On Reddit and Twitter, AI-powered investing is having a moment. Threads about prompt-driven trading bots, machine-generated F&O strategies, and GPT plug-ins for portfolio management are everywhere.
One viral post showed how someone used an LLM to backtest options trades and doubled their account in a week.
But here is a number I do not see trending: 93% of retail F&O traders lose money, according to SEBI. And here is another: 60% of U.S. personal bankruptcies are linked to medical bills.
In India, lakhs of families fall into debt each year because of one medical event, not because they lacked alpha but because they lacked a health cover.
We are rushing to use AI to optimize returns. But hardly anyone is talking about how to secure what they already have.
No one is running simulations on how their family will survive if they die uninsured. No one is calculating the ROI of a term policy that replaces their entire income for 20 years if something happens tomorrow.
And that is what this piece is about. Not how to chase more upside but how to guard against irreversible downside.
Because before you try to grow your wealth with smart tools, you need to ask a simple, human question: is what I have even protected?
Why starting with premiums is the wrong way to think about insurance
One of the most common mistakes people make when choosing insurance is asking, “How much does it cost?” before asking, “What does it cover?”
This is understandable. No one wants to overspend. But in insurance, starting with the premium often leads to a dangerous outcome: underinsuring yourself and your family. It is like walking into a hospital and saying, “I only want to pay ₹300 and give me whatever treatment fits that.” That is not how risk works. Risk does not care what you budgeted.
When you lead with premium, you are making coverage decisions backwards. Instead of identifying your actual financial risks and matching coverage to them, you end up fitting your policy to your wallet and hoping it is enough. Most times, it is not.
Premiums are a function of:
- Your age and health
- The coverage amount
- The type of policy (term, whole life, indemnity, etc.)
- The duration of the policy
So when you focus only on a number you feel “comfortable” paying, the result is often an arbitrary mix – a ₹5 lakh health policy, a ₹15 lakh term cover, or a short 10-year plan when a 30-year one is needed. It feels like protection, but it is not calibrated to your reality.
What should come first is a question most people never ask clearly:
“If something happens to me, say death, disability, or major illness then what exact costs will need to be covered? For how long? By whom?”
That number might scare you. That is fine. It is better to be scared now and plan accordingly, than to let someone you love be scared later with no plan at all.
Once you calculate your actual exposure, only then should you look at premiums to figure out the most efficient way to cover those gaps. That is how insurance works best. Not as a random purchase. But as a deliberate, mathematical decision that reflects how much is truly at stake.
The ₹10 lakh illusion: Why life insurance coverage is almost always too low
Ask most people what kind of life insurance they have, and the answer is often a single number: ₹10 lakh. Maybe ₹20 lakh. Or whatever their company gave them.
These numbers sound large. Until you do the math.
A ₹10 lakh payout, if invested conservatively, may generate ₹40,000 to ₹60,000 a year. That is barely ₹5,000 per month. It will not pay rent. It will not cover school fees. It will not carry a family.
Life insurance is meant to replace your income not for a few months, but for the years your dependents would have relied on you. That includes:
- Rent or EMIs
- Groceries and utilities
- Children’s education
- Aging parents’ care
- Any debts or financial goals left unfinished
If your annual income is ₹10 lakh, and your family needs 10 years of support, the gap is ₹1 crore. If you want to fund college, add another ₹20–30 lakh. Funeral expenses, unpaid loans, emergency buffer all of that adds up.
A simple and widely used rule of thumb is: Your life insurance cover should be 10 to 15 times your annual income.
It is not an arbitrary rule. It exists because time needs money. If your absence takes away the money, the time left behind becomes heavier for your family. Life insurance should not be a gesture. It should be a full, financial replacement of what you meant to the household.
Term insurance makes this possible. It allows high cover at relatively low premiums because it is pure protection no investment, no extras. For most people with financial responsibilities, it is the only type of life insurance that makes sense.
Do not ask: “How much do others have?”
Ask: “If I were gone tomorrow, how much money would my family need and for how many years?”
That number is your starting point.
The health cover gap: When ₹5 lakh is not enough
Health insurance is another place where numbers deceive. A ₹5 lakh cover feels sufficient until it is not.
