Here is how to save money for medical emergencies
Set Money Aside For Medical Emergencies
Mumbai: You do not have a health insurance and suddenly you need money to cater to your medical bills. What do you do? Then there are these questions do you really need a health insurance? Can you deal save sufficiently with medical services getting expensive and health insurance premiums also increasing? How do you decide how much is enough? While having a health insurance policy gives you peace of mind and the knowledge that you have put up a contingency plan for that, with escalating medical costs it is better to have emergency funds handy or liquid assets, which you can quickly convert to cash when in need.
Here are some ways to deal with the situation when you don’t have health insurance or your costs have risen more than anticipated.
Keep pumping money into a fixed deposit:
Open a separate fixed deposit account that would only be used when you have medical or other emergencies. This fixed deposit should be opened with such a bank that provides you with the facility of liquidating it instantly online and where you can immediately go to the ATM and withdraw all the money that you require.
If you have a lumpsum amount at this point, set it aside rightaway to build your emergency fund. You will get interest every year that would keep adding to the money and your investment will keep growing with time.
Open separate RD accounts:
If you do not have a lumpsum now, you, must open a recurring deposit account in a bank and save some money every month and deposit it in this account. Commonly called an recurring deposit (RD) account, it is available will all banks, which give you a fixed percentage as interest.
Even if the amounts are small, it does not hurt saving each month, without your regular expenses getting unduly affected.
Taking loans against PF, PPF or NPS:
These investments also offer you loans. However, they are bound by certain terms and conditions and you need to check them out before going ahead. For example, you can get a loan against PPF only after completion of five years. Such terms are spelt out in your investment documents and you need to read them completely.
Sometimes, it may not be enough to just depend on your health insurance. There are a number of avenues like the above, which you can tap to cater to medical bills or any other emergency life throws at you. But remember: This can take some time.
Take riders with life insurance policies:
These days, many life insurance policies offer riders that cover your health costs too. Look for such riders in your existing life insurance policies and try to make the most of these. If you do not have life insurance yet, pick one with maximum benefits and riders. Riders are extra benefits that come to you at comparatively much lower as compared to taking them up individually in the form of as separate policies.
Take a secured loan against other assets:
With the right market conditions gold will fetch you enough money to cater to medical emergencies. You should, however, be very careful about volatility in the gold market and should avoid buying gold during such times. Try taking loans against shares, property, insurance policies and other such assets it if is not possible to sell gold just then.
Make the best use of your existing deposits:
If you already have fixed deposits, consider taking loans against them rather than encashing them when you need money. You keep getting interest that you are supposed to get on your fixed deposit even when you take a loan against them.
The rate of interest that the banks charge you for the loan is usually 2-3 per cent higher than what you get on your fixed deposit. Effectively your cost of getting this loan is as low as 2-3 per cent.
( Source : dc )
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