We are having a child & need help in planning our finances. How should we proceed?


Hi Team Fpguru,

My husband and I are in our early 30s. Both of us are working with a combined annual income of Rs.25lakhs. We are going to be having our first child at the end of the year. I would like to understand the kind of health and life insurance cover we need.Currently, we both have very minimal LIC life insurance covers (under 2 lakhs) and our health insurance covers are only what we have from our companies. Please suggest which would be good health & life insurance covers. Also, with a baby on the way, what kind of investments can we start making to take care of the baby's future needs? We invest in MFs regularly (I have a corpus of about 6lakhs in MFs and am currently investing in SIPs in HDFC Prudence). We also bought a 2BHK flat and that is currently rented out (Monthly home loan EMI is about Rs.35,000). We are currently living in our own home (with my in-laws). Please guide us.




Regards, Shweta

Dear Shweta,


We thank you for visiting our website & asking us a question. You have asked us a question on practically all aspects of your personal finance. Let us understand your needs one at a time.


You are a Double Income No Kids Family (DINK as we call it in financial planning) which will soon turn into a Double Income Single Kid Family or DISK. This is an important milestone in your life. You have mentioned your incomes but not your expenses. Due to this we can’t judge your savings capacity. However the fact that you have a MF SIP & EMI on additional property means you have started investing.


You urgently need to understand your insurance needs. Once the child comes, life insurance will be important for both. If you plan to take a career break for the child, then your husband will need even greater cover. Due to lack of required data, we can’t provide the exact coverage, but you may apply the rule of thumb which says income* 10 i.e. 10 years income should be your Sum Assured.


Medical Insurance, Critical Illness & Personal Accident are other covers you can take. Medical Insurance should atleast be Rs 2 lacs. Your company provided one will do if the amount is adequate as with introduction of Mediclaim Portability you can transfer coverage with change of job. Do take coverage for the child as well.


You need to chalk out your child goals first. Education & wedding are the most important, but the time frame & cost needs to be ascertained. Accordingly savings should be oriented.


One important goal you have missed out on is your retirement. This phase of your life you will have to live off your accumulated savings. Chalking out this goal is a priority for you.


Your investments can be utilised for the above goals. First however you need to chalk out these goals. For this you can consult a financial planner who will be able to guide you best. We at Fpguru.com offer Personalised Financial Coaching services for the same too.


It’s nice to see you have realised the value of financial planning for your family. Now visualise your goals & save for them. With the right guidance you will be able to achieve financial nirvana.


Hope this solves your query.



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