Saving Insurance Plans for Self-Employed Without Fixed Retirement Funds

“Being your own boss”: If that is your life’s motto, you are definitely an enthusiastic self-employed individual. It surely has its perks, like flexibility and freedom to express your ideas and ways of conduct, but it brings in future uncertainties like unstructured retirement savings and financial plans. In the absence of usual employee benefits like pension plans, provident fund or group insurance, savings insurance plans are useful instruments to build financial security for your future. Interested to know more?

What are Savings Insurance Plans?

These are investment-oriented tools that combine life coverage and investments efficiently. Along with life cover assurance, savings insurance plans ensure, you can build a corpus over time to secure your retirement. For self-employed professionals in India or abroad, these plans are ways to make disciplined investments and savings. Some key aspects of these plans include:

Most long-term plans offer affordable options so that you can invest and save as per your needs. With variations in business cycles, your income may also be inconsistent. Hence, there may be options for lump-sum investment along with regular payments.
Since these plans are chosen to fulfil various life goals, the tenure can also be chosen as per the investment horizon.
Mostly, the returns are assured as in the Public Provident Fund or Fixed deposits, but life insurance plans with a bonus feature might not guarantee fixed returns, as bonus amounts tend to vary.
Some plans may also allow the freedom to choose where you want to invest your funds.

Types of Savings Insurance Plans

There are 2 categories of savings insurance plans, which come in combination with insurance coverages:

Endowment Plans: It offers a death benefit along with a long-term savings facility for your family. In case the life assured is deceased during the policy tenure. The entire amount is paid out with returns for family support, along with a bonus amount (if any). In situations of survival, a maturity benefit is paid out, which is a corpus created to fulfil your dreams over the years. This type of plan can also be utilised by the self-employed Non-resident Indians as well to achieve their financial objectives in the long run.
Money Back Plans: It has all the characteristics of an endowment plan, plus liquidity. During policy tenure, in case of survival, fixed payouts are given at predetermined intervals to policyholders. On maturity, the balance is paid out along with any further accumulation. Despite payouts, in case of the death of the policyholder within the term, you are eligible for the entire amount of the death benefit, irrespective of any earlier payouts.

For the young professionals, a family man with dependents or even those with high-risk jobs living abroad, NRI insurance Plans like endowment and money back can be preferred tools to secure finances.

Why Savings Insurance Plans Matter?

Other than the obvious of promoting long-term saving habits and discipline, savings insurance plans have other benefits as well :

Many plans offer assured returns, especially those that are not linked to the stock market or are not unit-linked. It helps you to build a stable and secure corpus without exposing you to any market risks.
In addition to savings you can enjoy with your loved ones, these also carry life coverage, which takes care of your family’s financial requirements and goals in your absence. They offer death benefits on the sudden demise of the policyholders so that the family can maintain their expenses without worrying about the future.
As these are long-term assets with assured returns, savings insurance plans are often used as collateral for taking loans. This helps you to get over any emergency fund crunch without disrupting your savings or discontinuing the policy.
To top it all, the maturity proceeds that a policyholder or his family receives are also completely tax-free under section 10(10D) of the Income Tax Act.

What to Consider For Choosing the Right Plan?

Whether you are an NRI going for NRI insurance plans or an Indian going for Savings Insurance Plan, these factors should guide you to choose the right one amongst the many available in the market:

Are you saving for your retirement? Or your child’s education or marriage? The answer determines your investment tenure and objective.
Choose a plan that suits your income pattern and where you have the option to top up your investment whenever you have extra income.
Look out for policy administration charges and a high rate of claim settlement percentage. The credibility of the policy and the provider needs to be judged before you hand over your life savings to them.
Understand the lock-in periods, surrender conditions, and taxation benefits before starting your policy.

Ending Note

For self-employed and NRIS who do not have the security of an employer-sponsored benefit, savings insurance plans and NRI insurance plans are the best and reliable ways to plan their financial future.

You can enjoy the best of both worlds a savings for yourself in case of survival and for your family in case of demise. You just need to start early, stay focused and be patient with your investment.

Author Bio:

This is Aryan, I am a professional SEO Expert & Write for us technology blog and submit a guest post on different platforms- Technoohub provides a good opportunity for content writers to submit guest posts on our website. We frequently highlight and tend to showcase guests.