personal finance Archives – Page 5 of 10

What if you are unable to work? Accident Disability Insurance

May 17, 2016 by Vipin Khandelwal

Rohit was driving back from Pune to Mumbai through the expressway. After crossing Lonavala, in the Ghats, the curves on the road become so sharp that sometimes you cannot see what’s around the corner.

Rohit saw the milestone. He was 70 kms away from his destination. Just then he happened to look at his speedometer, which was hovering at 70kmph. He could not help but smile at this sheer coincidence of numbers.

Rohit was crossing that part of the Ghats, which had a few consecutive turns. He crossed the first, the second as he turned into the third one he saw a huge trawler overturned, less than 100 meters away.

As a natural reaction, he pressed the brakes with all his strength, but it was too late. His car rammed straight into the trawler’s rear end and overturned.

The car’s engine was smashed, the wind shield was shattered and Rohit lay inside unconscious.

You are financially literate, so what?

April 28, 2016 by Vipin Khandelwal

Your financial behaviour can still be messed up.

The problem with financial literacy

According to Wikipedia, in a financial literacy survey:

In Australia, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.

This quickly summarises all that is wrong with financial literacy.

You may get a new tool, but you may not know how to use it best. Imagine yourself holding a knife from the sharp side.

Being financial literate is no guarantee that you would make the right money and investment decisions.

If that was the case, Chartered Accountants, MBAs (Finance) or commerce graduates would not be falling into all the obvious traps – buying ULIPs for investments, investing into real estate trying to become property moghuls, not realising the amount of interest they are paying on the loans.

Not to mention, you sent the concept of diversification limping down a one way street.

One of my clients aptly described his situation as, “The amount of interest I am paying, it feels like I am working for the bank.” Sigh!

Retirement Planning Calculator – revised

June 1, 2016April 20, 2016 by Vipin Khandelwal

Good planning depends on two things:

To have a goal
To establish a path to reach that goal.

Financial Planning is no different.

Once you zero down on your goals, you need to know what would it take to reach that goal and build an action plan.

One of such goals that everyone plans for is Retirement, or a more modern phrase, Financial Freedom.

Call it by any name (not quoting Shakespeare here), the purpose is the same – to know, how can you retire / achieve financial freedom as soon as possible.

Let’s use our retirement planning calculator to figure this out.

The Retirement Planning Calculator

Few months ago, I had shared with you an Excel-based retirement planning calculator. To say the least, it was a little simplistic. It only told you a constant amount that you need to invest every month.

What if you lived longer?

April 17, 2016April 17, 2016 by Vipin Khandelwal

“I want to retire at 50” Dinesh announced, “and then just enjoy life – reading, cooking, writing, everything that I always wanted to do.”

“That sounds like a plan Dinesh. But are you ready to do it?”

“Means?”

“I mean, are you financially ready to retire at 50?”

“I guess so. I am saving up enough that I can live carefree till 70.”

“How do you know you will live only till 70?” I paused. “What if you lived longer?”

“Well, no one in my family has lived beyond that age”, he winked at me. “Plus, isn’t that the normal life expectancy of a urban male in India”, he turned the screen of his smartphone towards me. The Census of India site confirmed the life expectancy number. I took his phone and read further.

“Do you notice here that the life expectancy has been continuously increasing over the years? There is a fair chance that you could go on to live till 80, 90 or even 100.”

“I don’t want to live that long.”

“I am not saying you have to. I am saying you may. In that case, will you have enough money to take care of you and your wife?”

This got Dinesh thinking. After a couple of minutes, he replied, “I don’t know.”

He looked at me and said, “You tell me. What would it take?”

What if you lived longer?

I had just been working on retirement planning for various life expectancy numbers. I opened my laptop and turned the screen towards him.

“Here, see this.”

What is Top Up and Super Top Up Health Insurance?

April 13, 2016April 12, 2016 by Vipin Khandelwal

In an earlier post I wrote about Health Insurance and what factors matter in selecting one. I compared 3 health insurance plans too – that of Apollo Munich, Max Bupa and Religare.

As you would understand by now, when you take a Health Insurance Policy, you are allowed to claim expenses against any medical treatments (as specified in the policy document) upto the amount of Sum Insured.

The question is what would happen if your medical expenses go beyond the Sum Insured. For example, you have a health insurance cover of Rs. 5 lacs. But for an unfortunate event that required hospitalisation, the medical bills ran upto Rs. 9 lacs.

Your health insurance would cover the expenses upto Rs. 5 lacs only. Where would you arrange the balance Rs. 4 lacs?

The simple answer is you would have to pay out of your own pocket, putting a dent in your finances.

Well, there is another solution to this problem. It is to buy a Top Up health insurance cover.

Buying Health Insurance – A comparison of 3 plans

January 21, 2019April 8, 2016 by Vipin Khandelwal

Updated version of this post is here. Buying health insurance – Comparison of 5 plans

I thought investing in mutual funds was a huge problem for you and me. Turns out I was so wrong.

Buying Health Insurance is a much bigger pain. I guess climbing the Everest would be easier. I don’t know from which planet did the creators of health insurance products come, but they have succeeded in scaring the hell out of us.

When the plans are presented to common janta like you and me, all I can feel is heads spinning.

Room rent capping, disease wise sub limits, waiting period for specific diseases and pre-existing diseases, co-payments, domiciliary hospitalisation, organ donor, emergency ambulance, renewals, no-claim bonus, refills, super top ups, top ups, vaccination, ….(stop for breathing…), how many things one needs to look at before deciding what makes sense?

I have spent over 24 hours (real hours) reading, talking and absorbing details on various health insurance websites and the plans they have to offer. Frankly, I am yet to recover.

Now I agree that there is a ton of useful material out there that already details what you should look for in buying health insurance. Even after going through those super helpful guides the evaluation of health insurance plans is simply no fun.

Anyways, after much dilly dallying, I decided to take the bull by the horns.