Retirement Planning: Why one should include term insurance in retirement portfolio

With average life expectancy in India steadily rising over the last couple of years, more and more people are finding themselves occupied with another financial task — retirement planning. Living longer is heartening, since we get more time with our loved ones, to pursue our dreams and live life to the fullest. But on the other hand, it also increases our financial burdens in our golden years after we have exited the workforce. Being able to meet our financial needs even after retirement poses a very important challenge in planning your post-retirement years. 

There are a few considerations to ensure that you come up with a comprehensive retirement plan. Some of the most important factors are the time horizon available for saving, savings and corpus, risk appetite, and transfer of wealth. 

Role Of Term Life Insurance

Term life insurance is an indispensable component of a well-rounded retirement portfolio. It offers unique advantages that can significantly enhance your retirement planning efforts. The most important factor is that term life insurance provides a safety net for your loved ones in case of your demise during the policy's term. If you have a spouse or dependents, ensuring their financial security is paramount. A term life insurance policy guarantees that they will receive a death benefit if the unexpected happens, providing them with the financial support they need.

Term life insurance is initially much less expensive compared to permanent life insurance, making it a cost-effective choice for those looking to secure their retirement years. This affordability allows you to allocate more of your funds toward savings and investments, helping you build a substantial nest egg for retirement.

Premiums paid for term life insurance are typically tax-deductible under Section 80C of the Income Tax Act, 1961. This tax benefit can lead to significant savings, allowing you to maximise your retirement contributions and reduce your overall tax liability.

When it comes to retirement planning, term life insurance is a valuable tool that should not be overlooked. Its affordability, tax benefits, and ability to provide financial security to your loved ones make it an essential component of a well-rounded retirement portfolio. As you plan for your golden years, make sure to consider the benefits that term life insurance can offer in securing your financial future.