Contingency Plan refers to the money you keep aside to meet unexpected emergencies.
What it gives you is the peace of mind, that should there be any unforeseen event that leads to a stop in
the inflow of your monthly income, you would still be able to provide for your family. There will be no
panic-stricken running to arrange funds after the emergency has already triggered and you will be able to
decide your further course of action on your terms.
There should ideally be three different parts of everyone’s emergency fund:
a) 6 months of expenses for the family. Make sure you include the monthly contributions towards
investments for future goals out here. This could be kept in savings account or liquid assets such as debt
mutual funds from where you can easily withdraw whenever required. The latter would also give you a bit
extra on the returns side though.
b) A Family Mediclaim Policy. You must have in place a cashless medical expense health insurance to
take care of all hospitalization requirements that may arise.
c) Life insurance. A pure term plan. Should in case a situation arise where you as the primary bread
winner of the family are not able to provide for them anymore, due to loss of life or a major physical
incapacity, the insurance proceeds will make sure that your family’s living expenses as well as the monthly
investment you were making are accounted for. While calculating the amount of money your life should be
insured with be sure to factor in expenses as well as investment that you were making for future because
most of the objectives you were preparing for will still need to be funded. A life cover to provide this
amount (out of returns from insurance proceeds reinvested in say an FD) will be a substantial sum of money
that only a pure term plan can provide at affordable premium.
It is absolutely essential to have an emergency plan ready to cater for any contingencies.
The three parts of the emergency fund mentioned above are absolute essentials. It is pertinent to note here
that you should not confuse insurance with investment, which is a very common error that a lot of us make.
Gravity Wealth Management helps you plan fund flow triggered by emergencies and follows through on payment.
For your peace of mind, that in the toughest of times, you would still have provided for your family.
We'd love to hear from you ! Just give us
a few details and hit "Call Me Soon"