The COVID-19 pandemic is unlike anything the world has seen before. Ever since its outbreak, there has been an influx of information about preventive measures one must observe to remain safe. As much as everyone wants everything to be back in control, there are still multiple questions to be answered.
In such uncertain circumstances, building financial immunity is just as equally important as maintaining physical immunity. As you navigate through this crisis, the pressing need is to ensure the financial security of your family. Your financial well-being can help you fight through hard times with ease.
Here are some ways you can use to build your financial immunity during the COVID-19 pandemic:
- Reassess your present budget: The pandemic has made one thing clear; you do not need much to live a happy life. You can do well with the basics. Hence, to ensure you sail effectively through this tough time, you should reassess your needs and wants and create a budget that adequately meets your requirements.
You can cut down the budget for eating out, traveling, etc., and instead, save more for medical emergencies such as the COVID-19. The objective is to spend consciously and save more for rainy days.
- Create an emergency corpus: An effective way to build financial immunity is to create an emergency corpus for rainy days. Now, even more than before, it is critical to create an emergency fund. Ideally, you should have at least three months of your daily expenses as a reserve for tough times.
You can keep aside your emergency savings in an easily accessible medium such as ULIP investments. ULIP plans come in with a lock-in period of five years, which allows your reserve money to grow significantly. This can come in handy during tough times. Moreover, after the lock-in period expiry, you can withdraw your ULIP policy money without paying any ULIP charges.
However, if you wish to take funds before five years, you will need to pay specific ULIP plan charges and will get a surrender value. Alternatively, the best ULIP in India offer an SWP (Systematic Withdrawal Plan) feature that allows you to withdraw funds from your ULIP plan at a regular interval to create a reliable source of income.
- Invest wisely: It is not wise to rely on a single income source. This has become even more evident during the current pandemic situation. You need additional help to stay financially immune. For this purpose, you need to create a financial plan that has a variety of safe investments.
You can trust ULIP investments to be your safe bet at all times. In the concept of ULIP, a part of your premiums is invested in market-linked funds, as per your risk tolerance and financial goals. The remaining part of your premiums is used to provide a secure financial cover for your family. This dual benefit offered by ULIP plans gives your family financial security in your absence as well as helps you build wealth in the long-term through high ULIP returns.
This is an ideal time to invest in a ULIP plan because you need insurance for your family and good returns to sustain your lifestyle expenses. Further, since you can choose a ULIP investment fund as per your risk preference, it becomes a quintessential asset for financial immunity. For instance, in market volatile times such as the COVID-19 pandemic, you can invest more in bonds to get safer returns without risking your capital.
- Opt for a comprehensive insurance policy: Uncertain times like the COVID-19 pandemic stress the need for a comprehensive insurance cover. An insurance policy safeguards your family in case of your absence. Hence, if you do not have health insurance or a life insurance plan, buying one is another prudent decision you must take immediately.
There are different types of insurance plans you can choose from. If you want a pure insurance plan, consider investing in a term policy. However, if you prefer insurance along with market-based returns, you can opt for the best ULIP in India. ULIP plans give you a comprehensive insurance cover along with investment in funds as per your risk tolerance.
Moreover, buying insurance is not only beneficial from a security point of view, but it is also advantageous from a tax perspective. The premiums you pay for your ULIP policy are exempt from tax under Section 80C. Further, the death benefit and the maturity proceed also enjoy different tax benefit under Section 10(10D), subject to some conditions. A good insurance plan can reduce the monetary pressure during stressful times like the COVID-19 pandemic.
The last year and the present times have been testing for everyone around the world. With the new normal seeping in, anxiety levels have been redefined. However, one thing you should remind yourself of is that there are a few things you still have under your control. You can be a responsible citizen and take good care of yourself while following all COVID safety protocols. Further, being cautious of your finances, understanding money management, and choosing the right financial tools for investment in these unprecedented times is even more crucial to tide through the pandemic. Along with physical immunity, you must build financial immunity too.
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Conclusion
It is time you start focusing on boosting your financial immunity and taking the right steps to financially safeguard the future of your loved ones. With the above tips, you can easily create a failproof financial plan to help you navigate grave times like the COVID pandemic. Once you are financially secure, you will be stress-relieved and much-adequately prepared to tackle difficult times.
Chirag Iyer BFSI Enthusiast
Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing