There’s one aspect every financial plan should have – appropriate life insurance.
Purchasing life insurance is an important part of good financial planning. Your family relies on you for their safety and well-being. Your life insurance coverage might protect your loved ones from financial hardships. A cashback/payback insurance coverage also enables possibilities for your future financial security. Hence, life insurance is an important financial tool to have in your portfolio.
A life insurance policy is a legal agreement where you commit to paying a set amount of money. In exchange, the insurer guarantees a certain amount to your family and friends if an unexpected incident occurs, replacing the lost income.
As a primary salary earner, you must plan for alternate means to cover your family’s current and future costs. But let’s first understand in brief what financial planning is and why it is crucial for you and your family.
What is financial planning?
Financial planning is outlining your long- and short-term financial goals. It aims to provide a groundwork for accomplishing goals. With so many investing options accessible, such as public provident funds, mutual funds, fixed deposits, and unit-linked insurance plans, there are chances you may become overwhelmed. Among the many resources available at your disposal, an online life insurance premium calculator is one such tool to help you determine the monthly premiums that you need to pay for better financial analysis and planning.
Life insurance is an essential component of a solid financial plan. And when you get older, get married, purchase a house, start a family, and plan for retirement, scouting and having a robust life insurance plan becomes more crucial. Let’s take a look at the top five benefits of life insurance.
- Mortgages and debts
A mortgage is one of the most significant expenses for a majority of people. As a result, many couples face this long-term financial responsibility together. But having a long-term plan for ifs and buts could enable you and your family to cover such significant expenses even without a primary income. A life insurance policy could provide your family with lump sum money to pay off mortgages and debts. It could help remove this significant financial stress and the danger of loan default or eventual foreclosure.
- Education funds for children
Every parent’s most significant concern is the safety of their children and their future. Therefore, securing their education with life insurance plans will safeguard their bright future and relieve them from instabilities and insecurities. Fortunately, your life insurance can cover their educational expenses as well as life’s milestone events such as marriage or starting a business.
- Family safety in emergencies
It can help you protect your emergency fund and provide you with the required finances during an emergency. An insurance policy can safeguard you and your family and ensure that your finances are not adversely impacted in the event of an accident, disability, disease, or even untimely demise that might result in a loss of income.
- After retirement
Life insurance products that provide savings opportunities could assist you in building wealth. Maturity funds can be used to fund your investment goals, such as purchasing a home or building a retirement fund. Even pure protection term insurance with a money-back guarantee delivers a nest egg at the end of the policy period. You can use it to purchase an annuity as an alternative source of income or to secure your old age.
- Potential future outlays
Along with current expenses, your family looks to you for future financial objectives and needs. Some of the future demands you should consider are your children’s schooling, marriage, and your spouse’s economic independence in old age. Policies that allow for coverage increases in response to changing financial demands might also be beneficial.
The purpose of financial planning is to help to you achieve your life goals. Whether you are sending your child to college, purchasing a new house, or leaving a legacy, you must keep to your financial plan. Nobody knows your priorities better than you, so create a clear plan with appropriate investing possibilities.