The main purpose of life is to be happy. However, what always challenges us all, in this pursuit are the changing circumstances. This is the inevitable reality of life. But, still, some prior preparedness in the wake of life’s challenges can help us deal with them in a much better way. Not only that, but it can also help us realize our goals and dreams to make the most of life and to be truly happy.
One crucial part of this planning and preparedness is concerning finances. It is because having your finances in places is essential for both meeting with contingencies and achieving life goals. That is why creating a 360-degree financial portfolio is imperative for you.
Creating a 360-degree financial portfolio is easy if one knows what all should it comprise of. So, before anything else, let’s first tell you that.
What should a 360-degree financial portfolio include?
You all have different kinds of financial plans, together which shape your financial needs. All these can broadly be divided into the following categories:
Protection Plans
These are the primary financial plans that we all aim to have in our portfolio to have a financial cushion for our loved ones and ourselves against life’s challenges. Our security needs in life necessitate having these in our portfolio. These may include the following-
Term Insurance: This is a financial cover that promises to provide a fixed sum assured to your family in your absence. You may choose the option for your family to receive this death benefit as a one-time lump sum amount; as a fixed amount accompanied by a monthly income or a lump sum amount along with increasing monthly income.
Health insurance: These plans in your portfolio provide you for medical expenses in case of hospitalization or any critical illness. There are also special critical illness plans such as cancer insurance plans that ensure your family’s financial stability even during major health crisis.
Accidental insurance: This covers you against financial expenditures arising from your meeting with an accident. Some plans may also provide your family with death benefits if the accident results in your death or dismemberment.
Having these plans in your portfolio is thus, vital for you to maintain financial stability. However, while buying these plans, you must see the claim settlement ratio of various insurers.
| Insurer | Claim Settlement Ratio (%) |
| Max Life Insurance | 98.26 |
| LIC | 98.04 |
| ICICI Prudential | 97.88 |
| HDFC Standard | 97.80 |
| Bharti AXA | 96.85 |
This claim settlement ratio report submitted by the Insurance Regulatory and Development Authority of India (IRDAI) reveals that Max Life Insurance has the highest claim settlement ratio in the industry.
Wealth Building Plans
These plans help you earn returns on your invested money so that you can accumulate wealth to achieve your life goals. These include instruments like the Unit Linked Insurance Plan.
ULIP is a dual benefit plan that insures you, while also providing you with returns earned on equity or debt funds. The corpus created through this can be used for your retirement or securing your child’s future or for any other life goal.
Wealth Preservation Plans
As a part of your financial planning, you also want to have instruments that can help you save funds with the least risk involved. Such plans have low returns though but offer you the safety of funds. These include endowment plans, ULIP debt fund, and other such plans. These plans help you save money regularly over time so that you get a lump sum amount on maturity if you survive the policy term.
Wealth Distribution Plans
These plans in your portfolio will refer to pension plans in which you can either choose to take a lump sum amount or monthly incomes. This may also include immediate annuity plans in which you invest a sum of money received. You then receive regular returns from the same, starting immediately from the time when the investment is made.
Now, that you know what makes up a financial portfolio, the key to creating a 360-degree portfolio is to make sure that you have funds invested in all these kinds of plans. This will ensure that you remain protected also and can build a pool of funds too.
(Posted on July 18, 2019)
