The process of planning and protecting one’s life goals is subjective and evolving
The events that followed the outbreak of the novel virus were life-altering for many. A significant portion of the population battled with serious financial insecurities and burdens. The year 2020 has taught us to recognise the undeniable need to protect our loved ones. A life insurance policy is one of the most affordable financial instruments that can help offset such grave effects and increase financial stability to secure your present and future.
Term plans offered by life insurers provide financial stability to survive unforeseen events without compromising on your savings. However, it is wise to relinquish the ‘one size fits all' approach and seek term plans that allow hyper-personalisation based on your future life goals.
Life is unpredictable, but the life stages are similar for all of us. The process of planning and protecting one’s life goals is subjective and evolving. It is only fair to choose a term plan that evolves with your growing needs. Here is how a customisable term plan can benefit people in different life stages:
First stable income: Earning a regular income is considered an entry to adulthood and related responsibilities. As a young adult, you have limited liabilities and are working towards financial independence. However, as you ease into the upcoming stages of life, you will witness an increase in responsibilities and liabilities owing to aging, dependents, and other milestones like marriage and parenthood. It is prudent to plan for your future by opting for a term plan. Planning allows you to lock in a relatively low premium rate for the entire policy duration. Tweak your term plan basis your current needs, opt for a higher coverage compared to your liabilities, and obtain its full benefits. You can choose to reduce the cover when you are confident about the substantiality of your savings and a decrease in the liabilities.
Newly-wed: Ensuring income protection for your partner can be one of the major concerns at this stage in one’s life. This stage sometimes calls for a sizable dip in savings and an increase in liabilities as you and your partner might start planning for a new home and other expenses associated with a newly married life. A term plan with a sufficient joint cover for your partner can afford the much-desired financial security, especially if your spouse is not currently earning from external sources.
Parenthood: A new-born brings unmatched joy into one’s life. Your responsibility as a parent now is to provide for the growth and development of your child. It is essential to invest in reliable financial devices to secure your child’s future even in your absence. Also, it is very likely that at this stage one’s parents are becoming older and more dependent. It is crucial to factor in their needs while calculating the number of dependents on the current household income. You can opt for either a lump sum or an income benefit cover to fulfil your evolving expenses and provide adequate protection for the dependents.
Approaching Retirement: At this stage, your aim should be planning for a hassle-free retired life and leaving behind a legacy for your loved ones. A whole-life term plan offers coverage until 100 years of age and helps you save ample corpus for your future generations.
Recognition of evolving needs: Certain traditional responsibilities such as marriage and children might intentionally not be a part of your life path. However, the recent uncertainties have given us a first-hand experience of how important it is to have contingency funds. A robust term plan offers terminal illness benefits, critical illness benefits, and suitable rider options, and features to personalise and secure retirement income.
There has never been an opportune time to plan for the financial protection of your loved ones and assets. Using the personalization features of term plans, a policyholder can now tailor-make a comprehensive protection solution for self and family.
The author is Chief Actuarial Officer at Aditya Birla Sun Life Insurance
DISCLAIMER: Views expressed are the author's own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.