It is a known fact that a term insurance plan is a necessity for all. But do you have to spend a part of your income to purchase the policy and manage the subsequent premium payments? Or can you use passive income for buying a term plan? Read on to know more about it.
Creating a passive income source is not just a dream, but a necessary goal for many, especially those who earn a single income from a single profession. Many people have this wrong notion that having a secondary income eliminates the need for savings and investment. However, experts suggest quite the opposite. When you an additional income, it is only wise to use to for investment purposes like buying a term insurance policy to secure the financial future of your family.
But before we get into why you must buy term plan with passive income and its benefits, let us understand what passive income means?
As the name suggests, passive income, is an income earned without having to work for it. So, it could mean that you don’t have to be employed or run a business and still receive money to take care of your regular needs, the dependent’s needs and your future financial goals.
The usual way to generate this type of income is to have a large investment in income-generating investment instruments like blue-chip equity stocks, pension plans, fixed income instruments, etc.
Advantages of passive income
One of the significant benefits of passive income is continuity. This is because the income does not depend on your efforts. So, even if you are not working, you will continue to get the income.
Your need not worry about your family financial security. Even if you don’t have a regular income, the passive income can help them meet their regular needs.
Need for Term Insurance
A term insurance policy provides a financial cushion to your family until all the member become financially independent and helps them with other important financial decisions. Some of the most important financial decisions are when you need a large amount, like for buying a new home. Without the primary breadwinner, the family may have to depend on the passive income. And, if they use this income meet goals like child’s marriage, higher education, etc. the family income will most likely take a hit.
Apart from bigger expenses, the family will need money for meeting regular living expenses. Without a long-term and regular support, the family members may end up compromising on their usual lifestyle. Additionally, if the need regular income support for a long time, they may face the brunt of inflation as the daily use items may become expensive.
How can term insurance help with these challenges?
Having a term insurance cover can help you resolve several petty financial issues. For example, term insurance can help you –
- Secure the life of your family members
- Enable you to meet the major expenses like child marriage, education, in the future.
- Keeps your saving intact
- Considers inflation by allowing you to increase the sum assured by a fixed amount every year
Final Word
So, even if you have sufficient wealth to provide adequate income for your family, buying a term insurance with your passive income can make you feel more financially secure.
