Updated: May 3, 2021 6:39:11 pm
Written by Anil Kumar Singh
Life presents different opportunities to different people, today. What remains constant though is the need to plan and protect your future financially. Unforeseen situations can financially burden you, if not accounted for while road-mapping your way to different milestones. Apart from enjoying these milestones, one usually aspires to also pass down a financial legacy to their loved ones. Whether it is modest savings or a handsome inheritance, it will have an impact on the lives of those who matter most to you.
A life insurance plan can help you achieve your immediate and lifelong needs seamlessly and simultaneously. However, to gain maximum benefits from the policy, one must review and track their finances at life’s major milestones:
First regular income: This is a significant moment in the life of a young adult. With steady income comes the need to be financially independent and judiciously save for life’s upcoming milestones. Investing in a life insurance policy at a young age has ample benefits – one being that it allows for locking a relatively low premium for the entire policy term. At this stage, it is ideal to look for long-duration plans as one can reap the benefits of a lower premium and a greater financial cushion. However, a short-term savings plan can help generate the required sum for immediate milestones.
Family Life: Adding a partner and kid(s) to your life’s equation has the most impact on your life insurance needs, more so if you are not a double income family. You are bound to have additional needs and expenses such as a bigger house, private vehicle, a robust plan for the child’s developmental and educational needs, and much more. A whole life cover would be a good start towards retirement planning and securing your family in your absence. A combination of short and long-term plans can provide guaranteed income for your current and future needs.
Exponential Income Growth: A sizeable growth in income allows you to increase your social status and upgrade your lifestyle. During this milestone, it is important to make sure that your life insurance cover aligns with your new financial status and lifestyle needs. This measure helps avert the risk of downgrading your lifestyle due to an unforeseen, unfortunate incident. It is advisable to upgrade your existing savings plan or buy additional plans which provide the needed financial stability. You can opt for a plan that offers flexibility to align your goals with your savings and can give you assured money from time to time.
Planning for retirement: Life insurance is much more than just pre-planning for unforeseen events. It is an equally important tool to pre-plan for one’s golden years in life. It can ensure your financial freedom, post-retirement with a steady income and a sizeable corpus. Keeping this view in mind, it is vital to upgrade one’s financial cover by evaluating your needs and desires for the later years. These measures will provide a hassle-free retirement period for you and your loved ones. It is imperative to start young with your retirement planning; however, a flexible life insurance cover will let you plan for your retirement even at a later stage.
Leaving a legacy: While legacy planning, one must take into account the current and potential future requirements of your family and safeguard a sizeable corpus. A whole life participating cover typically includes a savings component that can help with your legacy planning process, when opted to accrue over time.
Life insurance truly is the most democratic, guaranteed, and easiest form of financial planning available to people from all walks of life, at a nominal cost. For salaried individuals, it further acts as a robust tool to save tax, year on year. It is prudent to understand the importance and advantages of life insurance and how it helps support your short-term and long-term financial needs.
The author is Chief Actuarial Officer at Aditya Birla Sun Life Insurance. Views expressed are that of the author.
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