Why Life Insurance Should be The First Step in Financial Planning
In the wake of rising inflation, change in lifestyle patterns and shift to nuclear families, and life insurance has become very important. It is necessary for every person to insure his life for the financial security of his family and then proceed to other aspects of financial planning.
Financial planning is a process involving charting person’s monetary goals and long-term objectives in conjunction with means and ways of achieving those long-term objectives and goals. This includes elements of wealth creation, emergency planning, and protection. Importantly, a person’s monetary plan should be reviewed to be in sync with his different stages of life and his need that are specific to a certain life stages.
Changing circumstances like wedding purchase of a house and child’s education mandate that the financial budget plan evolves to fulfill these objectives within the given timeline. Today, a person has numerous options to choose from when he starts his financial planning. While the loss of life of the family’s bread-winner is irreplaceable, being insured guarantees that the family members are provided with the much-needed money to be financially independent without having to compromise on their standard of living. Hence Life Insurance should be the first step in financial planning.
Life insurance is a savings-cum-protection tool that comes from its primary feature of it being a need-based financial tool that helps one meets every life stage need.While the basic and most essential premise of life insurance has always been ‘protection’. There are certain insurance products offering a feature of it being used as a wealth creation tool. There insurance products help a person to save the money that can be used to fund different events such as marriage, child’s education or retirement.But the instant comparison with such tools is incorrect as they serve fundamentally various needs. However, in the unfortunate event of the demise of the family wage earner, only life insurance provides succor to the dependents of the client.
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