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Five Steps To Making A Better Financial Decision With Life Insurance

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Five Steps To Making A Better Financial Decision With Life Insurance
Rakesh Goyal - 03 February 2020

We often make new year’s resolutions, mostly related to fitness, life, family or professional goals. But what we often forget is that each goal requires some financial assistance to achieve them, and sometimes, the result is all about achieving financial well-being.

Whether your new year’s resolution is to improve your financial stability, investment through a sound financial instrument, or simply build a corpus to meet your long-term financial goals, life insurance policies can be a good solution.

With life insurance, you can meet your life goals and achieve long-term financial goals such as your child’s education or marriage, a world tour or retirement planning.

So, let’s see how you can make better financial decisions with life insurance in 2020.

  1. Provide financial shield to your family with term life

Unexpected incidents often leave your financially off balance. Being a bread-winner, you have to ensure the dependents are backed by a strong financial shield. An ideal way to do that is by having a term life insurance plan.

Tips:

  • Check how many people are financially dependent on you

  • Figure out how long will it take them to be financially independent

  • If you have any loan - a house loan then consider the loan amount when opting for the sum assured

  • You need to check your current financial situation and incorporate inflation

Based on various factors, you can decide how much cover would be required and also what should be the policy tenure.

  1. Child plan to secure their dreams

A child plan helps in fulfilling your child’s dream, even in your absence. Often such plans offer money to complete the education in your absence or on maturity, which is mostly when the child is legally mature. In case the parent passes away during the policy tenure, the policy stays in force, however, in such cases, most plans waive off the further premiums to be paid that is required to keep the policy active.

  1. Plan your retirement

Irrespective of your age, whether you are in your 30s, 40s, or 50s, you must plan your retirement efficiently to stay financially independent. Life insurance is one of the risk-free options to do your retirement planning. A plethora of retirement or pension plans are available online. You can choose as per your requirements. Choosing a suitable plan is easy as many life insurance companies provide online calculators, you can simply use such calculators or speak to a consultant to make the right decision.

  1. Short-term financial goals

You may have some short-term financial goals or want to repay a loan or renovate your house after certain years. You can take the help of money back policies. These policies offer short-term returns on investment periodically, which helps to meet such short-term financial goals.

  1. Long-term investment and savings

It is not just that life insurance is all about risk coverage. In fact, life insurance offers a wide range of options to meet your financial goals. For long-term investments, with a horizon of 10 to 15 years, you can go for Unit-Linked Insurance Plans (ULIP). Whether you have a high-risk capacity or looking for a low-risk investment financial vehicle, based on your risk appetite, you can choose your ULIP. Moreover, if you are looking for savings options, there are many traditional life insurance and savings plans.

You get the benefits of investment, savings, and life cover under a suitable life insurance plan. Plus, tax benefits under life insurance for premiums paid and payouts are also an added advantage as the life insurance plans are not impacted by Long-Term Capital Gains (LTCG).

Whether you are looking for providing a financial shield to your family or looking for the right solution to meet your short-term or long-term financial goals, life insurance provides you with a wide range of options.

The author is Director, Probus Insurance Brokers

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