I spent almost the entire month of December, 2016 in hospital. There was a medical situation which required me to be with the close family member as he was in ICU for more than three weeks.
This time spent there was an exercise in itself and apart from the agony, anxiety and insecurity associated, it was also time for some introspection.
It made me realize the importance of continuity-like BCP in our organizations, it is essential to have continuity in life, in case of an emergency.
The trigger – While filling up the Insurance claim form at the TPA counter, I came across a lady who was not aware about even the name of the organization her husband worked with, leave aside other details. She had two school going children and the husband, the only earning member, had suffered a paralytic stroke.
The Dictionary defines ‘Emergency’ as “a serious, unexpected, and often dangerous situation requiring immediate action”. This ‘immediate action’can be better controlled, to an extent, by some planning and the sooner we act, the better it is.
These are certain aspects which might help us in initiating an action:
1 The ‘Why’ – No one ever thinks about anything going wrong with him/her or a family member and thus plans for future with respect to long/short term investments which would yield good returns and help in achieving life goals.
· Life goals would mean kid’s education, house, car, celebrations etc. However, in absence of an effective plan, a medical emergency can derail all your long term goals by eating into the investment corpus.
· Medical costs are quite exorbitant – (our first week’s expense was close to five lakhs) your employer’s medical cover takes care of only the hospital expenses (full or partial). Think about other aligned expenses – medicines, travel related cost, post hospitalization check up, multiple visits to the doctor etc. These would be totally from your pocket.
· What if the medical situation/illness is prolonged and you have to go on an unpaid leave for a month? Loss of job due to the illness is a scary, but realistic possibility as well.
· Creating a life continuity corpus would enable us or our family members to carry on with a normal life from a monetary standpoint in case of a medical emergency.
2 Creating a corpus – there cannot be a formula for calculating a particular amount for everyone. As a general rule, three to six months of house hold expenses is suggested as a corpus. In case of a family where there is a single earning person, factors to be considered will be different from a family where both are working.
· The amount thus arrived at can be accumulated and put in either a joint account or an account in the name of the spouse (the way it works for you).
· We generally live from salary to salary and thus most of the EMIs and other payments are taken care of through the salary account. Link this (corpus) account to the salary account, so that in case of any disruption, funds can be immediately transferred to the salary account.
· Creating this corpus would need effort and can take time as it would require you to tweak certain expenses and change your lifestyle, at least in the short term. Be disciplined.
3 Inform and teach– there is a lot of focus in the modern workplace on open culture, information dissemination and communication. Though in our personal life we ignore this important aspect.
· Create a list of expenses and categorize them with respect to the frequency (monthly, quarterly, or semi-/annual).This list should have items like house rent, home/auto/personal loan EMIs, utility bills, in case of school going kids, their fees, day care or private tuition fee etc. It should have details like date, account/s or cards from which the payments are being made.
· In households with double income, mostly, one person saves and the other one takes care of all the expenses – in such an arrangement, the other one should know all the details regarding the regular transactions. It would be better if monthly expenses for essentials/utilities can be automated.
· It is imperative that the spouse is aware about how to operate bank accounts and conduct other financial transactions (online and mobile banking is easy & user friendly) Ignorance is no longer bliss.
4 Invest in relationships In case of a long illness or hospital stay, family and office support would go a long way in taking off at least some pain.
· In times of need, your subordinates and bosses are all equally important. It helps if you share a good rapport with your colleagues and if you are a good people’s person.
· For those who consider relatives and neighbors as always intruding and are of the view that staying independent is the way of life, it is time to rethink. In tough times, you realize the importance of support from family, relatives and friends.
5 Take stock of your finances regularly-Take some time out to review your finances (at least annually) and align with your current life situation.
· Make the pending (if at all) payments,basis above assessment and discontinue others which are not yielding any benefits (your Life Insurance policy for 3-5 lakhs for which you are shelling out INR 25-35,000 per year today would be worth nothing in 10-15 years from now)
· If not a Term Plan, buy a health cover for the entire family. This would be a step in the right direction and will definitely make you stress free to some extent. (some of my friends cite a selfish reason for not buying a Term Plan-‘if we will not be there, what’s the point in taking a hefty cover’, they ask. However that’s beyond the scope of this article)
6 Go for a health checkup today. Even if you are in early 30s, do not ignore- spending between INR 5 – 8,000 today for a checkup is obviously better than landing in an uncertain situation where spending a few lakhs would become a necessity.
Life is uncertain and full of challenges – a few controls can ensure peace of mind and provide the much required continuity.
For some of us, 2017 has just started. For others, we are through with the first month and left with only eleven months now.
Plan well, but execute !