What is a Passive Income? Why should you Use it to Buy a Term Plan?
Updated On Oct 17, 2021
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A passive income is the type of income that can be generated by you without actively having to work for it. To state simply, to generate this income one does not have to go to work or office everyday and still get sufficient amount to:
- Take care of their and their loved ones everyday needs
- Take care of all the financial goals set by them keeping future in mind
Generally, one can generate this type of passive income by investing in income generating assets and having a large investment corpus. Some of the widely known income assets include monthly income plans, pension plans, blue chip equity stocks, real estate and many more.
This way you can accumulate sufficient wealth and you no longer have to work to save money. However, the income generated by you is subject to the ongoing rate of return and various other economic factors. It also means that you need to be flexible with your budgets (monthly).
Why Do You Need Term Insurance?
A term insurance plan does not just extend support to the dependents of the policyholder financially after their untimely demise but it also helps the family members with various other financial decisions.
Meeting Huge Financial Goals
Meeting large financial goals are some of the most significant decisions that need to be taken care of. It is important for your dependents to have a stable source of income after your sudden demise. In case this wealth is used by them in meeting big future goals such as marriage of a child and higher education, then the income of the family is surely bound to suffer to an extent.
Looking After Daily Expenses
Your family members require a regular stream of income in order to take care of their daily living expenses. In the absence of a regular and long term income support, your dependents left behind may have to compromise on their standard of living. Moreover, in case, they require regular income support for the long term, they may also have to go through the effects of inflation on their fundamental expenses.
How Does a Term Insurance Policy Help in Facing These Challenges?
Having a term insurance plan can help you in tackling various small issues related to money and expenses. For instance, a term insurance plan helps you and your family members in the ways listed below:
- Looks after the wealth transfer cost
- Helps in keeping your accumulated money intact
- Helps in protecting the life of your loved ones in your absence
- It might also help your kids financially at a later phase of their life by providing for their marriage and education expenses
- Keep inflation in mind by providing you increase sum assured with transforming life phases
With a term insurance plan, your loved ones can get sufficient time to make wise decisions with regards to preserving your current wealth and later use it prudently. Moreover, the lump sum amount that they would receive from the insurance provider can help them in paying for liabilities and also save for their long term future goals. Therefore, even though you have sufficient wealth to look after the needs of your family members in your absence, having a term insurance would still make their future a lot more safer and financially sorted.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.