While the fact that life is uncertain has never been a secret, the events of the recent past have further certified this truth. No matter how well you study and or how hard you work at the office, you could lose your job due to several political, global, or economic factors.
Similarly, despite leading a healthy lifestyle, you may encounter an illness that takes away your ability to work and leave your family without a breadwinner.
As gloomy as these concerns may seem, they can be tackled efficiently with planning. Investing in life insurance plans in India, dedicatedly saving in a monthly income plan with insurance cover, following a budget, and being prudent and mindful while spending, can be some easy ways to ensure financial safety for you and your family.
If you are wondering how to ensure guaranteed(1) income for life, here are some tips that can help:
1. Clear your debt: Loans and credit cards have certainly made it easier to purchase things. They provide financial liquidity and help you fulfil various goals like education, material needs like a car, assets like a home, etc. However, they also come with heavy rates of interest.
Debt is like rust on your money. It erodes your savings. So, the sooner you get rid of it, the better it can be. Try to prioritize settling your debts over fresh spending. You can also avoid taking on a loan altogether by adding your money in other instruments like guaranteed(1) regular income plans.
Savings insurance plans can help you grow your money over time with inflation-beating returns. The accumulated funds can be used to cover expenses like higher education, home purchase, car purchase, etc., and substantially reduce the need to take on debt.
2. Buy life insurance: One of the biggest worries that you can carry in life is over the security of your loved ones in your absence. This stress can be further amplified if you are the chief earning member of your family and your family members are dependent on you financially. A simple way to ensure their well-being in case of an unfortunate event is with a life cover policy.
Life insurance plans in India, like a term plan, can be bought at significantly low premiums. A term plan offers life protection in the unfortunate event of death during the policy term. The sum assured amounts for term plans are substantially high even at comparatively lower premiums. You can appoint your spouse, parent, child, or any other loved one as the beneficiary.
The death benefit paid to your beneficiary is tax(*)-free under Section 10 (10D) of the Income Tax Act, 1961. So, your loved ones get to keep the entire amount without any tax(*) liabilities. Moreover, life insurance plans in India also offer a tax(*) deduction under Section 80C that lets you save tax(*) on the premiums paid up to ₹1.5 lakh every year.
Purchasing life insurance can help you leave behind a legacy. Your family members can use the insurance payout for multiple needs and live their lives comfortably.
3. Prepare for the unexpected: An illness or injury can forbid you to work and earn money. In such a situation, it can be impossible to make ends meet. Therefore, it is important to allocate a part of your present income towards such unanticipated events in the future. Investing in a monthly income plan can be one way to do this.
You can use a life insurance savings plan to save systematically. These plans offer assured returns on investment, along with life cover. Contributing a small amount every month can be easy on the pocket and at the same time help you build a valuable pool of funds over time.
It is vital to start saving for such contingencies early in life as the primary reason for saving money here is to substitute your income. Moreover, if you do not use this money for the said purpose, you can add it to your retirement fund and enjoy a financially secure retirement. Either way, you have nothing to lose.
4. Have an emergency fund: Most financial experts recommend having an emergency fund for short-term emergencies like the loss of your job, a salary cut, sudden health issues, unexpected home damage and repair expenses, etc. Your emergency savings fund can be anywhere close to 4 to 6 months of your present salary.
For instance, if your current salary is ₹70,000 per month, your emergency fund should reflect an amount between ₹2.8 lakhs and ₹4.2 lakhs. You can maintain a separate bank account for emergencies. However, make sure to not use the money on your routine expenses.
An emergency fund can help you cover your essential expenses till you get back on your feet. The most important thing while picking a savings plan for emergencies is liquidity. You should be able to access your money anytime you want without any penalties imposed.
5. Plan for your retirement expenses: The golden years of your life can only be comfortable as long as you save for them. Ideally, retirement planning should begin from the very first paycheck. However, it is never too late to begin. You can consider guaranteed(1) regular income plans for retirement savings. These plans offer flexible premium payment terms and carry very low risk. In addition to this, these plans offer inflation-beating returns and also secure your loved ones with a life cover.
Guaranteed(1) regular income plans are also very flexible. You can pay the premium in a single payment or in annual, half-yearly, quarterly, or monthly instalments. Additionally, the payouts can be received monthly or annually. These plans act as a replacement for your salary in retirement and ensure that you are never short of money. Moreover, you can also avail of the many tax(*) benefits.
To sum it up
Guaranteeing financial freedom for life is not all that complicated. Simple yet strategic plans and habits are all it takes to ensure economic security. Try to incorporate these tips in your financial planning, and you would be able to lead a stress-free life.
Tata AIA Life Insurance offers a range of life insurance savings plans and savings calculators that help you strategize your financial safety. To know more about savings plans and how they can help you, you can also check out Tata AIA policy details.
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Disclaimers:
Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
* Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
Tata AIA Life Insurance Company Limited (IRDAI Regn. No.110 • CIN: U66010MH2000PLC128403). Registered & Corporate Office: 14th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. The trade logo displayed above belongs to Tata Sons Ltd and AIA Group Ltd. and is used by Tata AIA Life Insurance Company Ltd under a license. For any information including cancellation, claims and complaints, please contact our Insurance Advisor / Intermediary or visit Tata AIA Life’s nearest branch office or call 1-860-266-9966 (local charges apply) or write to us at customercare@tataaia.com. Visit us at: www.tataaia.com.
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