Choosing the right insurance in uncertain times
You can never exactly forecast the timing and amount of rain during the monsoons, no matter how hard you try. Likewise, your existence is full of unknowns. Things can go wrong in a variety of ways and at any time. As a result, you have tools like a savings account and a life insurance policy to protect yourself from such occurrences / unfortunes events.
Is it possible to survive without insurance?
You can survive without insurance if you want to, but you shouldn’t. Uncertainty and financial freedom risk will always be a part of your life. You will only get wet if a rain forecast is incorrect. However, if something goes wrong in your life, your way of life may be jeopardised.
A good life insurance policy with a critical illness benefit and a large death claim should be enough to keep you and your family afloat through difficult times. Having a savings policy in place could be beneficial at this time. The monthly income from your savings plan should be sufficient to cover all of your required expenses, such as your EMI and loan repayments.
There are four forms of financial planning in general you should consider for uncertain times:
- Term plan
- Pension plan
- Endowment plan
Term insurance is a form of life insurance policy that provides coverage for a specific “term” of the year in exchange for a predetermined payment. Term life insurance, as a pure protection plan, provides more insurance coverage for a low cost.
Term insurance plans provide financial protection for the entire family in the event of the policyholder’s absent. Optional coverage for critical illnesses and accidental death is also available. You’ll be insured for a long time, and the rates are reasonable.
The Benefits of Term Life Insurance
Family Dependency: If you are unable to work, the term insurance proceeds can be used to meet your dependents’ and family’s monthly expenses. It also aids you in achieving major life objectives such as your child’s education and marriage.
Asset Protection: You can borrow money for things like a car or a house with a term plan. However, if you die, your dependents and family members may be liable for debt repayment. In this case, your family may be able to use the term insurance payout to pay off the outstanding debts.
Risks associated with modern lifestyles: Today’s lifestyle difficulties frequently result in a wide range of ailments and diseases. Some term insurance plans give critical illness coverage for the remainder of your life, as well as coverage for your dependents and loved ones after you die. This critical characteristic compensates for the diagnosis of life-threatening conditions like heart attack or cancer.
A pension plan, also known as a retirement plan, is a sort of investment plan that allows you to accumulate a portion of your resources over time in order to ensure a stable financial future. A pension plan can help you deal with the uncertainties of retirement and assure a regular stream of income. Even if a person has a sizable savings account, a pension plan is essential.
Importance of a Pension Plan
- Increased retirement years
- Health-care costs
- Financial independence after retirement age
A Unit Linked Insurance Plan (ULIP) is financial vehicle that also provides life insurance cover. ULIPs let you build money for goals such as your dream house, your child’s education, your retirement, and more through systematic investments and market-linked returns.
ULIP, or Unit Linked Insurance Plan, is a type of insurance that also serves as an investment. It provides superior life insurance with good returns while also assisting in tax reduction. In fact, in today’s economy, ULIPs have emerged as one of the greatest investment possibilities.
Ideally suited for:
- ULIPs should be considered by people who have a long-term financial strategy for wealth creation with insurance.
- Investing in a ULIP until it matures can help you save for retirement, your children’s education, and other financial goals. It combines the benefits of both savings and security into one plan.
- Long-term financial planning, as ULIP offer both bond and stock investing with insurance. It has a regular premium payment option and accomplishes life insurance and wealth accumulation objectives.
An endowment plan is a type of life insurance that pays out a lump amount after a set period of time (called “maturity”) or upon death. Up to a particular age, typical maturities are ten, fifteen, twenty, thirty, thirty five, forty years.
In the event of a catastrophic illness, an endowment policy will pay out. Endowment policies are either standard with-profits or unit-linked, including those with unitised with-profits funds. The holder is subsequently paid up values and surrender value, which is set by the insurance company based on the period the policy and the amount paid into it.
Our lives do not stop because of a single wet day. As a result, a comprehensive financial strategy backed by the appropriate insurances can also help you endure obstacles in life. All short-term emergencies should be addressed in the financial plan. If you have a large enough umbrella to protect your entire family, the size and colour of the rain clouds don’t matter.