Name: Mayur (41) & Meena Salunkhe (38) Resides in mumbai Profession: Banker Annual income (Rs 21 lakh) Status & goals Mayur works in a bank at a senior position and has recently suffered a cardiac arrest. Mayur is especially concerned about his finances since he is the sole earning member. His wife was a banker but had quit her job when their daughter Shreya was born. Mayur owns two residential properties in a Mumbai suburb and a plot of land in his hometown. Both the Mumbai properties are used by the family,one by Mayurs family and the other is being used by his parents and younger brother. Children: Shreya (8) and Sanchay (5). Needed A comprehensive financial plan securing his health,retirement and other investments Net monthly surplus Rs 1 lakh Existing Investments Life Insurance Premiums Rs 1,12,000 pa Postal RD Rs 13,000 per month Property (Current Value): Rs 2.15 crore EPF Rs 8 lakh PPF Rs 3.25 lakh Fixed Deposits Rs 2 lakh Mutual Funds Rs 1.10 lakh Savings accounts Rs 75,000 Life Insurance coverage Mayur: Rs 89 lakh Meena: Rs 2 lakh Sanchay: Rs 2 lakh Total premium paid: Rs 1.12 lakh per annum Health insurance Mayurs family is covered by his employer for Rs 5 lakh each. He pays Rs 2,000 pm directly from his salary for his parents health cover of Rs 3 lakh each. Findings Emergency Fund Rs 2.75 lakh in in savings account and fixed deposits. This is about 3.6 months of expenses a little on the lower side. Health insurance Mayur is totally dependent upon his employer for his health insurance. In case of loss of job,this might be a major issue. Insurance Mayurs personal life insurance policies are all savings policies worth sum assured Rs 14 lakh for which he pays a premium of Rs 1.12 lakh per annum. His employer provides a group term insurance cover of Rs 75 lakh which is a huge benefit. Investments Mayurs portfolio almost entirely consists of land and property. Both residential properties are occupied by family. The plot of land is kept for retirement funding. He has postal recurring deposits of varying denominations which are maturing over the next three years. He has recently liquidated most of his fixed deposits to repay his home loans and personal loan. Recommendations Emergency Fund Considering his health and five dependents,it would be advisable for Mayur to have 12 months expenses in contingency fund. That amounts to Rs 9 lakh. He has Rs 2 lakh as FD,he should start investing at least Rs 50,000 per month into debt funds. Later he can use his next bonus to add to this corpus. Express tip In case of single earning member and health issues in the family,it is better to keep higher contingency funds. Health Insurance It will be difficult for Mayur to get a personal health cover now. He should get an individual health cover for Meena and the children. This should cost him about Rs 15,000 per annum. For himself,he should look at creating a health corpus of Rs 10 lakh over next few years. This can be done using the postal RD maturity amounts. He should ensure continuity of the health cover from his employer for himself and his parents. Also in case of change of job,he should ensure that he gets health benefits from his employer. Express tip It is always better to have personal health insurance even if you have health insurance from your employer. Life Insurance There is a gap of Rs 1.5 crore in Mayurs life insurance requirement. His cashflow does permit him to buy a term policy even with substantial loading if any insurer is willing to accept his case. He should declare truly his health condition and check if he gets a risk cover for at least the next 10 years when he will be building most of his wealth. He should ensure that he is continuously covered under his employers group term insurance plan. Another option for Mayur is to look at a scenario that in case of an eventuality,his parents will have to move into his flat and the other flat can be either sold or used to generate rental income. Express tip One should buy term insurance at a young age to avoid loading in premiums later due to health conditions which will invariably arise with advancement of age. Child Goals Goals for both children require an investment of Rs 54,000 per month. He should start these investments only after he is done creating his contingency fund,which is of paramount importance at this juncture. He can add to the childrens fund as and when the bonuses are received. This will help him reach the goals faster. He can use equity diversified funds to achieve the goals for children. His existing mutual fund investments can also be ear-marked for this goal. Retirement Mayur wants to shift to his hometown after retirement. Hence he anticipates that he should be able to live with 60% of his current expenses in retirement. To reach his desired corpus he should invest Rs 1 lakh every year in PPF. In addition his PF will contribute majorly. He should ensure not to dip into his PF account till retirement. Both these and his plot of land should be able to help him reach his retirement goal. Other aspects Mayur should look at buying home insurance for both his properties as both the properties are very valuable assets and need to be protected from loss due to natural calamities. Conclusion Mayurs primary concern should be protection before investment. Once protection of health,life and assets is done,he should have a proper investment plan in place. He should diligently stick to his investment plan to ensure that he meets all his goals without any compromise.
