A beautiful relationship between a brother and a sister is celebrated every year during the auspicious occasion of the month of August. Raksha Bandhan. Brothers promise to be there for sisters forever, and it is common to give them a meaningful gift as a token of love and care. We realize that with the ongoing pandemic, the festivities may not be as grand as they used to be, and we also feel there is a need for protection since the pandemic last year.
Protection plans can help your siblings secure their financial future when they need it the most. Helping your siblings understand the importance of a protection plan like term insurance or a protection plan like Unit-Linked Insurance Plan (ULIP) can be a good option for this occasion of Raksha Bandhan.
Understanding ULIPs
Unit Linked Insurance Plans (ULIPs) offer the twin benefits of insurance (life cover) and investing in a single policy. Thus helping you to increase your wealth along with protecting the future of your loved one from unexpected times. A major portion of the ULIP premium is invested in different funds (debt, equity or balanced) depending on the risk appetite of the policyholder and a small amount of the premium goes towards the insurance cover. ULIPs are suitable for meeting long term goals like child’s education/marriage, buying a house, retirement planning etc. Moreover, these plans are a great way to start saving for your future goals in a disciplined manner.
For an earning brother, he can buy and invest in ULIPs as it provides a security cover as well as it helps him grow his wealth to meet his child’s future needs such as higher education . Also, a policyholder has to pay only a small amount every month depending on his budget to save with a ULIP. ULIPs are a good option to get good market linked returns over the long term.
Understanding term plans
Your sibling should be adequately covered if he or she works and contributes to the family income. This Raksha Bandhan, you can ensure financial security and stability by guiding and introducing your siblings to term insurance. Term insurance plan will help your brother or sister to financially secure the family. If he has a loan like education loan, if any unfortunate event happens, the claim amount can help your parents to repay the loan. If she has children, the term policy will ensure that the school education of your nieces and nephews is not affected in the absence of your siblings.
The amount to be invested is determined by the financial needs and condition, type of insurance, policy term, target, time frame and risk tolerance. If necessary, you can consult a financial expert, research online and explore more options to safeguard your sibling’s safety and financial needs.
Disclaimer:Varun Gupta, Chief and Appointed Actuary, Bharti AXA Life Insurance. Thoughts are personal.
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