Time To Kickstart Or Revisit Your Financial Planning Is Now
Consider your life goals, expenses, and debts to determine the right coverage for your term plan.
Consider your life goals, expenses, and debts to determine the right coverage for your term plan.
Financial Planning
Advertisement
Recently, a colleague shared a story that made me pause and think. Ravi, an engineer from our IT team, was tragically taken from us in a car accident. He was the family’s sole breadwinner and left behind his parents, a wife, and a daughter. Our company rallied around his grieving family, offering support in every possible way. But hearing my colleague recount what Ravi had done made me take a moment to do my own mental math. I discovered that Ravi’s financial planning was as impressive as his technical abilities at work. He had planned and invested wisely, and with each significant life event, he had taken the initiative to upgrade his life insurance. Ravi had taken great care to secure his parents’ retirement, and a part of his death benefits provided the necessary support for his wife to settle their home loan. He had also secured his daughter’s future, planning for her education abroad.
Also Read: How To Effectively Plan For Healthcare Costs After Retirement?
Advertisement
With a little foresight and good planning, Ravi had secured his family’s well-being. He had ensured that his untimely passing did not cause major financial strain on his family.
Advertisement
Term life insurance offers pure protection against life’s uncertainties. Yet, a staggering 80 per cent of Indians are inadequately prepared for such eventualities.
Most Indians are either not insured or are under-insured. This leaves millions of families vulnerable to financial crises in the event of a breadwinner’s death. This happens because people either underestimate the importance of term insurance in financial planning or are unaware of the appropriate amount of coverage needed, as Ravi did.
Furthermore, term plans are sometimes viewed as unnecessary and are overlooked for investments with visible returns. Some purchase the product for tax benefits, which is a good start. However, they often end up compromising on the cover. There are also employees with employer-provided policies who generally feel that these are sufficient to meet their needs.
His careful planning ensured his family’s financial security. It’s time for us to do the same.
Start by taking control of your finances. To determine the right coverage, consider your life goals, expenses, and debts. Assess your unique needs and build a plan around them.
Also Read: Sebi Makes Entry And Exit Into F&O Stricter To Boost Market Stability: Check Details
While there are countless products, online calculators, and experts, don’t solely rely on them. A good rule of thumb is to aim for life insurance coverage 10 times your annual income, i.e. 10X. For instance, if you earn Rs 10 lakh annually, aim for a Rs 1 crore cover. This will ensure enough financial protection to cover critical expenses and obligations. While there isn’t a single formula to determine adequate coverage, the rule of 10x cover is the bare minimum, which is a good starting point. It is crucial to tailor this to unique family situations and how it fits into overall financial planning.
Significant life events like getting married, having a child, or changing jobs can greatly affect financial obligations. Regularly checking your insurance coverage is important to keep it in line with inflation and any changes in your financial situation. If you need more coverage, you can either add extra coverage to your existing policy or get a second policy.
Stories like Ravi’s show us just how important term insurance can be. His experience highlights the need to take a close look at your financial situation and recognize the vital role that term insurance plays in ensuring your family is financially secure in the long run.
The author is the Chief BALIC Direct Officer, Bajaj Allianz Life Insurance
Advertisement
Budget announcement is eagerly awaited by people of age groups, however, for seniors it is an event that gives them hope of saving more money, earning a higher return on their retirement corpus and lowering their expenses.
Having too many loans can create many problems, including keeping tabs on timely repayment and changes in the interest rate scenario. Clubbing multiple loans into one or two bigger loans can provide seniors with several financial benefits
Prioritising goals is an important part of life, and planning them well is necessary for a stress-free retirement
Get all the latest stories delivered to your inbox
Advertisement
Get all the latest stories delivered to your inbox