Financial decisions you should not delay while getting Life Insurance

What school doesn’t teach you is that your smartest financial decision will be to start planning early on. Without this knowledge, many fall prey to believing they will retire soon and live comfortably with accumulated savings. The outcome is that financial security is often put off for later, which inevitably becomes never. Here’s a list of wise financial choices you should make as soon as possible.

1. Finding the Best Life Insurance
   Finding the best life insurance can go a long way in keeping you financially secure today. Look for life insurance plan that provides financial support to loved ones in the unfortunate case of the policyholder’s demise and is tailored to your needs as the estimated proportion of deaths in India due to non-communicable diseases (NCDs) such as diabetes, cardiac conditions, cancer, and autoimmune disorders has increased from 37% in 1990 to 62% in 2016. Data provided by the Indian Government alleges that in 2016, 1 in 10 Indian women and 1 in 7 Indian men are likely to be diagnosed with NCDs.
   
   Buying life insurance in one’s 30s or sooner requires investing an average of only 500 rupees a month, making it an affordable option for collecting a lump sum that is exempt from tax. One such form of life insurance is a term plan. A term insurance plan pays out a certain sum, if a sudden demise occurs within the stipulated time frame in the plan. In addition to being exempt from tax, the premium for term insurance is much lower than other insurance policies, providing a life cover of 1 crore with affordable premium costs.
2. Division Of Assets
   Writing a will and appointing nominees may seem unnecessary, but these practices are often forgotten until misfortune strikes. Hiring a financial advisor is advisable if you would like to simplify, speed-up, and tailor the process of dividing assets to one’s preferences.
   While writing a will is often overlooked as an alternative for Estate Planning. Estate planning not only protects your beneficiaries from familial conflicts but also reduces the tax burden for them. Estate planning is preferred over a will as it does not involve  probate.
3. Covering Loans
   Servicing loans like credit card bills, house loans, and auto loans for one’s time of death could burden loved ones with complexity of payment options and processes. Paying off debt soon will save money.
4. Retirement Plans
   An option for retirement planning is to invest in mutual funds, which can offer an annual rate of return as high as 12%, and even 15% in rare cases. However, the amount that remains after you retire primarily depends on when you start investing. Take the following example:
   A. Invests 5000 per month in equity mutual funds starting at age 30
   B. Invests 10,000 per month in equity mutual funds starting at age 40
   C. Invests 30,000 per month in equity mutual funds at starting age 50
   On the surface, it appears that C will have the most significant returns since the amount invested is much higher. Calculations reveal that the retirement corpus saved in A’s case is Rs 2.82 crore, in B’s case, it’s Rs 1.33 Crore & in C’s case its Rs 79 Lakh. Since the cost of delaying investment for retirement is high, it is wise to start now.
5. Budgeting
   When you invest in a great term insurance plan, you learn how to budget your savings. This is probably why 42% of those who budget save money. To successfully operate on a budget, you can figure out how much of your earnings you can devote to your home, transportation, food, and general lifestyle habits. Then get rid of unnecessary payments like the cable cost for the channels you don’t watch, unused gym membership, or the expensive data plan that you don’t require. 

Hence, it might be risky to put off financial planning for too late, but it is never a bad idea to start too soon. You can browse the PNB Metlife website to know more about the various Term Plans on offer.

The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible.