"The needs should include the client's financial liabilities such as home loans, car loans etc and the funds required to support the dependants for the desired period. It may also include money required for specific family needs such as son's/daughter's education or marriage," says Kapur.

Alternatively, if a person who has to take care of his family and is thinking of buying insurance then his first priority should be 'risk cover' and then the ‘savings’. "The amount of cover is a factor of income and consequently the paying capacity, the nature of job, expected earning period, and amount of liabilities (personal loans, housing loans) reduced by any estate already existing (savings & investments)," says Kapur.

According to Kapur, while one evaluates their financial needs, he should first give importance to life stage, risk profile, dependants, disposable income and liabilities. Through this, the person will be able to identify the difference between his protection and savings needs. The insurance should provide protection in such a way that all the liabilities and the future earnings of the person are insured. This is will give a little confidence to the dependents of the policy holder as their will be no significant changes in their lives, after an unfortunate death of the policyholder. The savings would determine the financial goals of the individual.

Also Read:

7 Apps That Will Take Complete Care Of Your Finances for You

Invest In These 5 Assets To Become Richie Rich