While the nation was gearing up for inflation from the middle of year 2019, nothing could have prepared the country for the Coronavirus pandemic and its economic repercussions. While the Government’s swift response to affect a complete lockdown in the nation did manage to stall the intensity of the crisis somewhat, it also brought the economy to its knees.
India now faces the prospect of a deep economic recession, with thousands losing their jobs daily and many businesses downing shutters regularly. Far from encouraging buying and investment, most citizens are left grappling with the changing economic reality brought on by the COVID-19 crisis. As perCMIE’s data as on May 2020, the unemployment rate in India has zoomed to 27.11% in April 2020, up from a little over 8% in the previous month.
Are you worried about meeting your financial goals in a decelerating economy? This article suggests on the single most important financial decision you need to take in the current scenario: buying life insurance.
Investing in life insurance – a decision full of benefits
Though the financial outlook for the next two quarters appears bleak while the lockdown has forced a near standstill in business operations across the nation, there are certain things citizens can do to safeguard their fiscal futures. Indeed, this is the right time to realign your financial goals and protect the interests of your family, spurred by economic uncertainty around you. We are referring to investing in life insurance.
Which insurance policy type is best for you?
However, not all life insurance products are the same as each other and there are pros and cons of each. You must pick the one that matches closely with your financial goals. We list the different kinds of insurance plans for you to choose from:
* Term insurance: It is the most affordable form of life insurance that safeguards the financial needs of your family in your absence. The plan has a high sum assured for an affordable premium.
* ULIP. The Unit Linked Insurance Plan (ULIP) is a life insurance policy that offers the dual benefit of life coverage as well as market-linked returns on investment. The plan has a lock-in period of 5 years and the accumulated corpus is paid to you on maturity, or to your loved ones upon your unfortunate demise while the plan is active. You must consider buying a ULIP plan because the growth of the investment is directed by market movements during the vesting period.
* Endowment plan. This is one of the most preferred type of life insurance products since it offers a maturity benefit to the policy holder. You can time the maturity date such that it coincides with a major financial milestone, such as sending your child to a foreign university, or buying a second car. The plan invests in the asset markets and hence, offers a good maturity bonus.
* Money back plan. As the name suggests, this life insurance type pays money back in periodic instalments over the tenure of the plan. The sum assured is paid back over fixed intervals – this is a useful feature for accomplishing short term goals.
How to buy the right insurance plan
Make a roadmap listing upcoming goals, with how much money you need for each. This can help you pick the right plan. For example, if your end goal is to safeguard your family in your absence and you have adequate savings, then a term plan is adequate. If you want periodic payments for different goals, then a money back plan is best. But if you want market-linked returns on your investment, then you must buy a ULIP plan. It all depends on which goals you set for yourself and your loved ones, and the best plan to make those dreams come true.
Next, browse for suitable insurance plans from amongst reputed insurers, and buy the policy online. Take care to use the online calculators to find out potential premium payments. Also read the policy documents in detail to know more about bonuses, premium payment terms, riders to include in the plan, and so on.
In conclusion…
Everything about life may seem uncertain. You can hardly predict what the future will bring, and whether you will be able to tick off most items in your bucket list for this year or the next. Most aspects which you took for granted – your family, health, personal goals, interpersonal relationships – may or may not pan out the way you envisioned they will.
But there is something you can exercise control over – your financial destiny. Buying a ULIP plan or another kind of life insurance helps you and your family’s future dreams are protected from the shocks of a fluctuating economy.
