Are you postponing these 5 financial decisions?

financial decision

It is always ideal that you practice a good discipline when it comes to your financial life and to do so it is imperative that you prioritize and set your financial life in order. Life is challenging and comes up with the most unexpected events at the most uncertain times. In order to avoid hassles for your dependants and to keep everything about your finances at ease, you should plan and set straight your financial life in order at the earliest. This article is to take you through those five decisions which help you understand the gravity of these factors and the necessity as to why it needs to be executed by you with priority.

Keep a record of all your passwords:

We are in an era where e-commerce and digitized finances have taken over the world, which is why it is highly recommended that a complete list of all the details of your credentials be made as a hard copy and stored in a safe and secure place. This could range from your internet banking ids and passwords, to your pin numbers and even your social media accounts. Storing all these credentials online, for instance like on a password manager, could also be an option.  This would help store all the data in an encrypted e-vault and prevent the theft or misuse of the information with a restricted access, but do remember to keep a note of the login details of that account in a secure place, in case of emergency. Above all, the most important task is that, you need to keep your spouse or your legal heirs informed about this.

Decide upon the nominees

This is a very crucial task which in most cases is disregarded on the thought that there is always time to do this and that there is no necessity to rush for it at the present. But, life, as we all know, can be full of surprises and it is only wise to decide and appoint nominees with immediate effect whenever there is a need to do so. For instance, it could be opening a bank account, buying an insurance policy or investing in stocks or mutual funds and deciding upon the nominees would only let the process of passing on the benefits or assets to the people nominated by you over a very smooth process. Though a nominee by a financial instrument is considered to be technically as a trustee till the investments are passed on to legal heirs, it brings down the hurdles in understanding your financials and their allocations towards your family members, thereby saving them from additional emotional burden and stress.

Buy a health insurance with critical illness cover

Should you be well prepared with a corpus fund, it sure can help you during those unexpected times of hospitalization, which is bound to happen very rarely, considering that you are lucky enough. But have you thought about those critical illnesses which could cost you almost your entire life’s savings? Even in the case of a one-time accident, it is only ideal that you are under a medical cover so that your corpus, which you have planned for your expenses post retirement, does not get affected. And in a world, where the probabilities of diseases like cancer and organ disorders keep rising, which again incur huge repetitive costs, it is very important to have a critical illness cover rather than having a simple health insurance. Plan ahead of time when you decide to go for these plans, as most of the insurance groups which offer these policies have a check on the age the person being insured during the time of buying the health cover.

Estate Planning

Completing estate planning and all the documentation and processes related to it is one of the most important tasks which should never be postponed. The primary task should be to prepare a will which would clearly mention the list of the legal heirs with all the necessary documentation and should be duly registered in order to avoid any legal disputes at later stages. Next, a well detailed list of all your acquired assets, ongoing investments and liabilities should be prepared with separate folders respectively for each one of them like bank deposits, life insurance policies for life, health covers, automobiles,  regular savings plans or ULIPs, small savings schemes, post office schemes, stocks and mutual fund investments, real estate deals, loan EMIs, etc. Ensure that all the details, including dates of commencement and maturity, amounts, premium paying dates, etc. of these are duly recorded in them. Most important – keep your spouse informed about these details and store them in a secure place such as a vault or a bank locker.

Plan about your existing financial commitments

If you are already paying a huge emi, for instance a home loan, then this could become a mental and a financial burden to your dependants at the time of your demise. To avoid troublesome situations as such, make sure that you enroll into life insurance plans which would provide covers to all your loans as well. When doing so, plan it methodically so that the term plan is at a minimum of 8-10 times of your annual income, so that it can replace the loss of income and would be able to take care of all the day-to-day and future financial needs of your family. To have this accommodated, add the value of all the loans which you have as commitments so that they can be easily repaid. Another method is to choose for a plan which would cover only your loans but it should also be understood that the cover amount would reduce in tandem to the outstanding principle of the loan amount.