scorecardresearchYour Questions Answered: I am a freelance photographer, should I still

Your Questions Answered: I am a freelance photographer, should I still invest in insurance products?

Updated: 06 Jan 2023, 08:03 AM IST

We answer some of your most pressing personal finance questions. It is time to make the most of your money!

Savings bonds are one of the safest long-term investment options available to investors.

Savings bonds are one of the safest long-term investment options available to investors.

Q1. I am a freelance photographer in Mumbai. As I don’t have a regular source of income, I feel hesitant while investing in insurance products. How should one approach insurance when they do not do a 9-5 job?

Life insurance provides financial security in case of unforeseen circumstances, and helps provide adequate financial resources for your loved ones in your absence. Despite not having a regular source of income, you can still consider starting your life insurance journey with careful planning and due diligence. Most life insurance policies offer the flexibility of paying the premium amount in either of four ways - annually, half-yearly, quarterly and monthly.

Considering your profession, you can accumulate the required premium amount in a way that you are able to make an annual or half-yearly lump sum payment. Alternatively, whenever you have adequate funds, you could opt for single premium life insurance plans where you need not worry about periodic payments.

As a self-employed individual, I believe financial planning becomes uncertain, as one does not have EPF and gratuity funds to fall back on. What are the insurance options I can explore for my retirement planning?

There are two ways to approach retirement planning in your case:

You can start saving for long-term retirement by investing in a wider portfolio of financial products of your choice and then buying an annuity product with the accumulated corpus. This way, you will be able to enjoy the benefits of staying invested for a longer period, along with getting a life cover.

Alternately, you may choose guaranteed income products where you continue to pay premiums for a limited term, and then receive guaranteed payout periodically for a predetermined period – say, 25-30 years, and return of premium with the last income payout to meet your financial needs post retirement. These products also offer a life insurance cover, so you can ensure financial security for the family in your absence.

Q2. I am a 25-year-old well-paid working professional. My parents have always helped me achieve my life goals and now I want to take responsibility for securing their financial future after retirement. What are the insurance products I can explore?

Firstly, you have thought well about securing your parents’ financial future after retirement. Now is a good time to start investing for their golden years since it may help maximise the returns and build an optimum corpus to take care of their retirement needs. If you are saving on your parents’ behalf, it is preferable to invest in an annuity plan for them, which may help secure a guaranteed source of income post-retirement.

An immediate annuity plan is one where your parents will start receiving the payout immediately after making the investment; while in deferred annuity plans, you will receive the payouts after a certain period with higher annuity rates. Depending on their life goals, you may choose between deferred or immediate annuity products.

Q3. I am a 30-year-old working woman and am interested in buying a term insurance plan. I want to understand the factors based on which I should choose my cover and how do I ensure that I have to pay a lower premium?

To arrive at the amount of term insurance cover, you may consider a few important factors like your current income, expected liabilities & expenses, policy tenure, etc. You may consider choosing a term plan that offers a coverage of at least 10-15 times your current annual income. It is advisable to revisit this cover from time to time, according to your changing income and life stage.

At your age, you may consider buying a term plan right away to get an advantage of lower premium. You may further reduce your premium payable by choosing annual premium payment mode and opting for online auto-pay feature. I would also recommend you to consider opting for new age benefits like premium holiday, early exit at age 60, and increasing cover with changing life stage needs.

Disclaimer: The views stated above are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions.

Dheeraj Sehgal, Chief Distribution Officer – Institutional Business, Bajaj Allianz Life Insurance

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First Published: 06 Jan 2023, 08:03 AM IST