Monday 2 October 2023
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How To Ensure Financial Planning with Life Insurance?

How To Ensure Financial Planning with Life Insurance?

Financial planning is key if you seek to live a stable and financially content life. To ensure a sure-fire financial plan, there are several tools available for you to put to use. Through these tools, you can ensure that you are creating a balance of security, savings, and investment-based growth for your money.

Why Have A Financial Plan?

You may have several goals you seek to fulfil throughout your life. Some of these may be long-term goals, such as creating a retirement fund, weddings of your children, or buying a second home. Others may be short-term goals such as a vacation, buying a vehicle, or renovating your house.

To fulfil all these goals, long-term as well as short-term, you will need to create savings. Some of these goals may be shared with your partner or your family members, while others may be personal. Either way, you need to raise funds for each goal so that you can put yourself on the right track to achieve these.

It is to raise these funds to achieve goal fulfilment that financial planning can help you. Having an overall plan lets you create more specific steps to fulfil each one of your aspirations.

Benefits of Financial Planning

Here are four common benefits that financial planning tends to offer.

  • Better Savings: When you learn to save right, spend wisely, and invest appropriately, you can create better savings for your future as well as that of your loved ones. Having a plan can help you focus more on creating savings rather than indulging in unabashed spending.
  • Staying Prepared for Emergencies: Any uncertainty faced in life can become all the more heavier to bear if it hits you financially as well. To stay financially prepared for emergencies is half the battle won, and that can be achieved through financial planning.
  • Stable Living: Once your finances are sorted out, it creates a stable base for your living. It can grant you the peace of mind to move through life without worrying about the needs and wants of yourself or your family.

Insurance And Financial Planning

While you often may not think of it, insurance can be a tool to help you create security to ensure a stable financial plan. Of all types of insurance that are available in the market, life insurance plans are one of the ways to achieve this.

Let’s first take a deeper dive into what life cover is, and the various benefits of life insurance. When you buy a life insurance policy, it is a way for you to create a safety net for your family to rely on when you are not around. This helps them stay financially stable to face individual and collective challenges while staying on track to attain their goals. The primary benefit offered by life insurance policies is the death benefit. It can be claimed by a nominee when the person insured passes away. You can use a life insurance premium calculator to understand how much sum assured can you get for your premium. Life insurance premium calculators are available on almost all plan pages and may be specific to the plan.

Depending on the type of life insurance purchased, you can expect more life insurance benefits. Whole life insurance plans offer a cover for a longer duration than most other plans, and maturity benefits alongside. On the other hand, ULIPs offer market-linked returns which are suitable for people who want to have a life cover and also earn long-term returns. Endowment plans are apt for individuals looking to create savings.

With such an array of benefits to be offered from a single life cover, there is no doubt that life insurance plays a key role in creating a more holistic financial plan.

Tips To Create A Sound Financial Plan

While getting a life cover is one of the most significant financial planning tips to remember, here are a few more financial planning tips to help you create a better future.

  • Set goals

Before you have a plan, you ought to have a clear idea of what you seek to achieve. Study your current financial situation and understand your means. You can then chalk out your goals clearly. This will help you work out the steps needed to create a financial plan that will help put you closer to your goals.

  • Choose the right life insurance plan

Buying any life insurance plan is not enough. You ought to take stock of your goals and needs and select a life insurance plan that suits you best. For example, if you have a lower risk appetite, you may want to rule out ULIPs. On the other hand, if you are looking for a more affordable option, term plans may suit you well.

  • Create investments

While life insurance has to be one pillar of your financial planning, savings and investments have to be the other. Choose investment products that match your risk levels and stay consistent with them. Investment and saving products tend to offer better results in the longer run.

Whether you are earning or not, you may have some goals that need you to have some degree of financial stability. To achieve this, having a financial plan is crucial. Understanding your goals and selecting the right investment plans and the right life insurance policy can help you create this financial plan and achieve a better future.