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Life Insurances - the definitive rainy day plan



No matter how careful and strategic we are with planning our life and our future, life has a way of throwing the most unexpected encounters at us. That’s why financial experts suggest you keep some liquid savings stashed up for such rainy days.

WHAT ARE THEY?

So what is a rainy day fund?

They are the help that you need during a financial thunderstorm.

Having a rainy day fund will surely give you some peace of mind, and can help reduce your money related stress. You can relax, because you know that if an emergency does arise, you have got it covered.

Now, the ultimate question. What is the best way to have a rainy day fund?

It is advised that your rainy day fund must be in a secure, liquid vehicle such as a savings account or money market fund. Ensure that the fund does not have an ATM card coupled with it. That is, it shouldn’t be easy to access on a daily basis – which makes sense, considering its purpose.  

LIFE INSURANCES

Life insurances are the less known, and most versatile form to store your rainy day funds in.

Yes, although a life insurance is not a fund per se, it does perform the function of a ‘crisis fund’ when the worst happens.

So what makes a life insurance a better option than an emergency savings account?

The advantage is that if you do need it, an insurance will pay out to you a larger sum than you paid into it – making it a tremendously better solution than a simple emergency savings fund or you shall avail a loan over your life insurance policy at a considerably low interest rate.

There are different kinds of insurances that offer life cover or a term insurance. Depending on your lifestyle and risks you need to compare and choose the plans that are best suited for your need. There are several web aggregators online that help you compare, choose and buy the right insurance online, and take the help of these, whenever you need them.

 Finding the right policy for you will involve taking all your other circumstances into account.  Yes, the decision might require skill and knowledge beyond your means, which is why it is recommended that you seek the help of a professional financial advisor.

And thus, when it comes to rainy day funds, ordinary savings might give you just protection. But an insurance goes several steps further by bestowing several added benefits and a life cover!  

POSTED BY: BALAKARTHIGA.M 



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