The coronavirus pandemic has unambiguously shown that life is unpredictable and sudden medical emergencies can affect our physical and mental health, apart from throwing our finances in jeopardy. During this pandemic, many households have been struggling to deal with the loss of their loved ones to the disease. This has taught us to immediately put into action a contingency plan to remain financially prepared to deal with future shocks, be it cancer, a liver problem, or any other critical illnesses. So how do you prepare for such emergencies?
The first step is to get insurance cover to ensure you have the financial means to tackle the challenge. Follow it up by building a fund that you can dip into in times of medical crises, without altering the money flow to your pre-set goals.
1. Insurance
Get health insurance as well as life insurance.
Health insurance: Given the rising cost of healthcare in the country, it is necessary to have a health cover that gives you adequate protection for critical illnesses. For those working in the private sector, most employers provide health coverage to their employees. However, it's wise to have a separate insurance policy, so that if you are faced with a job loss you will continue to have your own protective shield when the company insurance will cease to exist. You can start with a Rs 5-lakh cover and as you grow in your career you can top-up the plan.
Life insurance: Every earning person should have a life insurance cover to ensure their family is adequately and financially secured in case of an untoward incident happening to that person. It is a contingency plan that is solely aimed at securing your family.
2. Create an emergency fund
Initiate creating a separate fund to deal with medical emergencies in the family. One you have planned to do that, it is important to figure out how big your fund should be. It depends on what sector you work in. If you are working in a booming sector, say IT, then you can increase the size of the corpus. Also, ensure that you can have access to it at short notice. A long-term investment vehicle with lock-in periods is not ideal for emergency funds. Fixed deposits and short-term investment instruments are good examples of building a corpus for future emergency needs.
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