FINANCE SPECIAL.... 5 TASKS YOU CAN'T PUT OFF ANY LONGER

5 TASKS YOU CAN'T PUT OFF ANY LONGER





A recent study shows a spike in mortality rates in the 45-54 age group in the US. India is witnessing a similar rise in this age bracket. To avoid problems for your dependants, here's how to set your financial life in order at the earliest.

STORE PASSWORDS

As our financial lives veer towards the digital--banking transactions, income tax returns, utility bill payments, insurance premium payments and mutual fund investments--we are besieged by a set of passwords that only we have access to. Make a hard copy of all the user names and passwords, including your official mail, mobile apps, even social media accounts, and put it in a locker or any other safe place. If you have stored all these in a password manager (it keeps all your passwords in an encrypted vault and offers security against identity theft and fraud), note down its password and keep it safe. More importanly, keep your spouse in the loop.

BUY A CRITICAL ILLNESS COVER

With the rising incidence of illnesses like cancer and cardiac diseases, it's important to not just have health insurance, but also a critical illness cover. This is because such plans provide a lump sum on diagnosis of specified illnesses and ensure the availability of funds at regular intervals for long-term treatment, expensive medicines and rehabilitation. While a contingency corpus can take care of one-time surgery or hospital care, critical illnesses can wipe out most of your savings if you are not prepared. Ideally, opt for a cover of `25-30 lakh. It is available as a standalone cover or as an add-on with life insurance policies. These plans typically cover about 20 diseases and come with a waiting period clause.

COMPLETE YOUR PAPERWORK

One of the most tedious and shunned tasks is estate planning and documentation. It is, however, one of the most critical. Earmark a few days in a year for this task. First, prepare a will, clearly listing the heirs to avoid legal disputes. Next, prepare a list of all your acquired assets, ongoing investments and liabilities. Create a separate folder for each: bank deposits, insurance policies for life, health, car, as well as traditional plans or Ulips, small savings schemes, post office schemes, stocks and mutual fund investments, real estate deals, loan EMIs, among others. Make sure these have all the details, including dates of commencement and maturity, amounts, premium paying dates, etc. Keep your spouse in the know and deposit these in a bank locker.

APPOINT NOMINEES

This crucial task is disregarded by most people as they consider it dispensable. However, appointing nominees--while opening a bank account, buying an insurance policy or investing in stocks or mutual funds--makes the process of passing on benefits or assets very smooth. Though a nominee is technically just a trustee till the investments are passed on to legal heirs, it reduces the hassle for family members and does not add to the emotional trauma.

COVER YOUR LOANS

If you are servicing a big loan, say for a house, at the time of death, it could saddle your dependants with a huge burden. To avoid this, make sure that your life insurance covers all your loans as well. A term plan should ideally be 8-10 times your annual income to replace the lost income and take care of the day-to-day and future needs of your family. To this, add the value of all the loans so that these can be repaid easily. Another available option is a plan that only covers loans. Here, the cover amount reduces in line with the loan

Riju Dave ET 8MAY17