Most families do not have the discipline of analyzing their financial portfolio and discussing where they are, what they need to do, how to go about, etc. If you are one of those, I am sure you are not alone.

I urge you to please set aside some time, at least once a year, where you and your spouse need to do some serious portfolio analysis. To help you get started, here is a check list of what you should be discussing.

What are the assets you own under various categories – Total it up – this is Total Assets

• First Home, Second house, third house, etc - take current market value

• Any vacant lands – take current market value

• Shares – take current market value

• What is money left in PF

• What is the money invested through Mutual Funds

• What is the money invested in Insurance (this is NOT policy value – this is money if you have saved up over and above your premium for life cover)

• Any Fixed Deposits you have

• Value of gold/silver you may have (usually diamonds and other precious stones are not taken into consideration)

• Any long term bonds, etc.

• Other minor assets like furniture and fixture, car, etc. – put depreciated value

What are the liabilities you have – Total it up – this is Total Liabilities

• Money you owe to pay for the loan towards purchase of apartment, home

• Money you owe towards purchase of car, furniture, or other

• Money you owe to credit card company

• Money you owe to other people (may be borrowed from friends and family)

Total Assets minus Total liabilities = Net Worth.

You need to know if this ‘Net Worth’ is enough. You need to answer the following questions.

• Are you saving enough money for your children’s ‘big expenses’ like college education, and marriage expenses? How much time you have till you hit ‘big expense’?

• Are you saving enough for life after retirement? Plan for at least till you and your spouse are 85 years old

• Can one of you afford to take early retirement and still enjoy the same lifestyle?

• Is there any other ‘Big ticket’ expense that you foresee?

• The most difficult question to ask - What if something happens to you (or your spouse)? Either death or permanently disabled? In such a case,

  • Do you have enough ‘net worth’ to run the family without borrowing?

  • Do you have enough life insurance cover which would give you the money required to run the family?

  • Will you be able to pay for ‘big expenses’ like children’s education and marriage?

You and your spouse need to do this exercise together so that responsibilities can be jointly taken

Good Signals - The following are considered good signals indicating sound financial position

• You have life insurance cover that is at least 10 times the annual gross earning with disability rider

• You are saving at least 30% of your post tax money

• Your investments are diversified into stocks, bonds, gold, insurance, real estate, etc.

• You have health insurance along with critical illness cover for you and your family

Bad Signals – If you have any of the following, you need to do serious financial planning

• You owe money to the credit card company

• You owe money to your friends and family

• Your overall money owed is more than 30% of your post tax earning

• You DO NOT have life insurance cover that is at least 7 times your annual gross earning

• You DO NOT have money saved up for ‘big ticket’ expenses like children education or marriage

Our site www.easyinsuranceindia.com has the following calculators to help you plan your finance better.

Retirement Calculator – Helps you to calculate how much money you should be saving to have a comfortable retired life

Human value Calculator – Helps you calculate how much life insurance cover you should have at any time

Inflation Calculator – Lets you calculate how much money you would need in future given the amount in today’s value.

Compounded Fund Calculator – Lets you calculate how much your investment today would grow in future at a certain interest rate

EMI Calculator – Lets you calculate the equal monthly installment on borrowings

May your portfolio be filled with good signals.

If you have any questions, write me back.

www.easyinsuranceindia.com

In South India, many communities celebrate the 60th and 80th birthday of a man by conducting wedding like event with his wife (no, he does not get a new bride) to celebrate the time the couple had spent together. Living till 60 must have been considered a blessing back when this tradition started. I had the pleasure of attending such one 60th birthday event last month. There were about 100 people seated in the audience. Believe it or not, 72 of them were actually older than the couple; about a dozen among them were 80+ with walking sticks. I was not sure if it really was a 'blessing' to live past 80… Physical problem is one thing, but if you also have to deal with financial problem, it would certainly not be a 'blessing'.

Think about it! If we retire by the time we are 60, in all probability, we and our spouses would all end up living another 25 years if not longer. This requires some serious consideration!!

