Tag Archives: Mutual Funds Distributor

Corona Pandemic – Life and Health Insurance

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Greetings from PenguWIN,

                                            The corona pandemic has impacted lives of everyone of us. It has made us sit back and seriously think about the welfare of our dependents. Forget creating wealth for them, their livelihood will be affected if proper planning is not done, especially young families where the spouses have (or one of them) a comfortable salary and their family would be dependent on this. Lives of young people were taken away. The official count itself is 4 Lakhs and this number is always disputed (expected to be higher)

Providing a safety net to our beloved ones is not a humongous task and can be done with 3 simple tools:

Life – pays a lump-sum or periodic payments to dependents on death of the insured,

Heath – when you or your family members are sick and hospitalised which happened to many during the pandemic and

Critical illness – when you get diagnosed with serious ailments that require huge expenses like Cancer, Chronic Liver or Kidney or Lung diseases, Coma, Parkinson.

Most of you might already have some or all of these through the companies that you are employed (group insurance). Professionals and small and micro entrepreneurs who are not formally employed and on their own will have to ensure that they have these in place.

People who already have all the three, life, health and critical need to review their adequacy of coverage. Without going into the calculation of coverage, a life insurance cover for a young family of  30 years old bread winner who makes a lakh per month, spouse who is a home maker and small kids, 50 lakhs cover will be too less, if the children need to be provided for studies upto a bachelor’s degree.

Similarly, a middle management employee who has been provided 5 lakhs of floater health cover by their company would have struggled if any of their family members would have been hospitalized for over a week due to Corona as the bill would run to a lakh of rupees per day in a Grade A hospital.

In health insurance you have an option of taking a super top-up, where the basic coverage will be done by your main insurer and anything over and above will be taken up by the top-up provider. Say, your Corona bill had run to 8 lakhs and your company health insurance has a limit of 5L, the first 5 lakhs of the bill would be taken by the company provided insurer and the additional 3 L will be taken up by the top-up provider. If the claim was only 5L or less then there is no claim for the top-up insurer and hence this policy works out cheaper than a overall base policy of say, 8 Lakhs.

Please make sure that elderly people (50+) buy a cover at the earliest as the insurance premium goes up with the age (and risk premium is higher with age) and in case of lifestyle diseases like BP, Diabetes, Heart problem, some insurers can even refuse providing insurance cover.

If you have any questions, please feel free to reach out to me.

Market Exuberance

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Greetings from PenguWIN,

The stock markets are rising every day and Sensex closed today, 11th Dec 2020 at 46,099. From the low of 25,981 on 23rd Mar 2020, this is an increase of 77.4%. The worrying factor is that the fundamentals of profit, sales and GDP are not in tune with it.

Foreign Institutional Investors (FIIs) have been flooding our markets with huge amount of money. This money is going into select Large Cap companies in the Index, Sensex and Nifty. The speed at which it is flowing is abnormally high in business that deliver growth. The flow is not the same across all companies as some are expected to do better without any surprises in earnings growth.

While I am happy seeing the portfolio go up and up, I do worry at the back of my mind as its irrational.

In equity investment we have to be prepared for the long haul and not get carried away by highs and lows, until we reach the long-term objectives.

Retirement, one of the most important goals for every investor (creating a good corpus to retire peacefully) may be 20 or 10 or even less than 5 years away and depending on the time frame, it’s extremely important to make sure that the corpus allocation is right rather than being too conservative or too aggressive. The farther away the retirement, the more the risk tolerance.

Please feel reach out to me if you have any questions.

PenguWIN turns 6

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Greetings from PenguWIN, PenguWIN 6th Anniversary

                                           Today, we are 6 years old. Our sincere thanks to each one of you, for your patronage. Trust we are well set for a long innings. Initially, when I decided to move from corporate employment to entrepreneurship (whatever small business that we do), while there was a lot of support from friends and well-wishers, there was some scepticism from family members. It was a call between doing what you might not like the best vs what you love to do but may not be successful in monetary terms. Since I had a flair for Personal Finance from my management school days, I ensured that we (wife & daughter including) were covered for atleast 10 years based on my Networth at that point in time.  Hence, I decided to take the plunge to start PenguWIN.

While it may sound easy to do something that you really like, entrepreneurship has its own set of challenges, especially when you are a first-generation entrepreneur. Anyway, I am happy with my decision and honestly, never in these 6 years did I think of going back to corporate employment.

The Covid 19 pandemic has affected the economies of the entire world during the first half of this calendar year. The medical fraternity is still grappling with unknowns, how to find a cure and a vaccine. I hope they will counter this challenge and come out successfully in the shortest possible time.

Every company in India is struggling to sustain its business and contraction in our economy is unavoidable, given the complexity of problems that they face. The top 10 business groups of India including Reliance, Tata, Adani, Birla reported profit before tax loss of Rs.19,340/- crores in Jan-Mar 2020 quarter (Q4 FY19-20) compared to profit before tax gain of Rs. 48,500/- crores in Jan-Mar 2019 quarter (Q4 FY18-19).

The Indian equity markets have been on a roller-coaster ride in CY 2020. 

Sensex went all the way up to 42,000+ and then nose-dived to around 26,000 (38% fall in about 6 weeks) on Covid-19 fears. Now we are back to around 36,000 level as of yesterday, the 3rd July 2020. Again, no investor or analyst could predict the market. While common sense tells us that when the economy is struggling, market is expected to go down, though the extent might not be predictable. But how did the market go back to 36,000 level from 26,000 when the Covid 19 is doing more damage than initially envisaged.?

One thing that has made a difference during this period is the heightened awareness about Life and Health insurance – Individual spending on life and health insurance has gone up 25% year on year. Interest and enquiries on long term life and health insurance are hitting the roof. Please ensure that you and your family have adequate coverage of Life, Health and Critical illness insurance.

Whenever there is uncertainty and stress in the economy, gold is expected to do well. While too high an allocation of gold and in jewellery form is not a good idea, a small exposure (upto 10% of networth) to gold as a hedge is a good diversification strategy. Sovereign Gold Bonds, issued by Government of India is the best option as it can be held in Demat (no issue of safety as in physical gold) and also provides 2.5% interest rate. There are 6 issues during this year and issue 4 starts on 6th Jul, Monday. The details are provided in the table below. The price mentioned is for 1 gm of 24K pure gold and offline price. You get a discount of Rs.50 i.e. if you apply online through demat, the July 6th issue price would be Rs. 4,802/gm.

On a different note, the Covid spread and consequences is alarming (I know atleast a dozen doctors and healthcare specialists who are directly facing the Covid patients). So, please be extra cautious.

Feel free to reach out to us for any of your personal finance requirements and please do refer your friends and family.

There is only one boss: the customer. And he can fire anybody in the company, from the chairman on down. Simply by spending his money somewhere else. - Sam Walton.

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