The pandemic has underscored the importance of taking care of your health diligently. However, it also raised the value of three “Fs”: freedom, family, and finances. Being immune to this deadly virus has been a priority, but now there are also questions about how one should achieve financial immunity without compromising the other.
There was a spike in people searching “How to save?”, “How to invest?” on Google for a year. And the current job market, the rising cost of basic necessities and the lack of social security have only added to the concern. In the midst of such a scenario, we all want our families to be protected from the strong winds of uncertainty and to be in the pink of our physical and financial health.
The meaning of financial immunity for each person and their family is different. With various investment opportunities at our disposal, life insurance acts as a financial instrument that not only financially protects the breadwinner but also provides savings and investment options by building up the desired corpus to meet the family financial needs.
To simplify this process, here are the different stages of life and the relevant life insurance solutions to ensure and strengthen your financial immunity:
For people between 20 and 30 years old: It is advisable to take out insurance at a younger age as the premiums are cheaper. If you are young and have recently started earning a steady income, you may want to consider building your wealth and financially securing your parents. If your parents are approaching retirement age, their future medical finances need to be taken care of now. At this stage of life, term plans and ULIPs can provide you and your loved ones with financial support in case the eventuality arises. A term plan offers the highest sum assured at nominal costs. Plus, what’s overlooked at this age is how vital it is to stretch your finances and grab the best health or critical illness coverage you can afford. The absence of pre-existing conditions will open up a plethora of options that may not be available later in life.
For people between 30 and 40 years old: In this stage of life, you will inevitably take on more responsibilities, your family grows, your assets increase, daily and lifestyle needs change and continue, but the question remains: is all this covered by a solid protection plan? Until a few years ago, most of us thought that living within our means and building up savings was more than enough for an average household. But the pandemic has taught us how quickly markets turn, savings are ruined and asset values implode – while our lives and livelihoods hang in the balance. It is imperative for all salaried people to have a flexible term plan that protects your family’s financial future and grows with growing aspirations. In addition to a term plan, you may want to consider investing in a children’s plan or a guaranteed income plan. A children’s plan can help you plan for your future education costs. Guaranteed income plans can help you meet your short-term and long-term monetary needs.
For people between 40 and 50 years old: During this stage of life, you focus on your children’s higher education, post-retirement income, and caring for your aging parents — in short, the sandwich generation! You are responsible for your own ambitions, the future goals of your children, and the well-being of your parents. Moreover, the costs of education and medical care are increasing at an exponential rate. It makes sense to protect your family and your investments with a term plan, bolstered by additional riders like critical illness coverage, premium waivers, and more. To achieve your financial goals and alleviate the existing financial burden, it is advisable to also consider secured money. -return plans and retirement savings plan tailored to your current and future needs.
For people over 60: Here, you are considering retirement or perhaps a 2.0 career project. If you had invested in a refund insurance plan earlier, you will begin to reap the benefits now. Even if you opted for a term insurance plan, it would provide increased coverage depending on your life stage, making you financially immune. Adding riders will cover some of your critical illnesses. The idea of looking into retirement plans at this point isn’t far-fetched either.
As you can see, life insurance is not only necessary, but also a comprehensive tool to protect one’s freedom, family and finances. Only with such a strong and solid foundation can one consider oneself financially sound and immune.
(The author is Chief Actuary, Aditya Birla Sun Life Insurance Company)
Posted: Sunday, March 27, 2022, 9:52 AM IST