Financial Planning is extremely crucial to meet your financial goals, to avoid a financial crisis and to provide for financial emergencies through tools like term insurance. Therefore, it is important to know the inflows and outflows. It is why we are asked to budget properly and to manage our expenses and receipts.
And yet, even when we use the best of tools and walk on the safest side of investment decisions, we are bound to be stuck by emergencies, cash crunch or an unforeseen financial constraint. Therefore, it is important to shield ourselves from the financial ramifications of say, the demise of the breadwinner of the family. This is where a term insurance policy proves its worth. In order to ensure that all the hard work and toil pays off, it is important to add that layer of protection. Term insurance policies provide for payouts of the death benefit to the beneficiaries of the nominees as mentioned in the policy papers.
Now consider a situation where your family members and dependents are left to look after themselves after you are gone. Without your support, life can become hard for them, both emotionally and financially.
The sudden loss of income could take an additional toll on your family’s well-being. Traditionally, in a pure term insurance plan, the nominee gets a lump sum amount upon the demise of the policyholder, but now there are plans where you can opt for monthly payouts as well. However, if you choose the lump sum option, you should keep in mind that it can be cumbersome to manage such a large amount of money and one should be adequately prepared to do so. An easy way to counter this is if you choose a monthly income payout option in your term insurance policy.
Calculation of the Monthly Income Scheme Inflow
A simple life cover will facilitate a financial inflow for your beneficiaries (in case of your demise) or you (in case of survival through the policy term) on the basis of the sum assured that you opted for at the time of taking the policy.
Let us look at the various expense heads you will need to take into account to arrive at a reasonable figure:
1. Monthly Rentals
These will include the mortgage or rent you are paying for your home and other properties.
2. Loan Repayments
If you have a home loan or a student loan or a vehicle loan, a certain amount each month is to be set aside for repayment of such borrowings.
3. Educational Expenses
If you have kids, they are likely to have expenses related to education, recreation etc., including but not limited to, tuition expenses, hostel fees, school supplies etc. As they grow up, expenses shoot up in the form of fees for higher education.
4. Utility Bills
This head includes the bills for internet, water, gas, electricity, mobile or telephone, cable etc. These are basic, indispensable utilities that cannot be done away with.
5. Groceries and Convenience products
One of the most obvious expenses each month is towards the groceries needed for survival – ranging from fruits and vegetables to toiletries.
6. Subscription services
These include Netflix and other OTT services, gym membership, membership to clubs etc.
Within the larger skeleton of term insurance, there are other additional riders available and other tweaks that can be made. For instance, a joint life cover option available with Smart Protect Goal Term Plan on Finserv MARKETS allows the life assured under the policy to also add his/her spouse in the same policy. It is an effective way to expand the life cover to provide for the uncertainties hovering both the partners’ lives. Moreover, under the Child Education Extra cover, you can provide for your child’s educational expenses over and above the other returns of the policy upon your demise.
In term insurance plan that provides an increasing life cover, life coverage increases every year on the anniversary of the policy. The cover can increase up to 200% of the base cover. Some variants of term insurance offer a complete waiver of the pending premiums on the occurrence of an event specified beforehand. For example, if the assured life becomes partially and permanently disabled, the benefits under the policy might continue even though the future premiums would be excused.
Under a monthly income scheme, it is imperative that you understand how the money is circulating and more specifically, what you are reaping out from this flow of money. A monthly income scheme of term insurance distributes monthly income. Because the income is steady, regular and assured, it is a reliable source of financial protection. So, head over to Finserv MARKETS and secure a robust term insurance policy like the Bajaj Allianz Life Smart Protect Goal for yourself and safeguard your family against financial exigencies. This plan provides a comprehensive life cover as well as multiple add-on options so that you can customize the plan to meet your needs.
This plan also renders tax benefits in the form of tax deductions for the payouts received as per the provisions of Section 10(10D) of the Income Tax Act. It also allows for tax deductions for the amount you spend towards the premium for the policy under the provisions of Section 80C of the same Act. You can now avail the two-pronged benefits of financial security for your family and heaps of tax saving.
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