How life insurance can help you in retirement planning

By: |
April 20, 2020 3:16 PM

Life insurance is the only category that gives the comfort of life insurance as well as long-term savings. There is no alternative to saving. But one has to save wisely in the financial products that can give one long-term returns.

life insurance, need of life insurance, endowment plan, ulips, money back policy, lic, lic policy, retirement plans, whole-life plans, how much will you need after retirement,There are numerous products available in the life insurance industry that can take care of retirement planning.

Even though everyone wants to retire rich, with the rising life expectancy, it is becoming more difficult every day. Hence, according to experts, it becomes very important to allocate money wisely so that you can enjoy your retirement life.

Rakesh Goyal, Director, Probus Insurance — an Insurtech Broking Company — says, “There are numerous ways to save money, but life insurance provides long-term stability in an investor’s portfolio. While investments in mutual funds are subject to market risks, other debt categories like banks fixed deposits or Public Provident Fund (PPF) cannot give inflation-beating returns in the long run. With long-term interest rates trending downwards, it becomes even more important to have an investment in life insurance.”

Life insurance is the only category that gives the comfort of life insurance as well as long-term savings. There is no alternative to saving. But one has to save wisely in the financial products that can give one long-term returns. Experts say, endowment plans are the right choice for investors who don’t want to take any risk. Those who want market-linked returns can look at unit-linked insurance plans (Ulips). There are numerous products available in the life insurance industry that can take care of retirement planning.

For instance, with endowment plans, insurers pay a certain lump-sum amount after the maturity period or in case of death of the policyholder. Goyal says “This policy is an opportunity for long term saving for retirement because in case the policyholder lives till the maturity period, the insurance company pays maturity benefit. In case of death of the insurer, the company pays the nominee the entire death benefit.” In the case of ULIPs which is a market-linked product, it offers benefits of insurance and investment (saving for retirement). With ULIP, one part of the premium is used for getting a life cover while the other part is invested in capital markets. Goyal adds, “If invested for the 15 to 20 years, returns can be strong and can take care of retirement needs of policyholders.”

Apart from such products policyholders can also look at retirement plans and whole-life plans. Under retirement plans, policyholders are supposed to pay premiums during the policy tenure which is called the accumulation phase and once the policyholder reaches retirement, he/she starts getting return which can be even monthly. This policy ensures a regular cash flow after for the policyholder after retirement. In the case of whole-life policies, policyholders are covered for the entire life of the insurer until the age of 100. At the time of the death, the sum assured along with the bonus if any is given to the nominee.

Experts say one should make life insurance part of their financial plan. Insurance can help policyholders’ family in case of unfortunate death of the policyholder, wherein the money is paid to the nominee. This helps mostly when there is a single breadwinner of the family who passes away, and the family is seen to face many financial difficulties. But a life insurance policy can take care of the policyholder’s family.

In order to enjoy retirement life, one has to start investing early in his/her career which will give time for money to grow. Note that, it is important to be very disciplined with your investments and avoid surrendering the policy or stopping the premium payment in the middle.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Govt employees can submit multiple bills to avail LTC cash voucher scheme benefit: Finance Ministry
28 things to keep in mind while opting for a pre-used car loan
3Diwali Bonus! Non-gazetted group ‘B’, group ‘C’ staff in Puducherry to get bonus of Rs 6,908 and Rs 1200