Having adequate financial security is crucial for every individual and family. While we earn to fulfil our current needs and responsibilities, saving and investing for the future is equally important. Building a corpus through investment savings plans ensures your family is financially stable even in your absence. On the other hand, buying term insurance guarantees that your valued ones receive a lump sum if something unfortunate happens to you.
When used strategically, term insurance and savings plans can work together to secure your family’s financial future. This article explains how you can leverage both to ensure maximum benefits.
The Need for Term Insurance
Term insurance is a reasonable form of life insurance that provides high coverage at reasonable premiums. It assures that if you were to pass away prematurely, your family would receive a substantial amount as a claim. This death benefit can help them maintain their standard of living without financial difficulties.
Term insurance is beneficial for primary earners or co-breadwinners of a family. It ensures that their spouse and children are protected if the earning member is no longer around. The payout from a term insurance plan can be used to cover primary financial responsibilities like:
Thus, term insurance gives you the peace of mind that your financial duties will not become a source of pressure for your loved ones.
The Advantages of Savings Plans
Investment savings plans help you accumulate wealth over time and build a retirement corpus. They provide market-linked returns while helping you save a specific sum periodically. Some key benefits include:
Clubbing Both for Complete Protection
Used strategically together, term insurance and savings plans can create a robust financial fallback for your family’s future. Here is how you can leverage both:
How Much Coverage You Need?
The term insurance amount and ideal monthly savings contribution will vary for every individual based on the following:
You can use online calculators to determine ideal term insurance and monthly SIP figures tailored to your situation. Higher responsibilities require excellent coverage to replace income, while higher income groups can afford larger SIPs for better retirement planning. Those with medical issues might need more extensive term insurance due to higher risk.
Both term insurance and investment corpus should be sufficient to sustain your current lifestyle. To balance both aspects adequately, regularly review coverage and SIP amounts, adjusting for life stage goals.
Tax Savings on Premiums and Payouts
Clubbing term insurance and savings also helps save tax, improving overall returns.
Term insurance payouts are tax-free for recipients under Section 10(10D), further enhancing the corpus’s value.
For some savings plans, such as ULIPs, PPFs, etc., maturity proceeds are tax-exempt upon fulfilling certain conditions around premium payments and holding periods.
Choosing the Right Provider
With growing awareness around financial planning, quality insurance providers now allow you to buy term insurance and start investing for retirement on a common platform:
Before choosing a platform, analyse term insurance, claim settlement records, experience across savings products, service ratings, the convenience of the online system, etc. This ensures both insurance coverage and investment proceeds are managed reliably.
Summing Up
Securing your family’s financial well-being requires careful planning, with term insurance as the foundation. Combining it with disciplined retirement-focused savings creates a comprehensive strategy. Properly sizing both based on responsibilities and aligning payouts ensures financial protection. Choosing a provider that manages both term insurance and savings simplifies the process.
Contact PNB MetLife to learn more about term insurance.