Should spouses be equally insured?

Got a question about your money? What you should or should not do with it?

Our expert Devang Shah has the answers. Got a question? Please write to us.

I am software professional aged 26 and am getting married next month. 

My net monthly income is Rs 33,000 and my fiancée gets about Rs 7,000.

Every month, this is the amount I spend:

Loans:
Rs 7,500 (home loan)
Rs 6,000 (personal loan)

Expenses:
Rs 2,500 (credit card)
Rs 8,000 (household expenses)

So I am left with about Rs 15,000 as savings every month, if I take into account my income and my wife's. Any good tax saving investments?

I also have an insurance policy for Rs 200,000.  I am planning to take a term insurance for Rs 20 lakh (Rs 2 million). Can I split it up and take Rs 10 lakh (Rs 1 million) on each or Rs 20 lakh on any of us and have the other as a nominee? 

What do you suggest?

- Srinivasan Dayalan

Hi Srinivasan

You will probably need to wait and get married before you can take a policy on each other. The purpose of a life cover is to make up for the economic loss suffered due to a potential income stream drying up.

You need to peek into the future 10 to 20 years from now to see who the main breadearner is going to be. Will it be both of you or just one of you?

If, for example, you are going to be the primary breadwinner, it might make sense to have a larger cover on you and a smaller one on your wife.

On the other hand, even if your wife decides, for instance, that she will become a homemaker, I would still believe there is reason for you to cover her life to some extent.

Should she pass away, you might not suffer from loss of income. But, if she was shouldering the responsibility of managing the home front, you most probably will incur expenses to be able to keep running the house.

Regarding your tax saving investment, I would suggest don't invest to save tax. I prefer looking at post tax returns of investment alternatives when deciding where to invest.

The question 'where to invest' needs to be answered from the point of view of your investment objectives and preferably be a part of a financial plan.

Having said that, at this point, you might want to consider a combination of Public Provident Fund and Equity Linked Saving Schemes to invest some of this money. These are diversified equity mutual funds with a tax benefit under Section 80L.

Do remember to create some liquid (cash) reserves because all tax saving schemes lock in your money for varying periods from three years (ELSS) to 15 years (PPF).

Wish you a happy married life!!

To see the other query answered by Devang Shah, read Saving for a home?

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