Diwali is a highly anticipated festival that celebrates new beginnings, happiness and prosperity. It also heralds the auspicious start to planning your financial journey for the coming year. The financial goals and backgrounds of each individual and family are varied; however, one thing remains constant in all cases: timely assessment of financial goals and research-based planning help mitigate the economic effects of unforeseen events.
Therefore, it is crucial to consider life goals such as bringing up a child, marriage expenses, etc. compared to current expense/revenue patterns. After careful consideration of financial goals, individuals should consider the myriad of options available to achieve those goals. Most of them are longer term investments and there are many avenues that help achieve these goals.
To put it into perspective, Covid-19 has had a negative impact on economies around the world from a health and economic perspective. Many people have faced job losses or reductions in income due to market volatility caused by the uncertainty of the new global and national economic paradigm. It has also forced many individuals and families to compromise on usually important milestones in any Indian family’s journey – some have put off their higher education, some have put off buying a new home and some have even taken a break. their wedding plans. The backing and security provided by an investment product that guarantees regular income combined with a sum at maturity would have worked wonders for many of these families.
This scenario has reinforced the need for a financial product that offers insurance as well as guaranteed, inflation-resistant returns on investment. The guaranteed life insurance products offered are part of these product groups in the market. These are non-participating life insurance plans that offer a combination of life insurance and return on investment. This instrument offers extreme flexibility by providing life cover for the entire duration of the policy while you can choose to pay a premium only for a limited period based on your respective insurance policy. In the event of the unfortunate death of the insured, the candidate receives the sum insured which allows him to reach the main stages of his life, without incident.
Guaranteed life insurance plans can also be customized by choosing premium payment terms and policy terms to suit current income and financial goals, encouraging individuals to live in the present while investing for their future. Guaranteed products are further divided into two categories; Guaranteed savings plans and Guaranteed Income Plans. A Guaranteed Savings Plan is a capitalization plan that offers a flat-rate benefit at maturity. A guaranteed income plan provides an assured income payment and a lump sum benefit at the end of the policy term. In addition, these products also provide tax benefits under Section 80C and Section 10(10D) under the Income Tax Act 1961.
The longer your policy lasts, the better it is for you and your loved ones, as it strengthens the policyholder’s financial safety net. These products also offer several add-ons available to insulate your investments and therefore your future ensuring that you can reap the benefits over a period of time. Overall, guaranteed products are suitable for all age groups to build wealth and achieve financial security at different stages of their financial journey, especially for risk-averse investors, as they provide stability during periods of market volatility and uncertainty. Many people spend considerable time researching investment opportunities and insurance plans that will meet their needs. Guaranteed products are distinguished by the benefits and flexibility they offer.
Therefore, this Diwali, rather than going into a sprendthrift mode, invest in your future and make a lasting choice to be invested in a guaranteed life insurance plan. It will certainly allow you and your loved ones to reach the major milestones in life. The rule of thumb remains the same for everyone, the earlier you invest, the better you get.
(By Akshay Dhand, Appointed Actuary, Canara HSBC Life Insurance)
Disclaimer: This is the personal opinion of the author. Readers are encouraged to consult their financial planner before making any investment.