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Have an emergency? Don’t break into your long-term portfolio.

If you are already doing a good job while being a regular investor and building a portfolio that serves you in the long run, you’re on the right track. But what happens if you have an emergency that can potentially become a monetary set back, do you withdraw from your neat long-term investment portfolio?

If you are already doing a good job while being a regular investor and building a portfolio that serves you in the long run, you’re on the right track. But what happens if you have an emergency that can potentially become a monetary set back, do you withdraw from your neat long-term investment portfolio?

You don’t have to, if you have covered contingency expenses. Here is how you can do that. 

Medical emergency 

This is right on top when it comes to emergency spends. Thankfully, there is an entire range of health insurance policies that one can choose from so that any large unanticipated hospitalisation expenses are covered. What it does is take care of heavy pre and post hospitalisation expenses. Some even cover preventive health check-ups. It is no secret that medical procedures are only getting costlier; hospitalisation even for 2-3 days can mean an expenditure running into a lakh or more. 

On the other hand, annual premiums for comprehensive medical insurance policies are much lower; for someone in their 30’s its unlikely to cross Rs 10,000 per year for a medical cover of up to Rs 5 lakh. By taking this on, you have a contingency plan in place. Family floater plans, enable you to cover up to four members in your family under one umbrella cover. In the event that you have a medical emergency, the insurance pay-out kicks in and you neither have to dip into your long-term investments and, more importantly, nor do you have to take a loan.

Home emergency

Did you know you can cover for home damage and protect yourself against large expenses for fixing damage caused by calamities like earthquake and fires? Separately, you can also get the ‘stuff’ in the house insured for damage and theft. The latter is available for home-owners and tenants. Home insurance annual premiums can be between Rs 5000-10,000. This is much lower than what it can potentially cost if a home related emergency expense does come up.  

Other contingency covers like motor insurance including third party damage, are critical to separating large spends linked to factors out of your control. However, one more thing that you can actually control is creating an emergency or contingency fund.

Contingency Fund 

Other contingency covers like motor insurance including third party damage, are critical to separating large spends linked to factors out of your control. However, one more thing that you can actually control is creating an emergency or contingency fund. This is just money accumulated over time and put aside in safe and stable return financial securities which you can access at any time. Job loss for example, is a reality in today’s times. If you have a family dependent on you, school going children and loans to pay back, a job loss really is an ultimate emergency. If you haven’t already started building that emergency fund, start right away. 

These are just some suggestions to ensure that you are able to cope with life’s unpredictability without sacrificing long-term wealth creation. Both the future and the present have to be managed in a balanced way and thinking through contingency covers is one way to manage the monetary impact of unanticipated emergencies. 


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