The Most Authentic Guide on Personal Finance and Investments

(Funny) Words of Wisdom : "My wallet is like an onion, opening it makes me cry." ~ Anonymous

Are You Adequately Prepared For The ‘Unforeseen’?

Risks are a part and parcel of anyone's lives. Most people live under the false impression that 'It won’t happen to me'. Therefore, they don't take adequate measures to prepare against the tragic incidents such as death, natural calamity, critical illness etc.

Apart from the mental trauma, these can play havoc with ones' finances.

Fortunately, a simple planning can go a long way in protecting you and your family against hardships in many such unfortunate events.

The emotional and mental trauma, of course, is something which can never be quantified or protected or relieved. But, one can at least take protection against the financial hardships, which usually accompany such situations.

1. The Risk of Medical Ailments
While medical advances have been able to save lives from many diseases and increased the average life expectancy, the changing lifestyle has resulted in many new medical problems. Besides, the costs of medical treatment is ballooning day by day. Therefore, a Health Insurance Policy is a must for everyone.

Today many such policies are available, which are highly economical when compared to the exorbitant medical bills that we often have to bear.

There is also, of course, the tax benefit available for the premiums that you pay.

2. The Risk of Untimely Death
Terrorism, natural calamities, accidents etc. resulting in the untimely death of the breadwinners is a traumatic experience for the family of the dependents. You can help your family by taking adequate life insurance.

In this regard, go for the TERM Insurance Plan only. As has often been mentioned, this will be the simplest, cheapest and the best form of policy for insuring your life, for a reasonably large and meaningful cover.

Another associated risk is of disability, either temporary or permanent, due to accidents, which also have become very common give the condition of our roads and the rash driving. This risk can be covered through an Accident Insurance policy. This too is quite cheap and won't affect your finances much.

Don't let unpleasant surprises threaten you and your family.

3. The Risk of Loss of Earnings
Another common risk today is of losing one's job and hence the earnings. This, together, with the increase in life expectancy, means increase in the non-working years. Hence, financial security is becoming increasingly important.

There are no insurance policies against such a risk.

Therfore, we have to build our own protection plan which suits our circumstances — through proper financial planning. This involves working towards a suitable corpus as early as by the age of 45-50, which can become a source of income, in the eventuality of (forced) early retirement. 

4. The Risk to Physical Assets
Fire, terrorism, theft, earthquakes etc. expose your physical assets such as house, jewellery, electronic goods, furniture etc. to risk.

Such risks to your physical assets can easily be protected nowadays through the Home Insurance Policies.

The premiums for such insurance policies too are quite nominal. Such costs won't bother you much, while providing you peace of mind.

5. The Risk of Home Loan
In the last few years we have seen an explosion in people buying homes, which are mostly financed by way of home loans. The amount runs into lakhs of rupees and the repayment term around 15-20 years.

Both these high amounts and long repayment periods pose a risk. Should anything go wrong and you can't repay your loan, you could risk losing your house.

You can either opt for a suitable Home Loan Insurance policy to protect yourself against such liability. Alternatively, even a simple Term Insurance Policy equivalent to the loan amount would also adequately serve your purpose.

It is true that all these protection measures will involve some costs. But these costs would not add-up to more than what you generally spend on the weekend dinners / movies or your vacations every year. Moreover, they are essential given the increased uncertainties in life.

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