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Why should insurance be included in your financial planning?


It is important to keep in mind that while a person is saving, a substantial amount of money should be invested to insuring one’s life and family from any kind of unforeseen circumstance.

As the new financial year begins, people are looking for different investment tools and making plans for investment for FY 22-23. A strategic financial plan, according to experts includes a long-term investment plan, tax-reduction strategy, risk management plan, emergency funds, retirement strategy, asset creation and building a diversified portfolio for wealth creation. 

Balachander Sekhar, Co-founder, RenewBuy says, “As consumers save, they need to keep in mind that the rate of inflation will always keep on increasing. Thus, the saving percentage should be targeted to fulfil their needs, desires, and requirements, not only for the present circumstance but for years down the line.” 

He further adds, “It is also important to keep in mind that while a person is saving, a substantial amount of money should be invested to insuring one’s life and family from any kind of unforeseen circumstance.” 

People usually overlook the need for insurance, thinking that no kind of emergency situation can affect them in life. In most cases, experts say people feel the ardent need for insurance when an unforeseen circumstance has already happened and they pay out of their pocket, burning their savings. 

Sekhar explains, “Insurance is vital, which will help in safeguarding the wealth created in one’s life and meet specific milestones. Today companies are providing multiple insurance policies, which cater to multiple life goals of a person. The policies offered especially, in the health and life segment are so extensive, that there is almost a policy for every life goal.” 

On the other hand, life insurance, for instance, goes beyond providing only protection, it is also an important tool to achieve financial objectives related to weddings, a child’s education, buying a car, buying a home, etc. “It is also an excellent savings option for the long term, which assures a guaranteed maturity amount based on one’s risk appetite and need,” adds Sekhar. 

Another benefit of signing up for insurance is that it helps build a retirement corpus. Sekhar says, “Insurance helps consumers to systematically save and build corpus for retirement over a long term.” Many insurance companies have come up with retirement plans which are majorly annuity-based products. 

Similarly, health insurance provides equal benefits which can help you build a corpus. According to NITI Aayog, nearly 30 per cent of the Indian population is not covered under any health insurance and the government is encouraging people to opt for insurance by allowing each to avail of tax deductions of up to Rs 50,000 under Section 80D. 

Every insurance policy comes with its sets of financial benefits and plays an integral role in paving the way to financial independence. Sekhar points out, “While it is difficult to highlight the importance of each and every insurance plan, consumers should opt for insurance, for facilitating their wealth creation and savings management.” 

The best way to choose the most suitable insurance, industry experts say, is to take the route of digitally-enabled insurance advisors who can guide you with the best insurance options as per your insurance requirements. 

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