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Non Life Insurance - One year after COVID: Are you financially prepared for career disruptions?

Job losses and pay cuts due to the pandemic may have abated with the economic revival. But how prepared are you for the next black swan?

“Nothing serious. It was just an anxiety attack; it seems like you are under some kind of stress, so take it easy,” said neurologist Dr Gupta looking at Prashant’s CT scan report. Though Prashant was relieved, deep inside, he knew the root cause of his stress. Prashant’s employer, a leading automobile manufacturer had to let go around 200 of its employees last month and the company had indicated that it is still not done with firing.

Job loss or even an indication of the same can be a nightmare and can change your life and priorities. Hence, it is important to prepare and plan for such a situation well in advance. Here are some essential steps towards the same.

Avoid Knee-Jerk reactions

Sometime in April 2020, Akash Sinha, a close friend of mine, received mail from his employer that the company was forced to cut salaries of all the employees by 50 percent till further communication. The mail also hinted at certain job cuts in the coming month. To add to his woes, Akash’s entire 20-year savings in shares and mutual funds had suffered a massive 48 percent erosion in the market mayhem. Career uncertainties, coupled with the fear of a deeper erosion of his wealth, compelled Akash to liquidate his entire portfolio. Fast forward 10 months and Akash’s job is safe and both the economy and NIFTY have recovered faster-than-expected, but he completely missed the ensuing bull market and lost the opportunity to recoup the notional loss in his wealth. In hindsight, Akash still repents such panic-driven knee-jerk reactions, which could undo all the hard work and derail your financial planning objectives.

Create an emergency fund

An emergency fund is the corpus you create to dip into in case of an unexpected financial crisis. Loss of job is surely one such situation that would necessitate fund requirements on an immediate basis. A corpus equivalent to 6-9 months’ salary is considered healthy. These funds should be parked in safe avenues such as short term fixed deposits or liquid funds. Without any further delay, act now and start building your emergency fund.

Revisit your expenses and lifestyle

As the saying goes “A penny saved is a penny earned.” An uncertainty in one’s career is the best time to implement this age-old wisdom and go on an expenditure diet. Some of the key steps one should take is to cut down on non-essential indulgences such as movies, vacations, eating out and expensive electronic gadgets. Down-trade on items such as branded clothes and cosmetics and reviewing monthly outgoes on electricity bills, cable charges, mobile bills, OTT subscriptions etc. Renegotiating an existing loan for a longer tenure to lower your monthly out-go can also be considered.

Discover your hidden talent

During the lockdown, Ravi Maheshwari, a senior manager in a reputed real estate firm decided to invest some of the free time available due to work-from-home and some money in his life-long passion of astrology and numerology. He enrolled into the basic training programme on numerology, followed by an advanced one and, within a week of completing his training, found his first online client from Dubai. Eight months into the lockdown, he has designed his own module, training more than 80 people on a monthly basis and conducting 8-10 one-on-one online consulting session with his clients spread across the globe every week! He now earns almost three times his monthly salary and is seriously considering embracing this hidden talent as his full-time job. While everyone may not be as lucky as Ravi, a newly acquired skill or enhancement of an existing talent can offer a ray of hope during such times to make good any salary cuts or embrace a new career.


Losing a job is an uncomfortable thought – many of us are not prepared to visualise such a situation, let alone plan for the same. But COVID-19 has taught us that even the best of us may be forced to deal with such a situation and therefore planning for similar black-swan events in the future should be a part of every financial planning exercise. And, of course, the need for a basic Will and other inheritance planning during such times cannot be overemphasized.

Source : Money Control back