Anand Mathews (31) is a young professional working for a major multinational realty firm. He earns a comfortable income and is set to rise well in his career. He owns a small apartment gifted to him by his wealthy grandparents, and he plans to get married soon. His parents are retired and not in need of financial assistance from him at present. Which is Important: Investment or Insurance?
Mathews has a surplus amount leftover in his bank account at the end of each month. He plans to use it to follow his creative passion for photography and travel when he builds a large enough corpus. However, his parents advise him to purchase insurance and make it a part of his overall financial planning.
Table Content
What Is Financial Planning?
Financial planning helps people estimate their future financial state (income, asset value, withdrawal, needs) based on currently-known variables. It can also focus on the certainty of future financial events such as educational needs, retirement, and risk management.
It is a step-by-step approach to achieving your future life goals. It helps you increase your savings, enjoy better standards of life, be prepared for emergencies, and have peace of mind. Wealth creation, retirement planning, and tax savings are other components of a good financial plan.
Which is Important: Investment or Insurance?
While it’s easy to say that both are equally important in a financial plan, in real-life terms, it’s wise to look at them from a practical perspective.
The current Covid-19 pandemic has abruptly shifted the focus for most people. The patchy job situation, uncertain incomes, unexpected and enormous medical expenses, and disruption of many pre-determined goals have drastically changed many financial landscapes.
People are becoming more aware of the need for correct financial planning, including tax savings, a better grip on your income and assets, and emergency funds.
Medical emergencies, accidents, and loss of income can drain your corpus and disrupt the best of financial plans. Death, disease, disability, and long-term after-effects of medical treatments can affect income-earning ability. That is where insurance can help people face unexpected financial crises, especially in the case of young people planning to start a family.
It is important to secure your earnings before you plan to invest, where insurance steps in.
Advantages of Having Insurance
• Insurance helps safeguard yourself and your dependents from the unexpected loss of life, property, business, or health.
• You can avoid financial strain on your current income.
• It protects you financially with health insurance, term life insurance, and critical illness insurance products.
• Purchasing insurance when you’re younger offers huge savings in premiums that get higher as you age
• You can benefit from tax savings under Section 80C and 80D
• It helps you to tolerate huge and unexpected financial outlays with the aid of affordable premiums.
• Various types of insurance plans are available based on different types of protection.
• It prevents you from getting into a debt trap because of huge medical expenses or the loss of the main income earner in the family.
• It represents a disciplined savings plan that can help in corpus creation.
• It is a great savings instrument that requires little or no involvement or expertise from the customer.
• It addresses multiple needs based on the life stage you are in.
Having the right inputs can help Mathews to make the right decision.
Decide as per need
“Insurance and Investment” both are almost the same cause in both scenarios you need to spend money. But in life, you want to achieve more than you should invest money in both and you need proper research before investing money or buying a policy cause finding the best in both is quite hard. Insurance and Investment is the basic need of human, insurance is another way to protect yourself and your family from the worst condition of life and Investment is a way by which you can fulfill your dream.
Look, family is our first priority and we never take any kind of risk to protect our family, no one knows about tomorrow but one thing is certain is that accidents can happen at any time. So, we should first ensure that accident won’t harm you financially and with an insurance policy, you or your family will get treatment in the best hospital and your insurance company will reimburse your loss.
Talking about the investment, well it’s a way by which you can increase your wealth and it’s actually helping you in standing financially. Dreams and Determination can give you anything and investing money in your respective field gives you a thought of keeping moving. But before investing money you need to do proper research, and the most important thing is your money.
Conclusion
Look, insurance and investment both are the much-needed thing in our life, but you have to decide which service you want to switch. Talking about insurance policy then you should opt for an insurance policy as young as you can cause in a younger period of; the life you got policy is too cheap and the way you become old age people then the insurance policy will be expensive. But you can’t invest money at your younger period of life because a lot of people have no experience and a lot of people don’t have money. So, now options are easy for people but the matter is what they choose.