Is Life Insurance An Initial Step In Retirement Planning?
If wisely planned, retirement / pension plan is not at all complicated as it may seem to be, and can bring you the required financial security for the post retirement period.
Life Insurance is a blessing in disguise for retirement planning. Besides its direct advantages like death benefits, long term care riders etc, it provides other facilities like tax free loans against the cash value that need not be reimbursed at all, thereby helping in the retirement years. Certain people invest in life insurance quiet early in their lives, yet many take the decision in the later stages of their life. In both the cases, the maturity benefits of the Insurance policy ensure a safe and secure retirement.
Life insurance is the only option that offers specific products for different life stages so that the financial need of that particular stage is met. Though many companies offer retirement plans for the middle age groups, the earlier you start investing in a retirement plan the better it is. Because of compounded interest, when you start investing earlier in life, you can reach retirement with much more money earned and saved as compared to those who delay.
Life insurance is a great solution for two main obstacles faced during the lifetime by every family. First is the unfortunate death of the breadwinner, and second is surviving old age without visible means of financial support. As per the flexibility of the plan, the invested sum in life insurance policy is available to the insured post retirement for medical expenses, buying / constructing a house etc. The policy holder can take advantage of the retirement policy to avail easy loans for such purposes.
Having gone through the struggles of a youthful life, post retirement bring the added concern of deteriorating health. Life insurance turns out to be a rewarding investment in this case, taking care of the increased spending on expensive medical bills. Moreover, insurance is more or less an interest free loan. To meet an urgent expense, a policy holder can cancel the policy at any stage and get the calculated amount.
Nowadays, Insurance companies offer specially designed / customized pension plans to meet the varied requirements of old age. These plans foresee your financial stability during later years and provide a secured future. Life insurance is thus the best medium to keep your head high even in old age, and should surely be the first priority in financial investment planning for retirement. One should make sure to start early such that the recurring factor comes into picture. That is the same amount (say 10 lacs) invested at the age of 30 years shall bear more fruits and meet your goals than compared to investing at a later age, say 40 years.
by: Sanjay Mathew