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Ensuring sufficient financial resources for your family anytime is a moral obligation. And if you are the only earning member in the family, then it is your prime responsibility! So, it would help if you are looking for financial instruments such as passive income streams or a savings policy to set up an income stream for your family in your absence and otherwise.
One of the best ways to set up an income stream for your family is investing in a guaranteed savings plan. So, let us know what a guaranteed savings plan is and how it can be used to set up an income stream for your family.
What is a Guaranteed Savings Plan, and How Can it Help You Set Up an Income Stream?
A guaranteed savings plan is a life insurance savings plan that provides a life cover and a guaranteed return. The life cover will provide the sum assured to your family in case of your unexpected demise. They can use it to clear off the debts or pay for a commitment that will arise in the future. It is a flexible financial solution that is customisable for your savings needs. For example, you can pay the premium for a limited term and decide on the payment mode, monthly, quarterly, annually, or semi-annually.
And most importantly, you can decide on the payout option whether you need it as a lump sum or as a regular income. If you desire a consistent income stream for your family, you can choose the regular income option for the life insurance guaranteed return. It will be paid by your insurer immediately after the plan matures. You can decide on the income period and the regular income required during policy inception, estimate the premium and fix the policy term.
In case of your unexpected demise, the death benefit can also be paid to the beneficiaries of your policy in the form of regular income. This will ensure that they have financial support even when you are not there.
With the savings plan, you can choose additional riders to enhance the protection. For instance, with the Tata AIA life insurance plan, you can choose the waiver of premium rider that will waive future premium payments if you get affected due to a total or permanent disability. It will leave the life cover, and savings benefit intact for you and your family.
You need to invest in the savings plan early in life for the best and maximum benefits. It will help you choose a longer policy term and provide an opportunity to stay invested and accumulate a huge amount.
Moreover, you can also consider savings insurance for the tax benefits under the prevailing tax laws in the country. The premium and the payout qualify for a tax deduction under Section 80C of the Income Tax Act, 1961.
What to Consider While Setting an Income Stream for your Family?
1. Decide on a budget – Firstly and most importantly, you need to decide your family requirements. It can include your routine monthly expenses and other money goals. When you are setting it for your family’s future, you need to account for the inflation rate in your savings plan. Based on the budget and accounting for the inflation, prepare a detailed financial plan. It should not compromise on your living standards as you grow older.
2. Account for unexpected emergencies – While preparing for the financial plan, you also need to consider the financial crisis that might arise in your unexpected demise.
3. Research on other income streams – There are different streams of income. Earned income, investment income, passive income, and inherited income are the common forms of income. An investment income is a good choice to plan for future finances that precisely account for the inflation rate.
4. Compare and choose the product – Different financial products are available to provide beneficial savings solutions. However, a guaranteed savings plan will be an ideal solution if you have increasing commitments and dependent family members. So, compare the plans and choose a suitable savings plan for yourself.
Conclusion
Working out a consistent income stream for your family is your responsibility. You can prepare a budget, work on a financial plan and invest in a savings insurance plan for a life cover and savings benefit. The savings benefit is a guaranteed return that can generate a regular income when the plan matures. It is a good way to secure your family and plan for your retirement. Ensure to invest early and, most significantly, stay invested for maximum benefits!
