Hello Readers!!
The Second Wave of COVID-19 has again put everyone in the same scenario we were in the first wave, and this time situation is more drastic. COVID-19 cases took a sharp surge in India, following which many states imposed lockdowns to put a brake on the chain spread.
Again, the impact of COVID-19 can be seen on the economy in its second wave. Again, the lockdowns imposed have impacted over 70 lakh jobs, taking the unemployment rate to a four-month high. If the situation of the pandemic continues like this, soon we can hear stories of this pandemic hitting individual finances again.
In all this, experts hope that there will be no repeat of extensive job losses and salary cuts similar to the previous year. At the same time, they suggest ways through which an individual can safeguard their financial health in these challenging times.
Boost Up Your Health Insurance Cover!!
The surge in several COVID cases, and new COVID variants, and mutants cases that are more infectious and dangerous, have made health insurance policy a prominent need for every individual. And those who already have health insurance cover, it's time for them to boost their cover plan.
A family floater plan of Rs 2-3 lakh will not be enough anymore. Enhance the cover to at least Rs 8-10 lakh. If you are one of those who depend on group insurance from your employer, then it’s time for you to buy a health insurance plan with adequate cover, because group health cover will cease in case if you lose your job.
Keep in your mind the Health Insurance Plans, comes with a waiting period, after the waiting period gets over, only then certain illnesses and pre-existing conditions are covered. So if you buy the health insurance policy now, you would have to carry out the medical and hospitalization expenses, till the waiting period get over.
Keep Cash Always Handy!!
There are certain charges for which our health insurance policy does not provide or provide less cover. Like, in COVID-19 times ambulance service cost is much above the normal rate. Currently, they are charging around Rs 8000 to 10000, while a health insurance policy generally reimburses only Rs 1,500-2,000 for ambulance costs. Also due to the shortage of beds in hospitals, some hospitals are demanding Rs 2-3 lakh upfront for providing a bed, this expense will hardly be covered by your health insurance policy.
For such expenses, keep adequate cash always ready. Parka good amount in Liquid mutual funds will have two advantages, your money will get good growth, and you can take them out anytime you require, without any penalty.
EMERGENCY FUND Is An All-Time Necessity!!
In the first wave of COVID-19, we heard many stories, in which the individual finances were hit badly, reason behind this was sudden job loss and no pre-preparedness for finances in emergencies.
However, in the second wave, the possibility of job loss and pay cut is not as remote as it seemed some months ago. In all this what an individual needs to do is prepare for such an eventuality by building an emergency fund. You should have enough money in a liquid fund or a bank deposit that can be accessed in an emergency. The thumb rule is to maintain at least 5-6 months’ expenses in such a fund.
Avoid Moratorium On Loans!!
Last year, RBI to ease out the pressure of EMI for outstanding loans, announced a moratorium on all outstanding loans. As expected by RBI, many people opted for the EMI holiday, totally unaware of its complications. And as result, these missed EMI payments resulted in outstanding amounts. The amount was so big that the government had to pay the compound interest accumulated due to the missed EMIs. So basically, this year if the moratorium is announced, it is suggested to consider the prominent points, and then go forward. And if possible, do not opt for it unless and until you really go out of cash to pay your EMI’s.
Do Not Land On Any Fresh Debts!!
This is also not the time to take on fresh loans. If you have loans going, don’t try and immediately prepay; take your time. Conserve cash as much as you can because you never know when you will need it. If you want to cash in hand, then go for other options instead of taking loans. Like if you are investing in mutual funds for more than 6 years, you can withdraw up to 50 percent of the balance at the end of the previous financial year. Or you can also go taking loans against mutual funds or health insurance policies, which are more helpful than bank loans.
Keep reading our articles for more updates on finance and investment!!
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).