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I am self-employed. How can I plan my retirement using life insurance?


Several types of insurance policies provide life cover as well as regular returns. Know how these policies can be useful to plan your retirement as a self-employed professional.
I am self-employed. How can I plan my retirement using life insurance?
 
Several types of insurance policies provide life cover as well as regular returns. Know how these policies can be useful to plan your retirement as a self-employed professional.
 
Most salaried employees have PPF and gratuity savings, which are partially financed by their employer. On retirement, the employees get a lumpsum amount as their PPF or gratuity settlement. So even if they don't have any other savings, they have at least something to depend on for their retirement needs.
 
However, for self-employed individuals, the picture is completely different. A self-employed person needs to manage all finances on his own, whether it is business, income, investments or retirement. Such a professional does not have any compulsory savings. Hence, when a self-employed person retires, he may have nothing to depend on.
 
Retirement planning is therefore even more crucial for self-employed individuals than it is for a salaried employee. By choosing the right type of life insurance policies, you can not only get adequate coverage, but also ensure that you get regular income when you stop earning from your business.
 
Goal-based investment planning
  • First and foremost, list down your financial goals and requirements. Plan to invest for your retirement based on your changing needs in every stage of life.

  • If you cover yourself and your family with a good term plan, your dependents like spouse or children will remain protected in case of an unexpected event.
  • There are several insurance plans that provide regular returns, which will be especially useful for your retirement. These plans provide life coverage as well as regular income in the form of annuity. Consider investing in insurance policies like ULIPs, endowment plans, money-back plans, etc. so that you have regular income to meet expenses when you retire.

  • When you are nearing your retirement age, you should also consider adding a few riders like accidental, critical illnesses, waiver of premium, etc. to your life insurance plans. These riders provide additional coverage for events that are usually not covered by your life insurance policy.
 
Just like you plan your business activities, you need to plan effectively for your retirement too. The various types of life insurance plans available today can be your tools for the same.
 
Disclaimer: This is generic information and It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any investment strategy. You are advised to make your own independent judgment with respect to any matter contained herein. ADV/2/12-13/5726.