Here is a fact: My doctor used to charge me Rs. 50 each time I visited her 20 years back. Today, she charges Rs. 200 for each visit. That is roughly about 7.2% inflation rate. If I apply the same rate, in another 20 years, she would charge me Rs. 800. So, let us say, my monthly expenses are about Rs. 25000 today, in 20 years, I would need nearly Rs. 100000 at 7.2%. We have an inflation calculator in our site.  You can access it to do your own calculations:  Visit http://www.easyinsuranceindia.com/inflationindex.do

I don't want to panic you. But, please make sure that you save up enough to have a peaceful life upon retirement. Save some money in real estate, some in safe insurance based plans, some in PF, etc. If you have a fairly decent knowledge on the stock market, then ULIP based pension plans are not a bad option. If you are below 40, invest a bit aggressively; if you are between 40 - 50 play somewhat conservative; and beyond that play very safe. No matter how old you are, you are never too early to start planning for retirement.

Money is not the most important thing in life if you have it, but it is the most important thing in life if you don't have it - I don't know who said that, but it is so true…

Wish you and your spouse a peaceful, happy journey into your retired life.

www.easyinsuranceindia.com

In insurance parlance, 'Critical illness' is classified as those illnesses that, even after treatment (if at all), the disease alters the lifestyle of a person drastically. Take for example, cancer. Whatever the kind of cancer it is, even after getting cured, the person who is affected by that disease can never really be as 'normal' as he/she was before. 

To begin with, there is huge medical cost for treatment (depending on how advanced the disease is) and the expense of routine medical check-up. Plus, depending on how much the patient is affected, he/she may or may not be able to pursue the career in the same pace as before so there is potential loss of income. In essence, not only the savings could be wiped out, the earnings could come to a grinding halt. 'Critical Illness' policy came about to protect families with cash benefit under such situations. 

I am hoping that most of you, by now, have at least some Health insurance policy that protects you and your family against the financial burden that could arise due to hospitalization of any of the family members. 

For a normal healthy family of 4 with the oldest person, say about 50 years, we may think, a health insurance policy for Rs. 500,000 is sufficient. But, what if, one of the members is suddenly diagnosed of cancer, or some organ failure. The Rs. 500,000 is simply not sufficient to take care of the medical expenses arising out of such illness. At the same time, it is absurd to be paranoid about all the possible ailments a person could have and get a health insurance policy for, say, Rs 1 Crore. 

So, the ‘Critical illness’ policy is something one can purchase as an additional cover to take care of major illnesses. Each insurance company has a different list of what it considers as critical illnesses. When you purchase a 'critical illness' policy, what the company is promising is to pay a lump sum of amount if the insured person is diagnosed of any one of its listed critical illnesses, provided the insured lives at least 30 days after being diagnosed with that illness. The idea is that, hopefully, with the additional money, the insured is in a better position to handle the ailment.

The 'critical illness' policy generally comes as an optional cover with health insurance or life insurance. There are also companies that let you purchase this cover as a separate policy. 

Let us say an individual of 50 years is purchasing Health insurance for Rs. 500,000 at a cost of about Rs. 11,000. If he/she also chooses to add the optional 'critical illness' cover for another Rs. 500,000, then that option would cost another Rs. 3,900, thus the total policy premium would be about Rs. 14,900. 

If your employer already has health insurance for you and your family, you have the option of purchasing critical illness cover alone separately. This may cost about Rs. 6000 per year for the same age and cover. 

Under life insurance policy also, Rs. 5 lacs of critical illness would cost about Rs. 6000 for the same aged person. 

Points to consider when investing in critical illness cover: 
Understand your own family history to determine the risk of inheriting the same
Understand your own lifestyle (food habits, physical exercise, stress level, etc) to determine the diseases that you are prone to
Look for policies that cover the critical illnesses based on your self assessment from the two points above plus other most common and complete list of illnesses
See if it covers almost all the heart diseases that you can think of: bypass surgery, first heart attack, coronary heart disease, heart valve surgery, etc. since much more Indians are prone to heart diseases
Understand the type of claim settlement: Is it a lump sum payment on diagnosis (or) is it payment of medical expenses
The age at which the company stops renewing critical illness policy


Email me if you need any more information. or If you are interested in taking a health insurance policy please CLICKING HERE.

www.easyinsuranceindia.com

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1.Is my family dependent on my income? If I were to die, would my family come to streets?

2.Do I have huge loans to be paid like home mortgage or other loans? If something happens to me, would my family lose everything in order to pay those loans?

3.If something happens to me, my family would not come to streets but they definitely have to cut down on a lot of comforts they enjoy now.

4.My children won’t be able to pay for their higher education if something happens to me and they would have to settle for inexpensive educational options

If your answer is ‘Yes’ to any one of the above questions, then you must, at least, take the least expensive insurance, which is Term Life.

www.easyinsuranceindia.com