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17 December, 2018 04:28 IST
Financial Planning
   
Building a strong financial plan is now easy and economical
Source: IRIS (17-SEP-18)

When we look at an old couple living a comfortable life with well settled children, we often end up commenting that the couple has lived a good life. Most probably, what we mean to say is that they planned their life and finances well. In fact, a sound financial plan is essential to achieve life goals and stress free life. Unfortunately, most of us associate a strong financial plan with only good earning, a well planning household budget and decent savings. Do you feel we are missing something?

Building a strong financial plan is now easy and economical

Sometimes what is not visible is the most important piece. The height of a building is dependent on how solid is the foundation and still the foundation is never visible to anyone. The fact dawned on me while I was watching a programme on how the tallest building in the world, Burj Khalifa, was built. It took 25 months to build the foundation, whereas in the next 15 months 50 floors got built.

Fortunately, for building a sound financial plan, creation of a solid foundation is neither that time consuming, nor that difficult to execute. It is a well-documented fact that risk to any plan should be thought through and covered first. The same is true for the financial planning. The biggest risk to any financial plan is the risk of disruption due to unforeseen situations such as death, disability or critical disease to the main breadwinner of the family. A simple term plan with some riders provide the cover against the risk of life and health. And the best part is that it is easy to buy a term plan in today's time.

1. Large cover at a low cost - How much a family spends on entertainment. An HD cable connection at just Rs. 540 per month, a Netflix connection at Rs. 640 per month and a visit to a cinema hall for the family of four at an upwards of Rs. 1,000 in any large city. But to ensure that the smiles this entertainment brings on the faces of loved one remain unaltered, just Rs. 536 per month for a cover of Rs.1 crore for a 30-year-old male is what one needs to pay. The economics of this investment is so positive that the concept of opportunity cost may not even come into play.

2. With just a few clicks of a button - Time is the rarest commodity in our lives today. In fact, large number of innovations of 21st century are focused on time consumed for every job. How much time we save in terms of travel time and standing in queues because of banking, payment of facility bills etc. through the innovation of internet and mobile. Luckily for us, life insurers have also thought of it and you can now buy the term plan with just a few clicks of a button or even on the go with a few touches on your mobile screen.

3. Stupendous effort-reward equation - In today's world we all value those things where we get disproportionate returns as compared to the effort made to procure those. Gone are the days when you had to fill multiple fields on a paper form to get a life insurance. Just enter some of your details like Adhaar, PAN, Income Details etc., and you are ready to close the transaction of buying a term plan. Yes, in some cases you may still have to go for a medical examination but that too can be scheduled at a time convenient to you through your mobile or computer and can be conducted in the comfort of your home.

4. Ease of storage - Any long-term contract carries with it the risk of losing important document related to it. For a term plan, it becomes even more cumbersome with the ill-equipped family to manage the claims process after the death of the breadwinner. No more of this problem in case of an e-policy as it will reflect along with other financial records in your depository statement. Hence, there will be no difficulty of storage.

When building a strong foundation to our financial plan is so easy and efficient, we can all spend our energy in building a well-crafted edifice of our financial plan and lead a carefree life-forever.

(Authored by Manik Nangia, Director Marketing and Chief Digital Officer, Max Life Insurance)

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


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