How life insurance can help you fulfill your financial objectives
Posted on Monday, January 29th, 2018 | By IndusInd Bank
Life insurance goes beyond providing only protection as it can also act as an important tool to achieve financial objectives in one’s life. Almost all of us have certain life goals to fulfill and these may be related to wedding, child’s education, buying a car, buying a home, etc.
Needs can be categorized as negotiable and non negotiable, buying an asset or fulfilling a need that is not a responsibility can be considered under non negotiable goals as these can be deferred or adjusted basis an individuals current financial standing. However non negotiable goals are ones that cannot be deferred such as a child’s education need.
Money is essential for survival. We all work hard to live a better life. We look out for opportunities to multiply our earnings and consequently our savings. Earlier, term deposits were used to earn interest on savings. But with the decreasing rate of interest, people are looking for other avenues to invest and earn better returns. One investment that will surely get you desired returns is “Life Insurance.”
Gone are the days when life insurance was all about securing the future after an unfortunate event; now it is more of living happily with your family. It is a general myth that life insurance is only for protection to the family in case of any mishap. The truth is life insurance has evolved over the years and now apart from protection cover it has become a great investment option. It mitigates the risk of living to short as well as living too long.
You could choose from different types of life insurance that meets your requirement: Whole Life Plan, Endowment Plan, Term Plan, ULIP, and Money back plan.
We make investments to safeguard our family from any unforeseen expenses. Life insurance helps you to save your family not against unforeseen but also predicted expenditures like your child’s studies and retirement.
Child Insurance Plan
We all want best for our kids. We go an extra mile to make their life better, so why not start investing in their future right from the beginning. There is no better way to express your love for your child than to ensure that their educational expenses are met with the help of Child Insurance Plan.
Looking at the inflation, with time education will only become more costly. One way to take care of your child’s education and career is to start saving right now.
So the question arises how does a child plan work?
You can either opt for a term insurance or permanent insurance policy for your child. With term insurance, you can help secure your and your child’s future financial goal in cases of exigency. With an Insurance Plan for your child, you can save a specific amount that will have regular payouts after a certain time. This saved amount will help you earn higher returns and even ensures minimum assured sum in case of any unfortunate incident. Also, in case of death of the insurer, i.e. of the insured parent before making the requisite premiums, the insured amount remains unchanged and the balance amount is then funded by the insurance company. This feature is known as the Waiver of Premium (WOP).
The same adequately covers any mishap. The first payout is immediately after the death and the other payouts will be according to the pre-decided terms. In some policies, there is an add-on feature of survival benefit, which is given in the case where the insurer survives. This benefit is like a bonus of the policy.
So you have secured your child’s future, but what about your old age? Often our exigent and immediate financial requirements push our retirement savings plan to the back-burner.
You would be retiring after some years and would want to live your dreams. Some of you might have even penned down your wish list. Making a wish list will not ensure the fulfillment, but insuring your retirement would.
“When do you tend to spend more – On a Weekday or a Weekend?”
The answer 9 out of 10 times is : Weekend !
I am sure everyone would agree that post retirement every day is a weekend!
The bigger picture here is that we tend to spend more when we have time to for ourselves, therefore it is imperative that while considering our future expenses we consider these behavioral aspects as well.
You will not like to change your lifestyle post retirement. To enjoy your retired life, this is the right time to start saving, and life insurance is one such way to ensure an old age full of happiness and contentment.
A good retirement plan will not only lay the foundation stone for your blissful retirement but also help to meet the medical requirements accompanied with ageing. A good retirement plan will assure you the best of medical facilities.
Not convinced enough? Here are few reasons life insurance should be listed in your financial planning:
1. Safeguarding the future of your family: Life insurance acts as a financial buffer at times of any unfortunate event or unforeseen expenses.
2. Excellent Savings: Life Insurance is an excellent savings option to meet your requirement. The regular investments fetch you great returns along with loyalty benefits. It assures a guaranteed maturity amount based on your risk appetite and need.
3. Plan for Long-Term Goal: You can start saving for predictable expenses like child’s education, car, house, marriage, etc. With periodic premiums you can accumulate the required amount for your long-term goals.
4. Tax Saving: Life insurance is not only a financial aid but also helps you save taxes. The premium of life insurance is exempted under Section 80C of the Income Tax Act, 1961.
5. Pay Off Debts: Most of us have taken a loan for house, car, or business. You surely do not want your family to struggle paying it off in case of some adverse event. Your family will be in a better situation if all your loans are paid off, and life insurance can help you ensure a debt-free life for your family.
No matter which insurance you choose, you and your family will reap the benefits of the life insurance policy. Unlike other investment plans, you can opt to diversify your funds to maximize the returns on your policy.
Life insurance can be tailor made to suit your requirements and future plans. It will help you achieve your long-term goals without committing yourself to any compromise on your life-style.
Today when people are struggling to save their hard earned money, life insurance is a blessing in disguise for you and your love ones. Many of you would be unaware that the early you buy a life insurance, the cheaper it is.
In a nutshell, life insurance is saving in a disciplined manner to meet your financial obligations at different stages of your life. Plan your finances today to make a better life tomorrow.