Life insurance serves as one of the most versatile investment tools that does not just ensure financial security for our families but helps us achieve our life goals in a disciplined manner.
Take the example of Sonia.
A 32-year-old graphic designer, Sonia recently embarked on the journey of planning her financial future alongside her husband, Abhijeet. With a 2-year-old son and another baby on the way, they were keen to explore investment plans that could not just provide financial security for their growing family but also supplement their income to adapt to the economic shifts. After analysing various options, she decided to invest in a ‘Non-linked, Participating, Individual Life Insurance Savings Plan’. The plan not only helped her secure her family’s financial future but also offered her rising and flexible income options, backed by consistent bonuses, if declared by the insurance company, to their evolving financial goals.
Sonia thus leveraged her life insurance policy both as a potential life cover and a substantial investment tool.
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On the occasion of World Health Day, Sonia’s example serves as a poignant reminder that ensuring financial health is as crucial as maintaining physical well-being, for both play pivotal roles in achieving a fulfilling life.
As we celebrate World Health Day, let’s explore the concept of ‘Healthy Financial Planning,’ an integral aspect of achieving a holistic state of wellness.
Here are steps to help you create a comprehensive healthy financial plan:
1. Set Clear Goals: Begin by defining your financial objectives, whether it’s saving for retirement, buying a house, or funding your children’s education. Establishing clear goals will give you direction and motivation.
2. Assess Your Current Financial Situation: Take stock of your income, expenses, assets, and debts. Understand your cash flow and net worth to identify areas for improvement and determine how much you can allocate towards your financial goals.
3. Create a Budget: Develop a budget that aligns with your goals and lifestyle. Allocate your income towards essential expenses, savings, debt repayment, and discretionary spending. Tracking your expenses will help you stay within your budget and identify opportunities to save more.
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4. Build an Emergency Fund: Start saving for emergencies by setting aside funds equal to three to six months’ worth of living expenses. This safety net will protect you from unexpected financial setbacks, such as medical emergencies or job loss, without derailing your long-term goals.
5. Invest in a Sound Life Insurance Plan: Investing in life insurance is not merely a means of protecting loved ones with a life cover in your absence but a strategic component of a robust retirement plan. For example, guaranteed income life insurance plans are designed to assure you a steady flow of income in retirement, acting as a cornerstone for a healthy financial future. Many plans now also invest your premium in a variety of investment classes to provide market-linked returns and help you grow your wealth.
6. Invest for the Future: Adaptability is key in both realms; financial strategies, like health routines, must evolve with life’s changes, ensuring goals and strategies remain aligned through all of life’s stages. Develop a diversified investment strategy based on your risk tolerance, time horizon, and financial goals.
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7. Aim for Tax Optimisation: Strategise to minimise your tax liabilities and preserve more of your wealth. For example, life insurance plans not only provide insurance coverage for financial security but also help in saving tax. The death benefit paid under the life insurance plan is tax-free subject to provisions of the Income Tax Act, 1961 and the maturity benefit i.e. return of premiums upon maturity, if opted under the plan, is tax-free under Section 10(10D), under the old tax regime, subject to satisfaction of conditions mentioned therein. Also, the premiums you pay can often be deducted from your taxable income, reducing your annual tax burden.
Remember, proactive financial planning, with life insurance as a key component, is essential for building a healthy financial future. This World Health Day, prioritise your financial health and continue to live fully and confidently in your golden years.
Sameer Joshi is Chief Agency Officer, Bajaj Allianz Life Insurance.
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Published: 07 Apr 2024, 12:06 PM IST