While most of us know the importance of savings, few of us save taking into account unexpected surprises which can risk critical long-term financial goals. For many the concept of savings doesn’t go beyond saving to taking care of day-to-day expenses or to achieve some short-term goals such as going on a vacation, home renovation, etc.
If you are the main breadwinner of your family, in your absence your savings may do little to financially sustain your family for long.
Thus, more serious financial planning is needed to protect your family against financial burden in case you are not there. Here’s how a simple steps that will help your family stay financially secure even in your absence.
Firstly, Term insurance is the foundation of financial planning. It is very important to have adequate term cover when your family members are dependent on your income or you have outstanding loans to pay. In your absence, your savings may not last long for your family to enjoy their current standard of living or pay off any outstanding loans.
This is where term insurance is your most trusted friend. It offers large life insurance cover at affordable premium. The lump sum pay-out from the policy can support your family in your absence. In case of your demise during the policy period, your family gets the sum assured.
Once protection is taken care of, the next step is to grow your wealth. Note that simply saving a part of your income and not investing it will eventually reduce its value due to inflation. You need to identify investment options to grow your money.
Blending life insurance and investment into a single product, unit-linked insurance plans(ULIPs) are one of the most effective financial tools to build wealth for long-term financial goals. In ULIPs, one portion of the premium you pay provides life insurance cover and the other portion is invested in the market for wealth creation.
In case of your unfortunate demise during the policy period, your family gets either the sum assured or the fund value (whichever is higher) or both, depending on the policy. The money received will help your family take care of financial needs without dipping into the family’s savings.
These are the baby steps which will certainly aid your loved ones when you are around. So don’t wait start taking action now.