{"id":12106,"date":"2020-10-19T06:52:08","date_gmt":"2020-10-19T06:52:08","guid":{"rendered":"\/blog\/?p=12106"},"modified":"2021-12-01T10:44:02","modified_gmt":"2021-12-01T10:44:02","slug":"the-relevance-of-insurance-in-your-financial-plan","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/moneyfy\/investment-guide\/the-relevance-of-insurance-in-your-financial-plan\/","title":{"rendered":"The relevance of insurance in your financial plan"},"content":{"rendered":"\n

Financial planning\nentails an objective assessment of your income and your expenditure to figure\nout a way to maximize your savings and investments. It allows you to reach your\nfinancial goals and objectives quicker without any hassles whatsoever. A\nfinancial plan brings method to the madness and streamlines your finances.<\/p>\n\n\n\n

To be able to\nprovide the best results, a financial plan should ideally focus on three\naspects – savings, investment (wealth creation), and protection. Most investors\ntend to focus only on the savings and investment aspects when drawing up a\nfinancial plan, leaving out the protection aspect entirely. This can end up\ndisrupting the carefully thought-out financial plan in the long-run. Here\u2019s a\nlook at why insurance occupies a very important role in a financial plan.  <\/p>\n\n\n\n

The relevance of insurance in a financial plan<\/strong><\/h2>\n\n\n\n

Most investors\ntreat insurance unfairly, as an afterthought. Insurance can help you or your\nfamily get back on your feet after an untoward incident. The payment that an\ninsurer gives you upon the happening of an undesired event can help you tide\nover losses arising out of it.<\/p>\n\n\n\n

For instance,\nassume that you\u2019ve worked out an exceptionally good financial plan including a\ncareful selection of low-risk and high-return savings and investment options.\nYour ultimate end goal is to purchase a dream home for your family and to save\nup for retirement. If something were to happen to you, such as an accident, a\ndisability, or even death, it can throw your entire plan up for a toss. In\naddition to that, your family would also end up losing their primary source of\nincome, thereby putting them under great financial distress. <\/p>\n\n\n\n

An insurance plan\ncan avoid all of this worry. It can keep you and your family protected from\nsuch situations by acting as a major source of income during such trying times.\nSuch is the relevance and importance of insurance in a financial plan. <\/p>\n\n\n\n

Additional\nRead:<\/strong> <\/strong>All\nYou Need to Know about Different Types of Insurance and Their Uses<\/a><\/p>\n\n\n\n

\"Insurance<\/figure>\n\n\n\n

Why should you include insurance in your financial plan?<\/strong><\/h2>\n\n\n\n

Now that you\u2019ve\nunderstood the relevance of insurance in a financial plan, let\u2019s take a look at\nsome of the reasons why you should include this product in your plan right\naway. <\/p>\n\n\n\n

Insurance can also act as an investment option<\/h3>\n\n\n\n

While insurance\nplans are designed to offer you protection against losses and other untoward\nincidents, they can also act as an investment option. Unit Linked Insurance\nPlans (ULIPs) in addition to providing a protective cover also gives you\nhandsome returns on your investment. Insurance plans with endowment benefits\ncan also be a good option for investors looking to get something out of their\ninvestment, while staying indemnified from losses. <\/p>\n\n\n\n

Insurance can help you meet debt obligations<\/h3>\n\n\n\n

Even when you lose\nthe ability to generate income due to an adverse event, your debt burden still\nremains intact. Without an income source, it might become tough for you to pay\noff your obligations on time. Insurance comes to your aid under such a\nsituation. The payout you receive from the insurer can be used to settle your\ndebt obligations without causing any significant financial distress to you or\nyour family. <\/p>\n\n\n\n

Insurance can help you save tax <\/h3>\n\n\n\n

The tax saving\naspect of insurance is a major reason why you should include it in your\nfinancial plan. The premiums that you pay towards an insurance plan can be\ndeducted from your total taxable income, thereby reducing your tax liability.\nAlso, the payouts that you receive from an insurance policy are also eligible\nfor tax deductions under section 10(10D) of the Income Tax Act, 1961.    <\/p>\n\n\n\n

Conclusion <\/strong><\/h2>\n\n\n\n

Knowing how\nrelevant insurance is, it\u2019s best to purchase life and health insurance plans as\nearly as you can. This is because the premiums for these kinds of insurance\ngenerally increase as you age. Aside from these types of insurance, it\u2019s also a\ngood idea to invest in motor insurance and home insurance if you own a vehicle\nor a house.<\/p>\n\n\n\n

Additional Read: <\/strong>What is Home loan insurance? Is it necessary for you?<\/a> <\/p>\n\n\n\n

Before you buy insurance, it is always a good idea to compare the various plans available. Comparing and availing insurance is also now easier than ever, thanks to the Moneyfy app offered by Tata Capital. With this app, you can easily browse through various kinds of insurance plans and purchase the kind of covers that are relevant to your specific needs. So, to make your insurance purchases smooth and seamless, download the Moneyfy app<\/a> from Tata Capital and make your financial journey easier. <\/p>\n\n\n\n

Download Moneyfy App<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

Financial planning entails an objective assessment of your income and your expenditure to figure out a way to maximize your savings and investments. <\/p>\n

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