Life Insurance is not a Retirement Plan

Dear readers if you are looking at investing in Life insurance strictly from the perspective of long term Retirement planning, I have reason to believe that you should not invest all of your capital into this one asset to achieve your retirement goals. The primary goal of a life insurance policy is to protect the financial needs of the dependents of the insurer in case of his untimely death within the term of the policy. To aid the same there are today a number of Life Insurance companies in India that offer various insurance plans for the benefit of individuals.

I am of the belief that Life insurance and Retirement planning are two totally different concepts, however both are surely taken into consideration when an individual carries out a long term financial planning for himself.

Let’s dive a little deeper to understand what the term Retirement implies, Retirement means that the concerned individual would cease to render his services in any professional or entrepreneurial manner. This means that he would not be an earning entity; this really changes many dynamics significantly as now the individual does not have a monthly income (salary) and he would have to depend on his savings and investments to look after his dependents.

Thus now he or she being retired very importantly needs capital, medical services and other needs that would account if they want to maintain the lifestyle enjoyed while working. Thus Retirement planning would look into all these aspects of which insurance could also be one but not the only one, as insurance cannot be considered as a hot investment asset.

Since generation of capital is a priority, the individual should rather direct his capital towards other prudent investment classes like equities and mutual funds. The Indian government has accepted even foreign insurance players in the potential insurance market, and there is stiff competition amongst the insurance companies in India to offer the best insurance plans to people.

It’s sad to learn that many of the life insurance agents are selling life insurance plans under the pretext of retirement planning, and gullible investors are buying such plans from them. This gap in actionable knowledge can be bridged if the investors would be more financially literate and able to differentiate between Life Insurance aspects and Retirement planning.

From a larger context, the regulator of Insurance companies should also enforce stricter norms to make sure that investors are not duped under false plans as purported by insurance companies or their insurance agents.

In my belief the investor should proactively take efforts to be financially literate and now more than ever before there are ample avenues to understand exactly about the various life insurance and retirement planning products available in the market. These small but very important steps will help him safeguard against pit-falls in the longer run to put it in simpler words he would know exactly what he is signing against and will get what he asked for.

If an individual wants to buy an insurance policy he should spend some amount of time researching on best life insurance policies available in India. There are many Insurance companies in India, and he can choose the one that is best suitable for his/her family’s needs. Likewise Retirement Planning also requires a lot of study and careful planning to make sure that one can enjoy and reap good benefits during one’s sunset years of his life.

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