Here is what many people forget:
- A 3-day ICU stay in a tier-1 hospital can cost ₹2–3 lakh
- Complex surgeries can cross ₹7–10 lakh
- Cancer treatment can exceed ₹20 lakh over time
- Health care inflation is rising 10–15% per year in private hospitals
A single serious medical event can wipe out your entire cover and then your savings.
Worse, many people depend solely on their employer’s group policy. That disappears the day you resign or are laid off. Others buy the cheapest personal plan they find, not realizing it has room rent caps, high co-pay clauses, or a long list of exclusions.
If you are young and healthy, this is the time to buy a high-quality plan one that scales with your life, not one that barely protects it. Most experts now recommend:
- ₹10–20 lakh for individuals in urban centres
- ₹20–50 lakh for a family floater plan
- Adding a top-up policy for catastrophic coverage, which is affordable and extends your protection
It is not about predicting illness. It is about recognizing that the worst-case scenarios are real and expensive.
A good health policy is not just for hospital bills. It is for keeping your financial life intact when your physical health is at its weakest. It protects your savings, your future goals, and your dignity during medical stress.
The Forgotten Risk: Why Disability Insurance Matters More Than Most People Think
Ask someone if they have health insurance, and many will say yes.
Ask about life insurance, and at least some will nod.
Ask about disability insurance, and most will just stare blankly.
Yet this may be the most important policy in your entire plan.
Here is the truth:
You are more likely to face a long-term disability during your working years than to die prematurely. The data confirms this. In some countries, 1 in 4 people entering the workforce will suffer a disabling condition that prevents them from working for months or even years before retirement.
Yet no one prepares for it.
The risk is invisible. It does not trend on social media. It does not make headlines. But if it strikes, the consequences are devastating:
- Income stops
- Expenses rise
- Savings deplete
- Dependents suffer
And unlike death, you are still here. You still need care, housing, food, support. The financial load can be even heavier than a one-time event.
Disability insurance fills that gap. It replaces a portion of your income typically 60 to 70% if illness or injury makes you unable to work. It acts as an income shield, allowing you to maintain your financial commitments without burning through your savings or depending on others.
Yet most people either:
- Do not know it exists
- Think their health or life policy will cover it (they will not)
- Assume the chances are low (they are not)
Some employers offer basic disability cover. But like life and health, it is often minimal and disappears if you leave. A personal, long-term disability plan ideally until retirement age is what truly protects your earning power, which is likely your biggest asset.
You insure your car. You insure your phone. Why would you not insure your ability to earn?
Disability does not ask for permission. It just arrives. The time to protect yourself is not after it happens it is now.
Build the foundation before anything else
The truth is simple: most people are building wealth on shaky ground.
They are investing in stocks, exploring real estate, experimenting with trading strategies even using AI to optimise their returns. But they are doing it without securing the basics. Without protecting their income. Without safeguarding their health. Without planning for a future where something might go wrong.
It is like building a house without a foundation and then hoping the wind will not blow.
Insurance is not about pessimism. It is about realism.
It does not exist to scare you. It exists to protect you from being scared when it is too late.
Here is what building that foundation looks like:
- A term life insurance policy that replaces your income for the years your family would need it
- A health insurance plan that protects you from large, unpredictable costs without draining your savings
- A disability cover that secures your ability to pay your bills if illness or injury prevents you from working
- A top-up plan or critical illness rider, if needed, to stretch your protection even further at low cost
This is not about how much insurance you can afford. It is about how much loss you cannot.
Before you chase returns, cover your risks. Before you grow your wealth, protect your foundation. Before you look ahead, make sure you have looked down to check what is holding you up.
No one gets credit for being “lucky so far.” But everyone pays the price for being unprepared when that luck runs out.
Start now. Run the numbers. Get quotes. Read the fine print. Ask uncomfortable questions. Do not wait for the emergency. Insurance only works before something happens.
You may not post about it online. But your future self and your family will be grateful you did it quietly, early, and well.
Author Note
Note: This article relies on data from fund reports, index history, and public disclosures. We have used our own assumptions for analysis and illustrations.
The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is not investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor. This article is strictly for educational purposes. The views expressed are personal and do not reflect those of my current or past employers.
Parth Parikh has over a decade of experience in finance and research. He currently heads growth and content strategy at Finsire, where he works on investor education initiatives and products like Loan Against Mutual Funds (LAMF) and financial data solutions for banks and fintechs.