Using Life Insurance For Retirement Planning

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Amit was a happy IT professional who lived happily with his parents, wife Sarita and his 5 year old son. The flexible timings, lucrative annual package, foreign tours—all these proved to be a bonus in his professional life.

When Rohan, Amit’s childhood friend asked Amit whether he planned for his retirement? He had excuses like he can purchase it later and so on. Most of us have such excuses in our mind but we don’t actually confront them. This actually leads to procrastination which can turn out to be highly expensive in the near future.

After hearing this Rohan explained the importance of retirement planning. “The level of uncertainty in our job is very high. Retirement can be a boon or a curse depending on how well one plans for it.

Life insurance should be considered an important element of retirement planning. An individual needs to understand how to repurpose life insurance to serve retirement goals”

Amit enquired, “How life insurance will help me post retirement?”

Ok I will explain;

Security for Family

Ensuring that a specific amount of money will be available to your family even if other retirement funds are depleted when you pass away, is an appealing aspect of life insurance. Life insurance offers death benefit at affordable premium. So, instead of hoarding money to ensure they leave an inheritance, retirees can spend their savings on what they want without guilt. Through a simple investment in a life insurance plan, the policy holders can ensure funds will be there for their family to cover final expenses and more.

Flexibility to retire early

Most people wish to retire early in life. However, many people find themselves in a scenario of whether they are wealthy enough to retire early or can wait until they turn 60 or older. Life insurance can actually provide a way to fund early retirement years. Instead of worrying about money, you can begin an early retirement from the maturity amount you would receive through life insurance plans like ULIPs or Endowment Plans.

Life insurance can also prove to be a handy tax-planning tool. The premiums you pay and the sum assured you will receive are both tax-exempted.

Rohan then added, “Amit, start with paying smaller but regular amounts every month. It’s the only financial tool that will give you dual benefits of security, wealth accumulation and tax savings.”

Amit replied, “Thank you Rohan for your fruitful advice. I’ll consider planning for my retirement now itself.”

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