With the world undergoing a rapid digital transformation, it is time for a new financial immunity blueprint that you should have in place. After all, with the speedy transition to a digital age, why should you be left behind? It is time to work on building financial resilience for yourself and your loved ones in this new era.
Financial Immunity in Today’s Times – How It Presently Stacks Up
Creating financial immunity for the entire family is not complex in recent times, with several available options. In fact, an SBI Life Insurance study with Deloitte also found that there were massive gaps in the financial readiness/preparedness of consumers in India. This study examined 5,000 people throughout 41 Indian cities and found that 71% of those who are uninsured now understand the requirement of proper insurance coverage to achieve financial immunity. 83% of those insured also understand the vital role played by this coverage in making them financially resilient.
While 68% feel that they are suitably insured, only 6% are actually adequately insured in the country. Furthermore, 46% of insured individuals have surrendered their life insurance plans over the last five years. Consumers are no longer bothered about medical costs and are mainly worried about increasing living costs and inflation, with 37% associating financial immunity with multiple income sources and 41% looking for a secondary income source.
According to the study, about 52% of the country’s annual household income is allocated toward building resilience through savings, life insurance, health insurance, and other investments. However, this still leaves a major chunk of the population either financially vulnerable to various situations or inadequately insured.
How to Build Financial Immunity
Creating financial resilience/immunity thus essentially hinges on the following aspects:
- Getting adequate life coverage – Your coverage amount should be a minimum of 10-15 times your gross annual income/salary. To do it more thoroughly, first calculate the amount your family will need in the future to meet monthly expenses for a certain period, adding higher education, debt repayments (in case you have loans to pay), and other costs to this figure. Then subtract your current assets and savings from it, and you will find the right coverage amount for your family. Try to get close to this figure without hindering your affordability with regard to paying premiums. You can also widen the scope of coverage by including riders like terminal illness, premium waiver, accidental disability/death, and critical illness.
- Getting proper health insurance coverage – Your family should be suitably insured for healthcare costs, medical emergencies, treatments, hospitalization, and so on. Check the inclusions and exclusions carefully before proceeding.
- Investing for the future – Allocate investments into wealth-creation avenues like ULIPs (which give you both life coverage and investment returns) and child plans for the long term. Also, put some money into retirement or pension plans for the future.
- Spread out your portfolio – Along with the above-mentioned investments, keep some amounts for other investments like ELSS or mutual funds, stocks/shares, gold, PPF, FDs, and so on, based on your risk appetite and financial goals.
Keep these tips in mind to achieve much-needed financial resilience in the present era.