Greeting To Our Readers!
When people’s income increases, their lifestyle changes. They look towards modifying their standard of living, like moving to a bigger house, changing cars and gadgets and many other expenses. This is normal and there’s nothing wrong with it.
But from a financial point of view, these are right only when along with it people look towards enhancing their investments and insurance as well!
Experts advise, do review your investments and insurance on events like, when you receive income increments, or when you add one more dependent (like spouse on getting married or having a child).
Let us see about these in detail!
Life Events Necessitate Reviews……….
Life events such as marriage or having a child increases the number of dependents, which calls for a review in your investments, life insurance, and health insurance as well.
For Health Insurance Review, at the time of renewal, do two things, add the new member in the plan and increase the sum insured. You can also consider opting for a family floater health insurance cover at the time of member addition.
For life insurance review, you should increase the term life insurance cover by the present value of your child’s education expense, to make sure that the insurance takes care of your child’s education in case of your untimely death.
For investment review, if you are investing for retirement, then reconsider the retirement money, as now you do need to accumulate for your spouse. Also, once you have a child, you should start saving for the kid’s higher education. So, you need to top up your investments accordingly.
Review As Per The Additional Liability………..
When you take a home loan or personal loan, automatically your monthly fixed expenses will go up to the extent of the EMI. So, you should gradually top up the contingency fund with an amount equivalent to 3-6 months of EMI.
Even if you have term life insurance, you should increase your cover to the extent of the home loan so that this liability can be repaid immediately in case of your untimely death.
The balance proceeds from life insurance can be utilized for your family’s ongoing expenses and other financial goals. So, you should simply increase your term life insurance cover to the extent of your home loan that you take.
Do Consider Inflation………..
Most of you review the performance of your investment portfolio regularly, but very few review the quantum of your savings. You should review your investments once a year and insurance cover every 3-4 years to see if they can beat inflation or not.
Let Us Sum Up……….
It is very important to enhance your investments and insurance periodically so that you do not overspend your incremental income and thereby do not remain underinvested and underinsured.
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For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).