The year gone by has once again witnessed human resilience and their ability to bounce back from adversities. Across the globe, governments are helping their respective economies get back on track. Alongside, we too should re-look at rebuilding and cushioning our finances from any possible future shocks. After all, it is our ability to withstand tough times that has held us individually in good stead. And what better than a life insurance plan to secure lives and create value.
Saving For a rainy day: Minimalist living has emerged as a trend in various forms over the years. The recent pandemic has brought the spotlight back on it and most importantly on saving for exigencies. Indians are known for their saving habits. However, to make your savings work for you and grow on its own calls for some conscious choices. Depending on the quantum of your savings and your life stage, wisely choose the insurance plan that will help you secure for certainties in life.
Satiating Your Risk Appetite: When it comes to investments, one has a wide spectrum of avenues to choose from. While some may offer attractive returns, they also come with their own ‘Conditions Apply’ fine print. It would only be prudent to have a good look at your own risk appetite and your approach towards risks. For informed and market savvy participants, opting for the right Unit Linked Investment Plans (ULIPs) allows them to take calculated risks, manoeuvre the market, enjoy unlimited fund switches at no extra cost, and earn tax-free returns.
Specialty Insurance: Specialty insurance, which covers distinctive risks or unusual circumstances, continue to attract the interest of insurers and customers alike. This takes hyper-personalisation of insurance products to the next level. Protection plans are gaining popularity in recent times and soon enough they will command your wallet share too. Innovative variants of life insurance plans, such as Switch on – Switch off insurance, Sachet or Bite-sized insurance, and Customized insurance, could potentially open doors to numerous opportunities.
Seeking ROI: There is a fair amount of guidance available in the virtual world. The difficulty is that there is no ‘One size for all’ solution when it comes to personal finance and surely not in insurance. Solutions range from safest of them all to ‘high-risk high returns’ investments. However, investing in need-based insurance products to meet your life goals provides timely and adequate ROI on your investments.
Staying Invested: Long term investments coupled with the power of compounding deliver astonishing returns. However, short term priorities often take precedence over long term goals. It is therefore important to commit yourself to long-term investing once you have provided for your short-term goals and have built your contingency fund. Participating or ‘With Profits’ insurance plans may be a perfect fit here. In these plans, life insurers share a substantial portion of surplus generated with policyholders, thereby passing on a fair amount of upside if you stay invested over the policy term.
Something for the Sunset Years: When planning for your sunset years, you have a spectrum of options, such as government securities, postal deposits and other offerings from India Post. There is National Pension Fund (NPS), Public Provident Fund (PPF), Bank Fixed Deposits (FDs), and Senior Citizens’ Savings Scheme (SCSS) as well. While these continue to give attractive returns with tax breaks available on some, the pre-tax return works out to be even better.
Pension products are one of the few options that cater to your financial needs throughout your and your spouse’s life and still leave some lumpsum money for your children. Therefore, investing in the right insurance retirement and/or pension plans is one of the most effective modes to plan your finances for the sunset years.
When opting for an insurance plan, look for averaging your return, balancing it in favour of return-on-investment and safety that you feel comfortable with. Life insurance revolves around securing the certainties of life, rather than preparing for the uncertainties. Be it marriage, starting a family, higher education for self, children education, buying a house or retirement planning or any other financial goal, life insurance can be actively combined with other investments options to complete the picture.
Whatever your life goal, you need to plan and be prepared. Thanks to the various options available, you can choose from different forms of investments to help meet your life goals. Only you can make sure you are financially well prepared to welcome certainties of life with open arms.
by, Kedar Patki, Chief Financial Officer, IndiaFirst Life Insurance