Five things you should be doing, if you got married recently
Here are the five things the newlyweds should be doing compulsorily
A friend got married last week. In the large pool of congratulatory messages pouring in the group, one person suggested that he review his term insurance and health insurance, among others. That is the best thing to do in view of the uncertainty the Covid has brought to the fore.
Be careful about credit and credit score:
It is not uncommon to use swipe credit cards to pay for various marriage related expenditures. You should be clearing the credit card bill asap. Credit card offers unsecured lending and is a costlier loan. There are no charges for using the credit during the billing window, which might range from 20 days to 50 days. But if there are any dues pending after the due date, the associated costs are high.
The monthly interest rate ranges from 2.49 per cent to 3.99 per cent. On an annual basis, measured in Annual Percentage Rate (APR), it will work out to 28 to 49.36 per cent. The credit card billing includes interest on the outstanding and on all the new transactions till the previous balance is paid in full.
Then there could be GST and other charges, depending on the bank/financial institution. Inability to clear the dues on time will result in the credit score getting affected, which again will impact your ability to raise new loans.
Term Insurance
It is one of the best financial tools to protect the personal savings when something untoward happens. Policies offer a cover in the range of Rs one crore to Rs 2 crore based on the salary levels.
They are affordable and allow flexibility with tenures like – paying a high premium for a few years, a low premium for a long tenure or just paying annually, semi-annually or quarterly.
Term insurance is meant to protect the family’s financial future and should not be seen as a tax saving instrument. Typically, one should opt for a cover that is at least 15 to 20 times the annual salary.
Health Insurance
Outbreak of Covid-19 underlined the need for having a comprehensive health cover. There has been no standard way for the hospitals to bill the Covid-19 patients. With a third wave anticipated, it will be better to take a good cover.
Start the insurance early as health insurance schemes have a waiting period for specific ailments. Also, it is best to consider a family floater policy instead of an individual policy covering all family members. If contracted Covid already, they can take a health policy only after 90 days.
Ensure that the policies do not lapse. In case of a lapse, porting to other policies becomes difficult. There are riders and top-ups that will up the insurance cover once the limit is exhausted.
Goal based investing
It’s advisable to have a joint account opened and use this for goal-based investing, like for vacations, festivals, travel, or planning a family or buying a car. Expenses in education segment are quite high. The long-term goals include saving for retirement, paying off mortgage.
Paperwork
A most important thing to do is change the nominees for insurance, bank accounts and other investments. It will be prudent for men to take the term insurance under the Married Women’s Property Act (MWP Act). Such a term policy will be considered as a trust. This amount cannot be claimed by creditors, relatives or form a part of the will (estate of the proposer). The trust will be holding claim proceeds for the benefit of the wife and/or children. Having a will or an estate planning in place will ensure that the proceeds go into the right hands.
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