The unfulfilled dream

Sunil (48) works as a manager with a private company. His take-home salary is Rs 1.42 lakh. He has a daughter and a son, aged 12 and 2.5 years, respectively. Sunil's wife, Sujata (39), is a home-maker. The family lives in a rented house. It has a monthly expenditure of about Rs 81,000. This includes Sunil's term-insurance premium and an EMI of Rs 30,000, which goes towards the loan repayment for an under-construction flat. Sunil has accumulated more than Rs 75 lakh, which is spread across various financial assets. Besides these, he also has a plot of residential land worth Rs 40 lakh. Sunil wants us to draw a financial road map for him. Emergency fund Sunil has around Rs 3.46 lakh in a combination of a fixed deposit and savings account as the emergency corpus. The major part of his emergency fund is in a savings bank account. An emergency corpus should be sufficient to take care of at least six months of your expenses, including EMIs. For Sunil, this amount works out to Rs 4.86 lakh. He should maintain it in a combination of sweep-in fixed deposits and liquid funds. This will help him earn higher returns, without compromising on liquidity. Action: Maintain an emergency corpus of Rs 4.86 lakh in a combination of a sweep-in fixed deposit and a liquid funds. Health Insurance Sunil doesn't have health insurance. He should buy a floater plan of at least Rs 5 lakh, covering all his family members. It should cost him around Rs 25,000 per annum. Though Sunil has opted for a critical-illness rider with his term insurance, it does not cover the treatment cost of diseases other than the ones termed 'critical' by the insurer. Action: Buy a health cover of at least Rs 5 lakh, covering all your family members. Life insurance Sunil has a p

This article was originally published on January 12, 2022.