Maintaining your lifestyle – Let Insurance help you plan

A combination of savings linked, and pure protection plans can help you maintain your and your family’s lifestyle right up till and even beyond retirement

Each one of us has a financial plan in mind for ourselves. The plan ensures that we can maintain the lifestyle that we currently enjoy over our lifetime, and even beyond for our loved ones. The financial plan ideally even provides for the aspirational goals that we set for ourselves.

A financial plan should cover three essential components – Savings, Investments, and Protection. While a lot of us focus on the Savings and Investments components, we tend to ignore or deprioritize the protection aspect. Inadequate protection can have a catastrophic impact on even a well-thought-out financial plan.

Protection as an important component of your financial plan

Let’s assume that you have worked out a great financial plan for yourself. You are able to save and invest enough for your current and future financial needs and even provide for the goals that you set for yourself. But what if something were to happen to you, like a major illness, or even death? Would your family be able to tide over a large financial loss without it putting estray your plan for them, especially if the primary source of income is lost?

The right Risk Management & Protection tools, like Insurance, can help you and your family deal with such financial losses while keeping the long-term plan on track.

In fact, Insurance can assist you even in saving and investing for the future in addition to providing protection against such untoward incidents.

Why Insurance needs to be part of your financial plan

Insurance provides security to you and your family against financial losses.

There are 3 types of pure protection covers that you should include in your plan:

1. 1. Term Insurance: In this policy pay, you pay a fixed premium to the Insurance company (normally annually) against a fixed life cover. In case of the death of the Insured person, the Insurance company would pay the fixed sub-assured to the nominee. This provides a safety net for the family when the primary earner in the family is gone.

You should ensure that you have a term insurance cover that would be sufficient to pay for the expenses of your family and any debt obligations like loans outstanding etc. after you are gone.

• • Health Insurance: These policies reimburse you for expenses that you may incur in case you are admitted to a hospital for a medical reason. These policies are available on an individual or family floater basis. In a family floater, you can get coverage for your family members as well under a single policy. Most of these policies have some waiting periods before which pre-existing health conditions or certain kinds of ailments are not covered. Hence, it is advisable to start with this policy early, so that full coverage is available when it is required. It is also a good practice to review your Sum Insured periodically and increase it every 3-4 years. This ensures that your policy coverage is sufficient to cover the increasing costs of medical treatments.

• • Insurance for Assets/ Personal belongings: Incidents like an accident in your car, or a fire in your house can lead to sudden unforeseen financial losses and can derail your plans. It's good to cover your prized possessions against such losses through relevant Insurance policies like Home Insurance, Motor Vehicle Insurance, Burglary Insurance, etc.

Insurance helps you save for your financial goals          

We all aspire to have the best for ourselves and our loved ones. We set out goals for ourselves based on these aspirations. It could be to buy a house of your own, secure the best education for your kids, or just travel the world with your spouse. But to see these goals materializing, you need to plan in advance.

Investment-linked Life Insurance policies like ULIPS, Guaranteed plans, etc. provide protection in addition to returns on your investment by investing the funds in marked linked assets like equity, government securities, debt instruments, etc. This ensures that your investments grow over time and sufficient money is available to fulfill the goal in case of death or at the time of maturity.      

Insurance helps you plan for your retirement

Once you retire, the income stops but the expenses don’t!!

In fact, the medical expenses, etc. would only shoot up as you grow old. If you want to ensure that you are able to afford a post retirement lifestyle similar to the one you have today, it is advisable to start planning as early as you can.

Life Insurance policies like Whole Life covers can help you plan for your retirement. These policies also provide Protection & Investment opportunities and are available for terms ranging up to the whole life. These policies can also be planned to either pay a lump sum amount at the time of retirement or regular monthly/ quarterly incomes. The premiums paid in these policies can be deducted from taxable income under Section 80 (C) and the post-retirement income from these policies is also tax-free under Section 10 (10D). This ensures that adequate income is available post-retirement to manage your living and medical expenses.

Conclusion

Insurance has a role to play in all of the three essential components of the financial plan we discussed – Savings, Investments & Protection. It can even help you save on your taxes.

It is important to note that it’s never too early to put a financial plan in place. With the right products & timely execution, it is not difficult to ensure that the plan meets your family’s lifetime spending needs and helps you move ahead confidently in all aspects of your financial life.

Try out our tool 'Insure Right'. It can help you set up a plan for your life right up till and beyond retirement in just a few minutes.