep in mind that investing in mutual funds or equity markets is subject to market risks. And it is always advisable to take guidance from an experienced financial advisor before making investment decisions.

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