Life Insurance and Financial Planning

By Gilda Swai

Financial planning means a relationship between the person's current situation and their goals together with strategies used to achieve such goals. Financial planning needs people to make decisions and changes in their life in proper ways through which they can achieve their goals. Generally, financial planning is all about problem solving and setting financial plans. In setting financial plans, there are various questions one needs to ask, such as:

1. How much should I save for my child's education? How much will my child education cost?
2. How much will my family need in case I die today?
3. How much money do I need when I retire?

There are many challenges and a lot of questions that someone may ask when it comes to financial planning. But the best solution for these challenges and questions is a Life Insurance Plan.

Life insurance is a long-term contract, which pays benefits to the person who takes it. The benefit is paid on the specific event mentioned in the contract such as illness, disability, death, and/or retirement. The benefit is paid to the person who takes the life insurance policy and in case of death the benefit is paid to the beneficiary. Life insurance policy can take 5, 10, 15 and so on years. There are life contracts for the whole life of the person who takes the policy.

Bumaco Life Insurance policies have saving and protection elements. But there are life insurance policies that have only protection elements like whole life policy. This is because the benefit is paid upon death only. Endowment policies, such as those provided by Bumaco Life Insurance, have both saving and protection elements because the benefit is paid upon the expiry of policy period or death.

Thus, in order to answer the above financial planning questions, one can use a Life Insurance plan. For example, in Bumaco Life Insurance, one of the products of life insurance is Education Annuity whereby a parent or guardian may take this policy for the future education of their child(dren). In this policy, a parent may estimate the cost of their child(dren) education (it can be primary, secondary ,college or University level), after estimation a parent can start to gradually save for their child education through a life insurance policy.  The policy will pay benefits upon the maturity (expiration) of the policy, which can be after 5, 10 or 10 years or upon death of the person (i.e. the parent or guardian) at any time during and before the policy expires.

In the case of the second question, somebody can take a whole life policy. In this policy someone contributes a certain amount of money (premium) depending on the amount of benefit that the person needs. The person will be contributing such an amount (the premium) in his or her lifetime and the benefits will be paid to his or her beneficiary upon death.

About the last question, one can take an Endowment Life Insurance policy, which pays benefits upon expiry of the policy or death. Thus, one can take an endowment plan for the period of 10 years, for example, if he/she will be retiring in 10 years. Hence, the person will start enjoying the policy benefit after he retires in 10 years.

Life Insurance plans are customized to the person’s financial needs and goals. Thus, for all your financial planning, we advise you to secure a life Insurance expert to assist and advice.