Suddenly over the past few months, there is so much talk about

  • the Economy of the World shrinking;
  • the GDPs degrowing and
  • Earnings & Savings getting depleted.

Alas – The invisible adversity, named COVID, has thrown light on how precariously we were living with finances. Overnight, there were lot of behavioural changes –

  • What we considered luxury became non-existent,
  • What we considered normal became hard to get by,
  • What we considered basic became the new normal.
  • We started to live with, what we call ‘essentials’.

What are the financial essentials?

As the old saying goes, Return of Capital became more important than Return on Capital! Every chapter in life has a ‘Moral of the Story’ and what did Covid teach?  Essentials are the essence of life!!

Let’s look at some Essential Financial Priorities in the current situation – just as the human body can’t live without heart and veins, our finances need to have a HEA.R.T too, else it all goes in vain.

HEAlth Insurance plans

Data reveals that there is a sudden clamour for Health insurance policies everywhere. As if they never existed in the past and were discovered in the past few months, just like face masks, Health Insurance policies are much sought after in the Financial ‘markets’. Health Insurance was always a unique offering in the industry – there are stand-alone Health Insurance companies that offer it, there are General Insurance companies that also offer, so does Life Insurance companies.

There was never a dearth in the supply chain, but it was never the hot cake in the demand side. There are a lot of innovations in this product in the recent past – some of them actually excite, motivate and reward you for having an active lifestyle that will make you spring out of your bed every day early morning without alarms.

A good health insurance cover is a must have for every human being; the cover offered by your organisation must always be considered as an add-on because it is expensive to buy a health policy when you actually need it – be it due to old age factor or due to health issues developed due to lifestyle. Oh yes, like how millions do, you can get one just for Tax benefits and you will never regret the decision. Just make sure that you have adequate Sum assured that will last for a fortnight of hospitalisation in a Top-notch hospital in town.

R- Retirement plans

Investments in Equities as well as bonds seemed risky and the interest rates were going downhill. Gold was racing to the Top so swiftly that many felt it was too late already. Provident Fund savings are alone not enough to manage the life post retirement. Don’t count on that ULIP insurance or money back/endowment plan to give you adequate corpus – They are insurance plans and have different objectives.   Always look for products that the market doesn’t market much.

In the investment industry, there are 3 players  viz.,

  1. the manufacturer,
  2. the distributor and
  3. the consumer.

A good product balances the rewards for all the 3;  the best product loads it in favour of the consumer. Here are few tips:

  • Try searching for NPS – National Pension System – and you will not regret the search.
  • SIPs are a good way of building retirement corpus unless they are never broken until the retirement.
  • Also, there are multiple ways, means and products for saving towards retirement but the key is the concept of Asset allocation.
  • Remember to find an advisor, who will do minimum no of investment transactions but will put maximum energies in arriving at the ideal Asset allocation for you before that, is priceless!

T – Term Insurance plans

Investments are always a seesaw of risk and rewards – the higher the risk, the higher the reward. The biggest risk is to assume that everyone lives to see their entire life go as planned.  As Indians, most of us love to have our Gold/Diamond jewellery – as a celebration, decoration or asset allocation. We may haggle but never get the bill without making/wastage charges.  They are minuscule when compared to the product, and we grudgingly part with our money for it, since they are a part of that jewellery portfolio.

So are Term insurance in the investment portfolio – the only difference is that

  • the making charges do not come back at all,
  • there is a chance of a disproportionately higher return a term policy would give, should the policyholder take a journey of not coming back.
  • The premium paid towards the term policy must be considered like the making charges of the jewellery (investment portfolio) to get the perspective right.

Just imagine

  1. if one day you wake up and tell the world that you are tired of your jobs and are not going to work from today, and will live the rest of the life with your savings. Will this really work and do you have enough savings?
  2. Also imagine if someone does not wake up at all, does the family have enough money to comfortably for the rest of their life?

The Sum Assured in the Term Insurance policy is precisely that.

The HEA.R.T (‘HEA’lth Insurance, ‘R’etirement plan, ‘T’erm Insurance) is thus the FINANCIAL ‘ESSENTIAL’ EQUIVALENT IN COVID TIMES. Every other financial product is like the luxurious Car you drive during the lockdown – good to own, gives you a lot of comfort/pride but doesn’t take you beyond a point in your journey, called LIFE.

Take care of your HEART and keep it pumping – Coach Covid’s essential lesson is precisely that !  TAKE CARE…

Written By: Shankar Sundaresan

Comments ( 4 )

  • Ajay Kumar Sharma

    Nice article. Will take care of Financial HEART

  • Mathews

    Excellent write up that gives an insight about current situation.

  • Amal vinod

    NyC 1..🙂🙂

  • Sivaraja

    Article helps us in making sure our HEART is in the right place

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