In our everyday life, we read a lot of articles on how to grow our wealth, where to invest, to buy insurance etc. But what is most important out of these and one must think first. Let us talk about it.
Term Life Insurance- The first most important thing for every earning Indian is to buy term life insurance. Term plan comes handy as income replacement in case of death of the earning member. In case of death of earning member of the family, incomes stops suddenly, but receipt from term life ensures that family does not struggle for money. What is term plan? How much coverage ? Please refer to article Term Plan for complete understanding.
Contingency Planning- Contingency planning is the second most important aspect one must consider after purchasing Life Insurance. In case of loss of job or business, one needs fund to survive till the next job or business gets setup. Contingency fund accumulated during earning phase helps here.
Salaried persons must keep at least 3 months of expenses in their savings account/debt fund. In case of business person/professionals, this duration increases to 6 months.
Health/ Medical Insurance- With advent of mechanization and fast paced moving society, accidents are increased. Accidents could be road accidents, fall of building, fire in home or office etc. or one can meet illness like cancer, kidney stones, long fever etc that may need hospitalization. Once can not predict who and when one can meet these fatalities. Hence, one must try to protect oneself from monitory loss in case of these casualties happen.
Health/Medical Insurance is the next important thing one must consider so that in case of hospitalization requirement, one can afford good hospitals without worrying of too high cost. For example, a family floater health coverage for 2+2 family for Rs 3.5 Lakhs may cost around Rs 800-1200 per month, however, in case of hospitalization bill of Rs 2 Lakhs, 20 years premium can go in one shot.
Investment- Cost of services and education is increasing year on year at around 8% inflation. One wants to ensure that children education doesn’t get hampered due to loss of job or not getting proper increment in time. Finally, we want to ensure that we can live our normal life once we take retirement from job. Hence to meet the future expenses, we like to save enough from our current earnings so that future demands can be met. Investment is the subject that covers this aspect.
Hence, we like our readers to ensure that they are covered in each of the above aspect fairly. We can help in your financial planning. Please contact us for any help needed.