Paying the equated monthly instalment (EMI) of a loan is continuous pain to many. For people in old age, it certainly creates stress.
Every father is special as he only knows the challenges he faced and how he managed to ensure security, stability and prosperity for his family – socially as well as financially – in whichever form he could. This Father’s Day, let us use the opportunity to thank them by posing questions that can help them in the long run. Whether your father is working or retired, you can ask him these questions.
It could be possible that your father may not have evolved with the fast changing financial world and continuous technological innovations. You might be in a better position to help him build a strong financial base with your advice so that his life is hassle-free as he grows older.
In this article, we take a look at five crucial questions that you must ask them so that they can deal with financial emergencies smoothly.
Does your father have a comprehensive health insurance plan?
In this era of rising medical costs, it is crucial for everyone to have a health insurance policy. With age, you become more prone to diseases. A health insurance plan will save your dad from sudden, high and unexpected expenses during health-related eventualities. A health policy will not only ensure quality medical treatment but will also help him get tax benefits under Sec 80D of Income Tax Act. This year’s Union Budget has increased the deduction limit for senior citizens from Rs. 30,000 to Rs. 50,000 under Section 80D. This will help your father reduce his tax liability and get greater coverage. This will not only help him, but will also help you avail tax benefits if you are paying the health insurance premiums for your senior citizen parents. You can avail deduction up to Rs. 75000 (Rs. 25,000 for premium paid for your own health insurance assuming you’re under 60, and Rs. 50,000 for senior citizen father above 60 years of age, from the earlier Rs. 55,000 (Rs. 25,000 + Rs. 30,000).
Is your father prepared to manage or is he managing the reasonably large one-time corpus of Provident Fund (PF) and Gratuity post retirement?
In case the money is staying or likely to stay idle in his bank account, it’s time to help him invest this sum in short-term financial instruments with comparatively lower risks. One can opt for avenues like liquid mutual fund schemes or banks’ fixed deposits. Such investments will at least help grow the principal to a certain extent. These investments would also make available funds immediately whenever there is an urgent need.
Does your father have any physical Shares Certificates which he might have forgotten?
Quite often, it is seen that people tend to forget their share certificates and remain ignorant about their existence till there is a sudden discovery of such physical papers pressed deep in old files. If your father does possess some such certificates in physical format, you should try first to dematerialise those shares on a priority basis. And if need be, you can monetise the value by selling the shares to add a further financial cover for your father.
Is strategy of asset allocation being implemented by your father with his current corpus of money?
The old saying that don’t put all your eggs in the same basket needs to be revisited here. It is advisable that you should ask your father if his current investments or money are tilting heavily towards one asset class — equity, debt, gold or real estate. Concentration of all your resources in one asset could prove financially fatal. Asset allocation is a must. The portfolio should also have some liquid investments.
Does your father have any running loan – personal or home loan?
Paying the equated monthly instalment (EMI) of a loan is continuous pain to many. For people in old age, it certainly creates stress. In case your father is servicing a loan, ask him to keep doing part payments (pre-payments) so that he gets rid of the borrowed money and does not have to keep carrying the burden of loan repayment for the entire tenure.
By asking such questions of your father, you would not only ensure financial security for him but would also give peace of mind to him and the entire family.
