Here's one unexpected lesson we have all learnt from the ongoing pandemic, financial planning is imperative. While people often plan for the certain, their homes, cars, marriages, babies or even retirement, saving for the uncertain or unexpected isn't on most of our radars.
One cannot refute the fact that Covid-19, has created uniquely challenging circumstances for us all but also taught us that the future belongs to those who prepare for contingencies and unforeseen situations. As we make a conscious effort to fortify our physical and emotional health, nurturing various facets of our financial health has never been more important.
Taking lessons from this pandemic, it is worthwhile to understand how to maintain financial health, so we are prepared ahead of the next future uncertainty. V Viswanand, Deputy Managing Director, Max Life Insurance shares 4 simple ways in which you can nurture your financial health in uncertain times and be prepared for the future.
Stay insured, stay financially protected
The importance of life insurance and continued coverage during a pandemic is paramount. A robust life insurance policy can therefore be the first brick of your financial foundational ground. Apart from safeguarding the future of your loved ones and helping them lead a dignified life in your absence, a life insurance policy also acts as a savings instrument helping with a wide variety of life stage needs, from securing your child's future to wealth creation and retirement planning.
In addition, term insurance provides one with a larger cover at affordable premiums and offers a pure risk-cover policy to safeguard against future uncertainties. As per a recent study that uncovered the dominant consumer sentiment vis-a-vis financial protection during Covid-19 times, it was found that nearly 41 percent of digitally savvy, urban Indian respondents said they intend to buy term insurance to protect their family in case of the bread-winner's untimely death. Term plans are proven to be among the most cost-effective financial instruments available to hedge against future uncertainties, making them a critical form of life insurance one should consider.
Enhance protection by adding critical illness rider
Health implications of Covid-19 have perhaps been the pandemic's most overwhelming element. The same have taught us that medical emergencies can befall when we least expect, creating an emotional and financial upheaval in our lives and also in our families.
While conventional health insurance policies do cover hospitalisation expenses and reimbursements, the sum assured offered is rarely enough to cover the costs. The need for a Critical Illness Rider under life insurance policy that ensures a lump sum amount to the policyholder upon being diagnosed with any of the critical illnesses specified in the policy contract is therefore extremely important for one's family during these times. At a time when treatment costs are skyrocketing, a critical illness rider that helps against other expenses is crucial.
Invest in a savings plan
The above study also discovered that Covid-19 has driven digitally savvy, urban Indians towards proactive financial planning and is changing the savings and investment dynamics significantly. Not only resources now being directed more towards savings in comparison to basic expenses and investments, but the objective of savings is now focused on medical emergencies and providing for family in case of loss of job/business.
To be able to navigate during uncertainties better, it is worthwhile to invest in a comprehensive savings plan. A good savings plan is one that is safe and systematic. Typically, this is exactly what a life insurance plan does. Under such a life insurance plan one can ensure a dedicated corpus for future life goals such as education, retirement etc. by investing in a disciplined way over the long term, while also receiving life insurance cover against uncertainties of life.
One of the greatest learnings during these uncertain times has been to embrace savings as an important aspect of financial management. In preparation of a rainy day, it is vital to have savings set aside that can be accumulated over the course of months and used to battle unforeseen circumstances creating financial challenges.
Refrain from making hasty decisions
This is an unprecedented situation, that requires unprecedented decisions but without any panic. Given the current volatility in financial markets, it is likely that our investments may have been affected. In either case, it is important to refrain from getting worried and making hasty decisions as a kneejerk reaction to adverse circumstances. In fact, we must patiently evaluate the current investment strategy and if required, make adjustments to minimize the blow and recalibrate resources for a healthy recovery of our portfolio.
To be prepared ahead of the next uncertainty, it is important to make certain adjustments to our investments, savings, and protection priorities so that our personal finances are immune to any future crisis. By simply remembering that we are the difference in the lives of our loved ones, we can consciously make prudent financial decisions such that we are prepared to fight future uncertainties, have adequate coverage against any unpredictable risks and are able to ensure the goals and future aspirations of loved ones in a new world order following Covid-19.