Do I need a business owner policy?

Your business may be running smoothly. It may be providing employment for other people. Small and medium businesses are subject to the same risks as major corporations. Disasters can strike in many ways; even a minor one could  wipe out a lifetime of hard work. 

Fortunately, Business Owner's Policy, sometimes called as BOP, can protect you in the event of property damage, business interruption or litigation troubles.

Prior to the 1990’s, what companies had to do was to go out individually to individual insurers and purchase individual policies for each little tiny pieces of the business exposure that was been presented. So you have a property policy from one insurer, you might have a liability policy from another insurer,business income,money in securities, all of these were tiny pieces to be managed effectively. For most business owner’s it was challenging and could be very expensive. And sometimes, owner’s would choose not to carry these coverage because it turns out to be very expensive. Here are 3 critical covers you should consider if you are a responsible business owner.

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Property Insurance

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Property is typically categorized as real or personal. Real property includes land, structures and permanent fixtures. Personal property includes contents and other mobile equipment. Property risks can be direct or indirect. A standard BOP policy helps protect against a specific list of perils, such as fire, wind, hail, water damage and vandalism.You may be able to work with an insurance broker to identify and reduce certain types of risks to help lower premiums. It is advisable to insure for “replacement value” rather than “actual value”. That way, you might not have to spend extra money to get back to business.

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Liability Insurance

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Liability is the next large type of risk. Liability insurance is often very important, because it protects a third party from someone’s negligent act. When you buy a car insurance, the only portion of car insurance which is typically required is liability coverage and it is not to protect you or the driver, but to protect the people on the road. Liability insurance is essential if someone were to become injured on your premises, by your employees or by your products. It can help protect medical costs for injured parties or to defend against liability claims.

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Business Interruption Insurance

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So you run a small business or may be a big business or even a factory, you probably got insurance for property damage, liability coverage and insurer will fix things quickly for you. But if your business is out of action for any period of time, who is going to pay for all your ongoing expenses like wages, rent or supplier costs? Depending on the business conditions, it could take months until you are able to open your doors and start serving customers again. But that would not stop the bills piling up. This is where business interruption can save the day. Designed to cover all the business expenses you incur while you are waiting to get your business humming smoothly again. It can pay staff wages, rent, or even to relocate your business to temporary premises. Your insurance broker can take care of the hard work of figuring out how much income your business has lost as well as dealing with insurance company to make sure you have the funds you need when you need them.

5 movies with great financial lessons & why

Have an emergency fund or it will cost you

We are always told to expect the unexpected. Money wise we can only do that if there is an available fund to tap financial emergencies. The last thing we want to happen is getting into debt because of an emergency. It’s frustrating to go into debt just to bail out from an emergency.

What is an emergency fund?

Emergency fund is a money pool which is typically about 3- 6 months of your household’s total living expenses. For example, if you are spending Rs.30,000 a month towards your living expenses, you need to have Rs.1,80,000 readily accessible fund that you can use for the emergency.

Why maintain an emergency fund?

Medical emergency, loss of job, credit card debt, property maintenance etc could easily cause financial stress. An emergency fund can come in handy during these times.

How emergency fund should be?

The framework for emergency fund should be a combination of liquid fund easily accessible in a day or two along with fixed amount of savings of 3 -6 months of expenses with zero exposure to volatility.

How to create an emergency fund?

As a thumb rule, treat savings as an expense just like a utility bill so that one would be forced to set aside an amount for emergency fund. Here is my pick to get started:-

Automate your savings – Nowadays, almost every bank gives the facility to set an auto debit date and amount to transfer to the respective account. As soon as the pay check comes in, set the date and amount for transfer to respective emergency corpus. Click here

Start small – A penny saved is a penny earned. Do not try to make all the savings for emergency fund in one go as it is likely to cause financial stress. It is not important that you save in higher amounts, but it is critical that you make the process of saving a hobby and sustain it.Click here

Use Mutual Funds – Debt mutual funds are a good option for emergency funds. They have easy liquidity and less volatility. Debt mutual funds gives better returns than savings bank account interest (7 – 8% debt funds compared to 3 – 4% savings bank account) Click here

Get your health insured – Emergencies comes in the form of medicals. A health insurance will take care of sudden medical costs like surgery, hospitalization etc. Choose a health insurance that provides cashless hospitalization benefits to ensure that your emergency fund corpus remains untouched.

      Click here

Insurance Policies to go E-Way, What does it mean for you?

Insurance Regulatory Development Authority of India (IRDAI) is all set to revolutionize digital platform in insurance. From October, 2016, most insurance policies will be issued in electronic form. It is similar to buying shares online, after which they are stored in demat form. An investor can make an electronic insurance account (eIA) through an insurance repository or insurer. It gives the benefit to store life and general insurance policies at one place.

