I am 58 years old I am going to retire this monthend, my salary 40k and manage to save around 25k in sip regular growth and Lic, Mediclaim policy individual apart from company provided, want to join in Term Insurance company for further period. My daughter doing her final B.com.,and Son working in USA 27 years old. Pl advice me

Ans: Let's delve into the importance of health insurance and term insurance policies in securing your financial well-being:

Health Insurance:

Health insurance is a crucial aspect of financial planning, providing coverage for medical expenses arising from illness or injury.
It safeguards you and your family against the financial burden of healthcare costs, ensuring access to quality medical treatment without depleting your savings.
Choose a comprehensive health insurance policy that offers coverage for hospitalization, pre and post-hospitalization expenses, outpatient treatments, and critical illnesses.
Consider factors such as coverage limit, network hospitals, co-payment clauses, and waiting periods before selecting a policy.
Regularly review your health insurance coverage to ensure it remains adequate for your evolving healthcare needs, especially as you age.
Additionally, consider purchasing a health insurance policy with lifelong renewability to secure coverage in the long term.
Term Insurance:

Term insurance provides financial protection to your family in the event of your untimely demise, ensuring they can maintain their standard of living even in your absence.
It offers a high sum assured at an affordable premium, making it a cost-effective way to secure your loved ones' financial future.
Opt for a term insurance policy with a sum assured that adequately covers your family's financial needs, including outstanding debts, future expenses like education and marriage, and income replacement.
Choose a policy with a flexible tenure that aligns with your financial obligations and life stage. Consider opting for a longer tenure if you have dependents or financial liabilities that may extend into the future.
Regularly review your term insurance coverage to ensure it remains sufficient, especially during significant life events such as marriage, childbirth, or career advancements.
By investing in both health insurance and term insurance policies, you can protect yourself and your loved ones from unforeseen financial setbacks and secure a peaceful future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Your corpus of 1 Cr may yield you a monthly income of around 50 K, if annuitized.(6% annuity rate considered)

Add 50% of rental income from commercial property to this, so your monthly income, in retirement, will be around 62.5 K.

Medical education is quite costly in India and even if your daughter gets admission into a Govt medical college (I wish and pray that she really does)still the other expenses may be quite high and you do not have a term life cover.

Please ascertain the extent of income you would be able to generate through insurance/law assignments and take a suitable decision.

My suggestion would be continue for another 5 years to enhance retirement corpus and support daughter's education.

Ultimately it is your choice.

Best wishes;

Ans: It’s commendable that you have a structured financial plan. Your disciplined approach is evident in your consistent investments and commitments. Let’s evaluate your financial situation and make necessary improvements.

Current Income and Expense Management
Your monthly in-hand salary of Rs 67,000 provides a solid foundation.

Home loan EMI of Rs 11,000 (at 9.85%) and personal loan EMI of Rs 9,000 are manageable but significant.

Fixed expenses like loans and insurance account for Rs 21,726, leaving Rs 45,274 for investments and other expenses.

Your monthly household and lifestyle expenses of Rs 20,000 are reasonable given your income.

Strengths in Your Financial Plan
A disciplined SIP of Rs 23,000 shows a strong focus on wealth creation.

Allocating Rs 1,726 to term insurance reflects good risk management.

LIC policy for your children at Rs 1,000 per month is a thoughtful step.

Loan Management
Home loan: Consider prepaying the loan partially when you receive bonuses or increments. This will reduce interest burden.

Personal loan: This loan has a high-interest rate compared to your home loan. Prioritize repaying this early. Use any surplus or low-risk investments to clear it sooner.

Avoid taking any new loans unless absolutely necessary.

Investment Analysis
Mutual Funds
Your SIP allocation of Rs 23,000/month is impressive. Ensure it is diversified across large-cap, mid-cap, and debt funds.

Actively managed funds offer better returns compared to index funds. They are handled by expert fund managers, which helps in better stock selection.

Consider consulting a Certified Financial Planner for periodic portfolio reviews.

LIC Policy
Review the LIC policy to understand its returns and benefits. If it is not giving sufficient returns, consider surrendering and reinvesting in mutual funds.
Term Insurance
Your Rs 1,726/month term insurance plan is vital. It provides financial security to your family. Ensure the coverage is adequate. Ideally, the coverage should be 10-15 times your annual income.
Risk Coverage and Contingency Planning
Emergency Fund: Maintain 6-12 months’ worth of expenses in a liquid fund or savings account. This will safeguard you during job changes or emergencies.

Health Insurance: Ensure you have a separate health insurance policy apart from your employer’s cover. Family floater plans are a good option.

Additional Insurance Needs: Ensure your personal accident insurance is in place. This adds to your risk coverage.

Tax Efficiency
Investments in equity mutual funds should align with long-term goals to enjoy lower LTCG tax. Gains above Rs 1.25 lakh are taxed at 12.5%.

Debt mutual funds have LTCG and STCG taxed as per your income slab. Consider them for short-term goals.

Section 80C: Maximize tax savings by utilizing Rs 1.5 lakh under this section. LIC premiums, ELSS mutual funds, and PPF contributions can help.

Section 80D: Avail deductions for health insurance premiums paid.

Retirement Planning
It’s crucial to set aside funds for retirement early.

Mutual funds, especially balanced or hybrid funds, can provide steady growth.

Avoid ULIPs or annuities, as they often underperform compared to mutual funds.

Children’s Future Planning
You already have an LIC policy for your children. Review its returns and maturity benefits.

Invest in child-specific mutual funds or balanced funds to build a corpus for higher education and marriage.

Use SIPs for long-term goals. They ensure disciplined investing and rupee cost averaging.

Improvement Areas and Suggestions
Focus on repaying high-interest loans like personal loans first.

Increase SIP allocation when your income increases.

Review your mutual fund portfolio annually to ensure it aligns with goals.

Diversify your investments beyond equity, such as debt funds or fixed deposits for short-term goals.

Final Insights
Your financial planning shows discipline and foresight. By fine-tuning loan repayment and investment strategies, you can achieve your goals faster. Regular reviews with a Certified Financial Planner will help optimize your plan. Stay committed to your financial journey and avoid impulsive expenses.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment