Retirement Planning: What is the importance of life insurance for post-retirement financial security?

Retirement planning helps to avoid financial uncertainties after retirement and it’s always better to start investing in different savings instruments for retirement at a young age. There are various products and investment options available in the market if you are looking to build wealth with long-term savings. Generally, retirement planning involves long-term savings. A diversified portfolio helps more to build wealth over the years and life insurance policies could be part of your investment portfolio.

Choosing a life insurance policy that offers guaranteed returns during retirement years could be a better way to ensure retirement income compared to other investment options. In addition, it can act as a cover for family in case of the unfortunate event of death of the policy holder.  

Why is life insurance important for retirement planning?

Stable income after retirement: Some types of life insurance policies offer a stable income after retirement. They provide one with the much needed financial support and reduce the burden on their family. One can opt for retirement or annuity plans to save by paying premiums and take advantage of these small savings after retirement as a stable lifelong income source.

Disciplined approach: Life insurance policies work in a disciplined manner and you need to start paying regular premiums that also encourages a sense of saving. Moreover, it is a way of disciplined investing and helps one in the long-run as the earlier they start investing the more their funds multiply. This helps to generate more wealth and create a larger retirement corpus.

Cover for medical emergencies: In later years, one common problem is need for medical help. The life insurance policies that guarantee periodical payouts can be a cover for medical expenses in the non-working years of your life.

Low risk: While retirement planning includes investing in equity and mutual funds, they're highly risky and investment in life insurance policies can mitigate the risk to some extent. Many life insurance policies offer guaranteed payouts  or annuity options and come with comparatively low risk.  

Financial security for family after death: In the unfortunate event of the policy holder’s death, a life insurance policy can be a saviour for their family. The lump sum amount or periodic payouts can be used by their loved ones to ensure their quality of life stays the same even after the insured's death, especially when they were the primary earner in the family.