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How Life Insurance forms an important element of your Financial Planning

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How Life Insurance forms an important element of your Financial Planning
March 07, 2023
Financial planning is a strategic way to ascertain the availability of adequate funds or reserves for the accomplishment of financial objectives or to meet unplanned contingencies. We all work hard to secure a better tomorrow for our loved ones. Life is a long journey which comprises of various financial objectives and uncertain exigencies.

To offer you a financial cover against unpredictable events and to accomplish the financial goals of life, a life insurance policy is an appropriate proposition to invest into as a part of your audacious financial planning.

A life insurance plan forms a vital constitution of one’s financial planning in the following ways:

  • Protection for your loved ones

    A life insurance policy acts as a financial backup plan for your loved ones. You pay a fixed amount of premium to the insurer, and in return,you get a life cover against your life in the form of a death benefit.So, in the event of your unfortunate demise, your family will be financially compensated with the sum assured plus additional benefits(if any) as per your life insurance policy.

  • Saving and Investment

    Life insurance policy acts as an appropriate saving and investment tool.With the periodic, regular and systematic payment of premium, the sum assured increases with various cumulative benefits like simple/compounded bonuses, guaranteed additions, loyalty benefits, etc. during the term of your life insurance policy. Additionally, it brings discipline in your investment approach.You may either invest in market linked or traditional life insurance plans as per your risk appetite and capacity to pay.The life insurance policy acts as a saving tool as it offers a guaranteed maturity benefit to attain various financial goals set in your life.

  • Manage risk against debts

    By investing in a life insurance plan, the benefit of managing risk against debts and loans is covered. A term insurance policy with a similar policy term as of your outstanding loan will reduce the risk of inability of repayment of loans in the event of your untimely demise. So, after your death, the burden of outstanding loans and debts will not be passed to your loved ones.

  • Achieve long term goals

    Long term goals like buying a car, home, education of your kids, marriage of your children and planning for your retirement, need a well analyzed and early start of financial planning. A life insurance policy with an adequate life insurance cover will help you attain different long term financial goals. Life insurance policies are a long term contract which offers a variety of insurance plans to achieve your specific or multiple financial goals by opting the right mix of insurance plans. It keeps your investment intact for a long and continuous period of time towards a planned and secure financial future.

  • Tax saving

    A life insurance policy also acts as a tax saving tool as the premium which you pay towards your policyis available for tax benefit under section 80C of Income Tax Act, 1961. The insurance policy proceeds which you receive from your life insurance policy are also tax deductible under section 10 (10)D of the Income Tax Act,1961.

    Financial planning is a major step towards a better and prosperous tomorrow. Making life insurance policy as a part of your financial plan is a stepping stone to safeguard the future of your loved ones. A life insurance policy offers a bundle of benefits to accomplish your set financial goals with a disciplined outflow of money in the form of a premium. A life insurance policy will prove to be more fruitful if taken at an early stage as the premiums are directly proportional to the age at which the policy is bought. It is a safe and secure form of saving which needs to be reviewed periodically to accomplish the changing objectives of life as per the evolution of scenarios of life.

Author’s Bio

Harjot Singh Narula, Founder & CEO, www.comparepolicy.com

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ARN: ED/12/19/17049

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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