It is hard to specify how 2020 has impacted our lives. As we begin 2021, on a hopeful note, with the news of vaccine and the decline in daily cases of the infection in India, let us take a look at how the pandemic has impacted the investing and economic aspect and the lessons that investors should reap from these moves.
Health insurance is neither luxury nor unnecessary expense :
One core lesson to learn from the pandemic could be, understanding the importance of having sufficient health insurance. Before the pandemic wreaked havoc in our lives, only a handful of people took health cover seriously, happy with the group insurance cover from their employers. But group insurance usually vanishes when a person is fired or quits from his job. You ought to buy health insurance on your own.
Another important fact to note is, the hospitalization bills of many patients of the infection in private hospitals have increased to lakhs of rupees. Which means an Rs.4-5 lakh cover won’t be sufficient unless you are a single individual. A family of four would require at least Rs. 10-15 lakh. Also, individuals and working professionals should stop seeing health insurance as a secondary expense and should treat it as an essential product they must be at any cost.
The transmission of the infection has also made us understand the frailty of life. It’s really sad to realize that a pandemic of this level was required for people to understand something essential. A survey by a life insurance company in India shows the increased anxieties related to unemployment, food insecurity and untimely death of the earning member of the family.
Hope it will drive people to make the right decisions when it comes to purchasing health cover. Though some individuals think pure protection term plans are a waste of time and money because they don’t deliver anything back on retirement, these affordable plans are probably the best way to take health cover.
Always maintain emergency fund :
As we all know, COVID-19 caused many to lose their jobs. The ones who didn’t lose their jobs experienced huge salary cuts. Those with heavy money commitments such as loans and EMI suffered the brunt of the problem. Thankfully, the RBI declared a moratorium in May, providing temporary relief for borrowers. The important lesson for borrowers, like everybody else, is to ensure you keep an emergency fund.
Even if your overall financial position seems safe and sound, unpredictable events such as the pandemic can upset the beehive. Always make sure you have sufficient money parked in a bank depositor in a liquid fund that can be readily reached. The general rule of thumb is to readily have at least 5-6 months of expenses.