How Can You Use Life Insurance to Build Wealth?

With earning money, people always have the thought of making investments. Have you ever wanted to invest your earnings or have a wealth plan? While most discussions revolve around the topic of investments, they seldom focus on the subject of wealth creation. People often talk about wealth creation but barely answer the question, what does wealth mean?

Wealth holds different meanings for different people. While some people consider large sums of money in their bank accounts wealth, others consider real estate a wealth mark. Some think wealth is having precious metals, while others believe in owning fixed deposits. Before we discuss wealth accumulation, let us closely understand what 'wealth' means.

What Does Wealth Mean?

Different individuals look at wealth from their perspectives, meaning different for them all. A correct way of defining wealth is having enough funds and assets to fulfil your requirements, future aspirations, and goals in life. People called rich but cannot meet their personal needs are not wealthy. Even if one is not wealthy today, with a wealth plan, one can make smart choices and take steps to become wealthy with time.

How to Build Wealth Using Life Insurance?

A life insurance policy is a crucial investment for everyone as it provides financial security against all uncertainties of life. While life insurance is primarily meant to offer protection and security, it is also an excellent investment option. One of the major benefits of life insurance is it helps you build wealth. When wealth planning, the following tips will prove to be helpful.

• Choose the correct kind of life insurance.

  The market contains various life insurance policies that cater to different people's requirements. Money-back policies and endowment policies are great-return investment options when it comes to wealth accumulation.
  
  More importantly, one gets to select a flexible premium payment option; the premium payment can be annual, half-yearly, quarterly, or monthly. Furthermore, while both these insurance policies might not offer you high returns, it ensures your security and great returns with no or minimal risks.

• Opt for long-term

  Life insurance policies are typically long-term financial vehicles, which makes them ideal wealth generation choices for the future. You can choose to invest in long-term plans like ULIPs. It offers you the double benefit of great investment returns and life protection.
  
  Part of your premium amount is put into money market instruments, where you get returns linked to the market. Therefore, if you plan on investing for a long-term life goal like your kid's higher education or buying a retirement house or marriage, ULIP investment can be a great choice.

• Minimum risk of losing your money

  A life insurance policy is an excellent choice if you are willing to invest in a low-risk investment that fetches you healthy returns. Your premiums are not directly invested into the high-risk equity or stock market. Therefore, no matter how the market movement is, your investment is never drastically affected by the same. As a result, your corpus keeps flourishing without any barriers.

• Taxation benefits

  Tax comprises a significant portion of your expenses; it takes away a large chunk of your income that you can otherwise put to use for different purposes. When you invest in a life insurance policy, you enjoy a tax benefit of up to ₹1.5 lakhs under the Indian Tax Act, section 80C. Saving tax contributes significantly to your wealth accumulation plan.

Points to Remember

Remember the following points before starting your wealth accumulation journey.

• Start investing early. The longer you invest, the better corpus you build.
• Prioritize your long-term financial goals and select the suitable investment option accordingly.
• Give priority to long-term wealth accumulation plans over your current expenses.
• Convert your savings into investments.
• Be proactive in activities relating to investment, savings, and wealth management.
• Research and understand the difference between the multiple long-term investment choices before choosing for yourself.

Conclusion

As you just witnessed, life insurance can be a great part of wealth building without risks. By investing in a good life insurance policy, you can invest money, save for your future, and build wealth in the most certain manner. Along with the same, you get the flexibility of choosing the kind of life insurance that suits your finance plans. With a ULIP, you can exponentially grow your money, while with a standard term life policy, you can get life coverage with minimum returns. Thus, with the correct mix of investment and insurance, you can easily meet your financial goals.

To know more, please read the relevant articles at our website PNB MetLife.

Disclaimer:
The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.

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