Long-Term Financial Planning with Assured Returns from Life Insurance Savings Plans

Bynamita mody

Everyone has a vision and different goals for their future. You might want to buy a car, own a house, pay for your marriage, sponsor the education of your children, save for your retirement, open your own business or more. Even though all these goals are different, there is one thing that is common in them all – they can be achieved only through sound financial planning. Long-term financial planning enables you to align your spending, saving and investing strategies with your goals.

The need for a long-term financial plan has become even more relevant in the present, given the sharply rising inflation, unpredictable market movements and the economic downturn caused by COVID-19. As a prudent investor, it is good for you to create a failproof long-term financial plan with the right investments as per your goals.

You must be cautious when selecting the investment instruments to achieve your planned targets. Experts recommend you create a diversified investment portfolio comprising of high-rewarding options, such as market-linked investments, as well as guaranteed and more secure paying options, like insurance savings plans.

What are life insurance savings plans?

A life insurance savings plan is a non-participating, non-linked, individual life insurance policy that offers you dual benefits of protection and savings. These plans provide you with a comprehensive insurance cover, securing your family financially in case of your unfortunate demise during the plan tenure. Apart from this, a life insurance savings plan also offers pre-determined assured returns on your investment. These plans are unaffected by the market movements and hence, do not carry an element of risk. You can choose to get your returns in the form of a lump sum benefit or regular payouts as per your desired frequency.

How do life insurance savings plans contribute to your long-term financial planning?

The future is uncertain, and irrespective of how well you invest, you cannot fully time the market or precisely know if a specific investment will be able to secure your financial future. For this purpose, it is important to invest in assets like life insurance policies that offer guaranteed savings returns. Market-linked investments are attractive because of their potential to offer high returns. But, such options also carry a huge risk of loss. If the market faces a downturn, you could even lose your principal amount. This will take a heavy toll on your financial health and jeopardise your long-term goals.

Alternatively, safer investment options, like life insurance savings plans, are not linked to the market and hence, carry no risk. Your investment is safe, and you get defined payouts irrespective of how the market is performing. Even though other investment options are incurring losses due to COVID-19, life insurance savings plans are still paying their customers the assured benefits of their investment. Guaranteed benefits ensure that your long-term financial goals are not compromised.

Moreover, since you know the definite amount of returns, you can easily align your goals accordingly. For instance, if you want to buy a car and wish to take a car loan, you can easily invest in life insurance savings plans to save for the future. When the plan starts to pay out the assured benefits, you can use them to pay off your car loan EMIs. Similarly, if you aim to create a retirement fund for your non-working years, you can place your savings in a life insurance savings plan to create a pre-determined, regular flow of income for your retirement.

Apart from all the investment benefits, some life insurance savings plans provide you with a comprehensive insurance cover. You can also enhance your policy with riders such as:

  • Critical Illness
  • Waiver of Premiums
  • Income Benefit
  • Accidental Death Benefit
  • Accidental Total and Permanent Disability
  • Payor Waiver Benefit

The insurance cover will act as a financial cushion for your family in case of your sudden demise, ensuring that your loved ones do not suffer when you are not around. You also get the flexibility to choose your plan tenure and even the premium paying years. You have the option to pay your premiums as a lump sum or regular instalments.

A sound financial plan can help you outmanoeuvre uncertainty. With the right strategies and investments, you can easily and confidently achieve your financial goals.