I’m in my late 30s. I want to quit my job and start a business. How can I ensure my family's financial security
Venturing from a secure job to start your own business is a courageous and thrilling move. Here life insurance can be a powerful tool to provide that stability.
- Dec 28, 2024,
- Updated Dec 28, 2024 12:19 PM IST
I’m in my late 30s, earning around Rs 10-15 lakh per annum, and I'm planning to leave my job to start a business. How can life insurance ensure my family is financially secure during this transition?
Reply by: Anup Seth, Chief Distribution Officer , Edelweiss Life Insurance.
Venturing from a secure job to start your own business is a courageous and thrilling move! It is a step toward independence and pursuing your dreams, but it naturally brings new uncertainties, especially around your family’s financial security. Thankfully, life insurance can be a powerful tool to provide that stability. Here is how it can support you and your family during this transformative journey:
Asses your finance first: Before diving into entrepreneurship, it’s essential to assess your current financial situation. This means having enough contingency or fallback savings to cover at least 6 to 12 months of living expenses. Having this buffer allows you to navigate through the uncertainties of starting a business without risking your family’s financial stability. It ensures you have a clear understanding of your finances before taking the plunge.
Create a second income stream: Starting a business can result in fluctuating income, especially in the early days. To ease this pressure, consider opting for an income plan. There are policies available that can begin paying out as early as the end of the first policy year. This additional income can provide the cushion needed to focus on building a profitable and solvent business, giving you more time to stabilize your financial situation without added stress.
Cover Yourself: Entrepreneurship often brings with it the burden of debt and increased financial uncertainty, especially in the early stages. To safeguard your family from additional financial strain, it is essential to secure a term life insurance policy while you’re still employed. By taking this proactive step, you ensure that in the event of an untimely death, your family won’t face further economic turmoil.
Health Insurance: As you transition from being an employee to a business owner, you will lose access to company-provided health benefits like Mediclaim. It is crucial to secure your own health insurance plan to cover healthcare expenses for both you and your family. Medical costs can be a significant financial burden, and having the right coverage in place ensures that your business and personal finances aren’t derailed by unexpected healthcare needs.
Plan for your family needs: If you are at a life stage where you are providing for children or your aging parents, ensure their needs are accounted for through a structured plan. Certain expenses, like your children’s education are definite. Consider investing in guaranteed savings plans or child education plans that ensure these critical milestones are funded and on track, regardless of your business’s fluctuations. These plans will help ensure that your family’s needs are met, even during the early, uncertain stages of your entrepreneurial journey.
Plan for Retirement: Once your business becomes financially stable, it is time to start thinking about your long-term financial future. As a business owner, you may no longer have access to traditional retirement vehicles like the PPF. This is the right time to explore alternative retirement planning options that align with your business goals, such as pension plans or investment schemes, ensuring you’re prepared for the future.
In summary, while the transition to entrepreneurship may come with its challenges, having the right financial planning in place—through life insurance, health coverage, and retirement planning—can provide the stability you need to focus on growing your business without compromising your family’s security. Ensure you take the necessary steps to protect both your business and your loved ones during this exciting yet uncertain journey.
(Views expressed by the tax/investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)
I’m in my late 30s, earning around Rs 10-15 lakh per annum, and I'm planning to leave my job to start a business. How can life insurance ensure my family is financially secure during this transition?
Reply by: Anup Seth, Chief Distribution Officer , Edelweiss Life Insurance.
Venturing from a secure job to start your own business is a courageous and thrilling move! It is a step toward independence and pursuing your dreams, but it naturally brings new uncertainties, especially around your family’s financial security. Thankfully, life insurance can be a powerful tool to provide that stability. Here is how it can support you and your family during this transformative journey:
Asses your finance first: Before diving into entrepreneurship, it’s essential to assess your current financial situation. This means having enough contingency or fallback savings to cover at least 6 to 12 months of living expenses. Having this buffer allows you to navigate through the uncertainties of starting a business without risking your family’s financial stability. It ensures you have a clear understanding of your finances before taking the plunge.
Create a second income stream: Starting a business can result in fluctuating income, especially in the early days. To ease this pressure, consider opting for an income plan. There are policies available that can begin paying out as early as the end of the first policy year. This additional income can provide the cushion needed to focus on building a profitable and solvent business, giving you more time to stabilize your financial situation without added stress.
Cover Yourself: Entrepreneurship often brings with it the burden of debt and increased financial uncertainty, especially in the early stages. To safeguard your family from additional financial strain, it is essential to secure a term life insurance policy while you’re still employed. By taking this proactive step, you ensure that in the event of an untimely death, your family won’t face further economic turmoil.
Health Insurance: As you transition from being an employee to a business owner, you will lose access to company-provided health benefits like Mediclaim. It is crucial to secure your own health insurance plan to cover healthcare expenses for both you and your family. Medical costs can be a significant financial burden, and having the right coverage in place ensures that your business and personal finances aren’t derailed by unexpected healthcare needs.
Plan for your family needs: If you are at a life stage where you are providing for children or your aging parents, ensure their needs are accounted for through a structured plan. Certain expenses, like your children’s education are definite. Consider investing in guaranteed savings plans or child education plans that ensure these critical milestones are funded and on track, regardless of your business’s fluctuations. These plans will help ensure that your family’s needs are met, even during the early, uncertain stages of your entrepreneurial journey.
Plan for Retirement: Once your business becomes financially stable, it is time to start thinking about your long-term financial future. As a business owner, you may no longer have access to traditional retirement vehicles like the PPF. This is the right time to explore alternative retirement planning options that align with your business goals, such as pension plans or investment schemes, ensuring you’re prepared for the future.
In summary, while the transition to entrepreneurship may come with its challenges, having the right financial planning in place—through life insurance, health coverage, and retirement planning—can provide the stability you need to focus on growing your business without compromising your family’s security. Ensure you take the necessary steps to protect both your business and your loved ones during this exciting yet uncertain journey.
(Views expressed by the tax/investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)