Is life insurance a retirement planning tool?

Planning for your retirement? Then ensure life insurance policies are included in your portfolio.

Planning for retirement is a crucial aspect of managing your finances. After all, you need to figure out how you will meet expenses when your income stops. Many investors make the mistake of focusing only on the share market or Fixed Deposits when they save for retirement. However, life insurance is also an important aspect when it comes to retirement planning.

Here is how life insurance plans help in your golden years:

• First and foremost, you need a life insurance policy to protect your family from the financial implications of an unfortunate event. You have been taking care of your family until now. But who will pay for their expenses in case you are not around? Adequate insurance not only ensures that your goals are secure, but also enables your family to meet expenses in your absence.

• When it comes to retirement planning, remember that you will need regular income to meet expenses when you retire. It is hence advisable to invest in life insurance plans that provide regular returns, such as money-back policies. These plans provide life cover as well as cash returns at periodic intervals, so you can get regular income even after you retire.

• In addition, you can also consider various types of Unit Linked Insurance Plans (ULIPs), in which you can invest when you are younger. When you retire, you will get a lumpsum amount, which you can use to meet expenses. Most ULIPs now give you the flexibility of selecting the kind of investments you want to make, so that you can customize your plan according to your risk profile.

You need to select the right policy for your retirement objectives to be met. If you are unsure about the type of plan to choose, consult your insurance advisor, who can point you in the right direction.