If you are someone in your late 20s or early 30s, the last thing on your mind is life insurance. You may have tuned out any advice related to term insurance policy coverage, thinking that it is not your concern right now. But financial planning is not something you keep for the later part of your life. Ideally, when you are in your late 50s is when you would reap the benefits of all the investment decisions you took in your younger years.
So if you are at an age where your responsibilities are minimal, and your disposable income is the highest, then now would be an excellent time to consider financial planning. That being said, life insurance is an essential part of that financial planning that will not only help you secure your family’s financial future but also save tax in the process.
There are many such life insurance products that you can incorporate in your tax saving investment portfolio that will help you meet your financial goals at various stages of your life. Let us discuss each one of them individually.
- Term Insurance
A term plan is a life insurance product that offers protection against potential financial loss that may arise out of your premature demise. In such an event, the policy nominee will get the sum assured that it would help them pay for their expenses and maintain their lifestyle, even in your absence.
When choosing a term plan, you must look for a policy that offers the best maturity benefit and financial stability to your loved ones.
It is the purest form of life cover that is useful in providing your dependents with a survival fund to sail through life in case something happens to you. You can also use the sum assured to cover the repayment of a debt by assigning your term plan to a creditor.
Simply put, a term insurance policy is one of the most common tax saving investments that are designed to protect your family against unforeseen circumstances. When choosing a term insurance policy, make sure you have carefully assessed your needs and identified the future requirements of your family members to arrive at a suitable sum assured that you could afford for an extended period.
- Unit Linked Insurance Plans (ULIPs)
ULIPs are a combination of life insurance policy with an element of investment that not only provides financial coverage to your family but also help you create wealth over some time.
Life insurance products such as Unit Linked Insurance Plans (ULIPs) can help overcome the effects of inflation on your financial goals by providing you with the option to invest in equity, a market entity known to deliver the best results across all asset classes.
When you invest in ULIP, a portion of your premium is allocated for the insurance cover while the remaining is invested in equity funds. You can choose from various asset classes to decide the fund allocation between equity and debt.
- Child Plans
Once the joy of becoming a parent subsides, the reality sets in that you have to start planning your child’s future right now. This is why you need to consider child plans. Don’t be misled into believing that a term insurance policy is enough to pay for your child’s needs in your absence. However, your child will have different needs as they grow up, and life insurance alone will not be able to cut.
A child plan is a combination of insurance and investment that not only secures your child’s future financially but also provides financial aid across various stages of their life. You will be able to comfortably pay for their education abroad and even set aside a fund for their marriage!
- Retirement Plans
Advanced medical facilities have increased the average life expectancy over the years. As a result, you can live longer with longer retirement years at the end of your work life. Since you have a lot of active years left, it is essential to have a substantial corpus so that you can maintain your lifestyle and enjoy the fruits of your labour without being dependent on anyone.
There are tons of pension plans that are geared towards building your savings during your earning years so that you can get a hefty sum on your retirement. This lumpsum amount from a term plan can be used to live out of your days in peace – without any monetary obligation on your children.
No need to seek help from relatives or liquidate your assets to pay for yourself through your old age. Choose the right life insurance product in the form of an annuity. Annuities bought from the retirement corpus can be either used to give you a fixed income for a specified period or your lifetime.
These life insurance products should make up the investment portfolio that will help you stay financially independent through various stages of your life. You can easily find online insurance products from reputable insurers such as Max Life Insurance that allow you to calculate the premiums and review the policies thoroughly before making an investment decision. Choose the right combination of these plans to cover all your bases.