The mantra to a debt free life is how sound are your savings and investment strategies. The thought of getting into a debt trap of a personal loan, home loan, car loan etc. can be quite disturbing as they can take away your a huge portion of your income. Apart from your systematic savings and investment procedure, it is very important to park funds which can be easily liquidated.
Since emergencies are situations which do not come with a prior information, you need to ensure that a part of your savings is left in the bank account so that the money can be utilisied as and when required.
For example, if you have funds invested in PPFs and EPFs, they cannot provide you funds immediately as they are long term debt assets. Liquidating them is a time consuming process which involves a lot of formalities depending on what grounds you require the funds for.
Apart form your debt and equity assets, You should also consider a hybrid equity fund in your portfolio. This, besides giving stability to the mutual fund portfolio, will also do well in volatile markets.
Having a money back endowment fund is a good option, however, try opting for a Life insurance cover as well.It does not mean that your money back cover does not help you in medical emergencies, but the only challenge being it does not provide you sufficient cover. You should look at a term cover which primarily covers your life and hence is cheaper.