6 Financial Mistakes Doctors Must Avoid in India
Doctors fall in professional segment of Income Tax. We believe doctors are self employed by profession in general; here we refer to the doctors who don’t have hospitals managed by other doctors. We have shared some common mistakes committed by every 2nd doctor, which we found while planning for doctors, we have tried to give the ways to protect from these.
Low Professional Indemnity Cover
Don’t expect returns from value addition
Don’t run Nursing Home to be self employed
Don’t oblige people by investing money
Don’t buy Life Insurance for your non working spouse or kids
Create 2nd Alternate source of income for life after 65
Low Professional Indemnity CoverWe found that most of the doctors don’t plan their Professional indemnity cover properly. The cover that we found was between 5 to 50 lacs in most of the cases. This can impact your family as the claim amount depends on the Human Life Value of your patient and it has no limit. Whatever the amount, the court will decide, will be paid by you or your insurance company. So if you treat people who have high net worth, you should expect the level of claim amount accordingly and don’t leave this domain unprotected. Take proper Cover for professional indemnity. If you are an Anaesthetist or Surgeon, it is must for you to protect your family properly from this risk. Don’t expect returns from value additionWhen it comes to perfection, the examples are set by you. Doctors love to work with new, advanced technologies and apparatus. We found that most of the doctors say that they are expanding their business by buying some new apparatus but after discussion, we came to conclusion that the expenditure was for value addition and it will not give an extra penny from the investment. So doctors should necessarily differentiate between value addition and expansion. Value addition gives you branding, perfection and above all satisfaction; expansion increases your income or revenue. Choose what you want to do first. Don’t run Nursing Home to be self employed, Be a BusinessmanMany of you may be thinking that how a nursing home owner can be self employed. We found that most of the setups were managed and served by owners only. You earn when you work, you don’t earn when you go for vacation or you are away. Business means – you earn even when you don’t work personally, your professionally managed team runs your organisation even in your absence and patients are served in the manner you have planned to. Over staffing was again a common problem of these nursing homes and owner of these setups work day and night to pay salary. Doctors need to have a clear business plan to run a setup. Don’t buy Life Insurance for your non working spouse or kids, protect your familyAlmost all the doctors say that they pay high premiums, when we checked the documents; we found that the premium was being paid by doctor and the risk cover was on the life of non working family members, Spouse or kids. As the doctors were busy, so it was easy to make the doctors buy insurance on family members because of non availability of doctors for medical test. Have you ever thought if something goes wrong with the medical practitioner how family will pay for the survival and do we expect them to pay insurance premiums at that time? Evaluate your existing policies and do the needful. Every doctor should protect his/her family by buying proper life insurance cover on their own life by Online Term Plan. Create 2nd Alternate source of income for life after 65Doctors have fortune to work till they are physically able to work. We believe you should work till your last breath, live your passion. Will it be not better to work according to your wish after the age of 65? It should not be the compulsion to work for money after a certain age. Doctors should plan their Financial Freedom by the age of 65. This is the situation where you get your monthly required income from your investments / wealth. Develop a 2nd source of income which is not related to your profession. Plan your investments in the manner that adds value to your situation. Don’t oblige people by investing moneyDoctors are busy because of their profession and have very limited actual trust worthy people. One thing is for sure that money don’t give you friends, by obliging Bank Manager, Manager or Agent of Insurance company, Mutual Fund Agent by buying a policy, SIP or investment you can get anxiety only. Invest for the need of your family and give proper time to plan your life. Anything which is being sold to you cannot be good for you. If your situation requires something in financial world you will not see people pursuing you to sell as these are automatically sold, most of them are available online. Buy things which are suitable for you and your family. Buying on obligation may erode your capital in long run.We tried to share some of the practical experiences which we got while planning for doctors.