Here are some of the benefits of holding insurance electronically :

Safety

Policies held online will have no fear of damage and loss of policy documents. One time KYC will be sufficient and insurers will be able to take KYC inputs from the insurance repository. Investors will no longer be vulnerable to being cheated by fraudsters fabricating and forging policies since digital policies will be authentic. A copy of policy can be downloaded to a remote computer via secured networks at any time by an authorized user. Clickhere

Convenience

All insurance policies, be it life, pension, health or general, can be electronically held under a single e-insurance account. Premium for all the policies can be paid online and service requests or complaints can be registered at the website of the insurance repository. Click here

Less Paperwork

An investor who wants to buy a new electronic insurance policy under and existing eIA need not have to go through KYC verification all over again, if there are no changes to your KYC details recorded earlier. All service requests can be submitted to the insurance repository online and there is no need to go to the offices of individual insurance companies for service. Click here

Smoother Claims

The biggest challenge experienced at the time of making claims is the submission of original documents to the insurer. In case of electronic insurance accounts, bank details of the policy holder are available through the e-insurance account and insurers can make payments using NEFT.

Cost Effective

All basic services provided by the insurance repository are free of charge. Policy holders need not pay extra to buy an electronic policy or to dematerialise an existing policy. Cost savings are indeed possible for insurance companies, if they can completely do away with existing system of physical maintenance of policies. Click here

Top 5 free financial planning tools

When it comes to your financial affairs there are so many things you need to consider. The list goes on like home loan, household bills, school or university fees, credit card debts, investments, retirement planning, insurance and tax implications. As the list goes on, it’s all too easy to get out of control. But wouldn’t you like to get it back under control? By setting some goals and objectives, big or small and then putting a plan in place to achieve them will help you to achieve more financial success.

Here are some most useful tools that can help you understand and take control of your finances:

Life Insurance

Your loved ones mean everything to you. You provide for their everyday needs and future dreams. But what if something were to happen to you? No one wants to think about dying. But have you ever wondered how your loved ones would financially manage? 

Unfortunately many people don’t get life insurance because they believe it’s too expensive.How do you know how much coverage you need? To find your number take a look at this calculator. Click here

Child Education

Providing a great education to your children is probably the best gift any parent would give. School fees are probably rising at 4 times the rate of inflation. So it makes sense to plan ahead and ensure that your children get the best education. How much do I save for my child’s education? Click here

Loan Eligibility 

Owning your dreams in this modern era seems quite easy with loans provided you manage your debts accurately. This calculator will serve as a guide before applying for a personal loan, home loan or car loan. It lets you understand your loan eligibility and the EMI. When you head to the bank next time, you are not worried about asking your loan eligibility, because you already know it! Click here

Tax Impact

Knowing only the income tax slabs may not help in computing tax obligation for a person. This calculator helps you to calculate tax liability for FY-17 and FY-16 and assess the changes in your tax liability in FY-17 with respect to FY-16. Click here

Retirement Calculator

Are you one day closer to wrinkles?  A proper pre-retirement planning is required for leading a peaceful post-retirement life. Find out how much money you need to save for your retirement and maintain your current standard of living. Click here

Do you invest goal based or tax based?

We all dream of travel. Whether it’s a simple weekend getaway or around the world trip, we all yearn to escape, disconnect and enjoy life to the fullest. Some might tell you that your dreams are too outlandish, too expensive or simply unachievable. What many of us fail to realize that these travel dreams of ours can be made a reality by simply setting financial goals and working hard to reach that.

5 tips to raise a money smart kid

 

It doesn’t take long for kids to grasp the value of money. Quickly they get the idea that money can buy things and that the more they save, the more they have. But how much do they really understand about smart planning, saving and investing. All too often, parents prefer not to discuss the subject of money with their kids. The truth is teaching your kids financial responsibility should start as early as possible. We all know, kids are constantly making choices between things that they want and the other things that they want. Parents have the opportunity to teach them about prioritizing, how to make trade off. Having those conversations early gives kids the opportunity to develop the skills on how to be financially independent, make good choices, to save and spend wisely. That helps them prepare for the future. 

Here is my pick to get started:-

Piggy Bank Adventure

Kids of today do not need to understand how money can be spent, but they need to know how money works. Parents should start the money education at the dinner table or take the help of these interactive websites that impart financial literacy in a fun way. Click here

Raise kids to be entrepreneurs

Entrepreneurs are not born, they are made. Teach your children to think like an entrepreneur. The key skills required to succeed, “can” and “should” be taught. You do not have to start a small business to teach your child about entrepreneurship. Try some of these little things to teach your child to self start. Click here

Let your child earn it

Allowing children some element of financial control may be one way to help them realize the value of money and build basic budgeting skills, which will help prepare them for financial independence when they are on their own. Click here

Set Milestones

By showing children how investing money on a regular basis can help them achieve their life and financial goals. This list of 20 items will guide parents to set milestones according to the age progression of the child and secure their financial independence for the future. Click here

Be a role model

What kind of a financial role model do you think you are? Have you ever even thought about it? You should think about it as your kids are watching and learning from you. Click here