Most people do not know what is their biggest asset. They then say – it is my house, my equity portfolio, my car, etc. However then I lead them to the next question:

Have you borrowed for your house?

They jump and say yes. My house cost me 93 lakhs – i put Rs. 12L of my own and borrowed Rs. 81 lakhs…or so goes the discussion.

Is this a home loan? They say yes. I ask them what is the security that you gave…they think it is the house. It is not.

You do not get a house loan, a car loan or a personal loan. What you get is a loan against your FORM 16 – it is an assumed capability to create income in the future ALSO.

So your biggest asset is ‘your ability to create the net cash flows which can repay the loans’ – that is your earning power.

What can affect your earning ability / power to bring in the cash flows?

Early death, Critical Illness, Disability – and these are the risks that you run. Thankfully these are all insurable risks.