Like most of my blog, the title of this article is also inspired by Bollywood. Bollywood and Finance has always attracted me as there seems to be a lot of commonality in them. Both of them have lots of action, drama, hasi mazaak(Highs) and rona dhona (Lows) etc. Well as it is said that most of the stories of Bollywood movies are inspired from our day to day life, I thought of writing an article inspired by a famous movie title. Coming back to the point, through this article I would like to share how an individual can be free from financial trouble and that’s when they can say “Main Azaad Hoon”. Here we go:
The First thing one should do is to take a Life Insurance policy. This is the simplest and most economical way to ensure that your family future is secured and that they are free from any kind of financial trouble, even when you are not around. The number of policies don’t matter; what matters is the amount of insurance one has opted for. Well, there is no definite amount but as per thumb rule one should have at least 10-12 times of his/her annual income so that one’s family can continue to maintain the same life style. Having a life insurance becomes even more important when you have liabilities like a home loan or a business loan because here the money involved is very huge and can take away your lifetime savings. I won’t talk much about having a life insurance as I have already shared in my previous article the need and importance of it.
Second is to have a health insurance. Do you know that hospitalisation for ONLY 1 disease can take away our years of savings? Sharing few numbers as food for thought:
- One of the fastest growing illness in India is Cancer and the treatment cost can be anywhere between INR 8-10 lakhs
- In India, 1 out of 10 people suffer from some chronic kidney disorder. A kidney transplant costs around Rs. 7 lakhs whereas dialysis can cost you anywhere between INR 18,000-20,000 per session
- 25% of deaths in the age group of 25-69 are because of heart disease. The treatment cost here can be anywhere between INR 5-7 lakhs
- Hospitalisation cost in case of Covid is anywhere between INR 2-3 lakhs per person. The biggest problem here is that in case of Covid, multiple family members can get infected and may need hospitalisation. This will increase the cost highly.
Don’t think of the annual premium as expense but it is a small amount for peace of mind and safety of ourself and our family members.
In case you don’t have a health insurance, you should apply for one immediately and in case you have a health insurance, ensure that its good enough to cover the hospitalisation cost. If you already have insurance and the cover is not enough, you can opt for a “Top Up” plan instead of applying for new insurance policy. Top Up plans can provide a very high cover at a very low cost. A floater “Top Up” plan of INR 10 lakhs should not cost you more than INR 5000-6000 on an annual basis.
Third is to keep aside a sum of money which can take care of your day to day expense for next 3-4 months. This can be kept in bank Fixed deposit or in a Liquid fund / Arbitrage mutual fund.
It’s when one does all the above 3 actions i.e. Life Insurance, Health Insurance and creation of an Emergency Fund, that one is truly free and can proudly say “ Main Azaad hoon”. One can then start investing in which ever asset class suitable as per one’s risk profile. It can be Equity, Debt, Gold, Hybrid etc.
“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” – Suze Orman
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