The pandemic has underscored the importance of diligently taking care of one’s health. However, it has also enhanced the value of three ‘Fs’: Freedom, Family, and Finances. Being immune to this fatal virus has been a priority, but now queries are also rising on how one should achieve financial immunity without compromising on the other.
There has been a spike in people looking up “How to save?”, “How to invest?” on Google for the past year. And the current job market, increasing cost of essentials and no social security have only added to the concern. Amidst such a scenario, all of us want our families to be protected from the harsh winds of uncertainty and be in pink of our physical and financial health.
The meaning of financial immunity for each person and his/her family is different. With various investment avenues at our disposal, life insurance acts as a financial instrument which not only protects the breadwinner financially but also provides savings and investment options by building desired corpus to fulfil family’s financial needs.
To simplify this endeavour, listed below are the different life stages and relevant life insurance solutions to ensure and boost one’s financial immunity:
For individuals between 20s-30s: It is advisable that one must purchase insurance at a younger age as the premiums are cheaper. If you are young, and recently started earning a regular income, then you may think about building your wealth and financially securing your parents. If your parents are nearing retirement age, their future medical finances need to be taken care of now. At this stage of life, term plans and ULIPs can provide financial support to you and your loved ones in case of an eventuality. A term plan offers highest sum assured at nominal costs. Also, what gets overlooked at this age is that how vital it is to stretch your finances and grab the best health or critical illness cover that one can afford. The absence of pre-existing illnesses will open a plethora of options that might not be available later on in life.
For individuals between 30s-40s: In this life stage, you will inevitably shoulder more responsibilities, your family is growing, your assets are increasing, daily and lifestyle needs are evolving and sustained, but the question remains — is all of this covered with a solid protection plan? Up until a few years back, most of us thought living within means and building savings is more than enough for an average household. But the pandemic 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 individuals to have a flexible term plan which protects your family’s financial future and evolves with growing aspirations. Along with a term plan, you may want to consider investing in a child plan or guaranteed income plan. A child plan can assist you in planning for future education costs. Guaranteed income plans can aid you in pursuing your short- and long-term monetary requirements.
For individuals between 40s-50s: During this life stage, your focus is on your children’s higher education, income after retirement, and caring for your ageing parents — in short, the sandwich generation! You are responsible for your own ambitions, your children’s future goals and your parent’s well-being. Furthermore, both education and medical costs are rising at an exponential rate. It makes sense to protect your family and your investments with a term plan, bulked up further by additional riders like critical illness cover, premium waivers, etc. To meet your financial goals and mitigate existing financial burden, it is advisable to also consider guaranteed money-back plans and retirement savings plan that suit your current and future needs.
For individuals above 60s: Here you are contemplating retirement or maybe a Career 2.0 project. If you had invested in a money back insurance plan earlier, you will start reaping its benefits now. Even if you opted for a term insurance plan, it would provide increased coverage as per your life stage, making you financially immune. Adding riders will cover some of your critical illnesses. The idea of looking for retirement plans at this stage is not farfetched either.
As you can see, life insurance is not only necessary but also a comprehensive tool to safeguard one’s Freedom, Family and Finance. Only with such a strong and solid foundation, one can consider themselves financially healthy and immune.
(The writer is Chief Actuarial Officer, Aditya Birla Sun Life Insurance Company)
