Goal based financial planning with life insurance


The first step towards goal based investing can be to identify your short-term and long-term goals. While your short-term goals can be planning for a vacation, buying furniture, and so on, your long-term goals can be funding your child’s education or wedding, saving for your retirement, etc. Such goals should be identified in advance by setting a time frame for achieving them.

When you are clear about your investment goals, you can be able to link them to the right type of investment options. For instance, if you align a medium-term goal to long term investment options, you might be unable to achieve the desired result. Moreover, managing and controlling your finances can be easier when you determine what you wish to achieve in advance.

Goal-based financial planning can inculcate a disciplined investing habit as well as allow you to generate funds in an orderly manner. Additionally, you can easily follow the approach of ‘income minus savings equal to expenses’ rather than ‘income minus expenses equal to saving.’

After the identification of goals, the incorporation of life insurance investment tools can play a crucial role in achieving them. Let’s understand why the role of life insurance policies can be crucial to turn your dreams into reality:

  • Mitigates risks

A life insurance investment plan can mitigate the risk of not being able to achieve your long-term goals, such as your child’s needs. For instance, if you purchase a life insurance policy to meet your child’s financial requirements, your dedication to save for your child can increase. If anything happens to you in the future, the chosen life insurance policy can fulfil your child’s needs in your absence.

  • Safeguards your loved ones

Your family can be your top priority. As the breadwinner, you might look after their financial needs. In your absence, your family might be unable to sustain financially in the future. If you have a life insurance policy, your family can receive financial protection after your demise. Goal-based investing can safeguard your loved ones as well as provide them with financial backup in your absence.

To begin a comprehensive goal-setting process, you should follow these steps mentioned below:

  • Establish your current financial status. On doing so, you can put a realistic goal and values in place.
  • Identify and estimate your financial requirements after you adjust the inflation rate. For instance, let’s assume you are saving money for your child’s post-graduation. After considering the inflation rate, the post-graduate course that costs Rs. 9 Lakh today might cost you twice the money in the next 15 years.
  • Build a strategy to meet your current investment goals based on your financial condition. During this stage, you can take the help of a financial expert to guide you through the process.

As highlighted above, identifying your financial goals can commence your financial planning that can make it easier to achieve your objective at different life stages. Goal-based investing can provide you with the right direction to a make financial decisions during your entire lifetime. With these steps in mind, you should begin your goal-based investing today without any further ado!