Life insurance - Pay your premiums regularly II

How does paying your premium regularly help? 

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Delivers gains over the long term -


 For those who use insurance as a wealth building tool, some very beneficial laws of mathematics apply to your premium payments, especially if begun early and continued regularly.

Compounding: The law of compounding makes sure that even if you pay out small sums of money, you will gain substantially over the long term. Don’t question it; it’s a law of mathematics.

Systematic investing: Side by side, there is a property called ‘systematic investing’ which insures that even if your money is being put into investment avenues like stocks, where the value of the investments fluctuates, your capital grows at the best possible rate. This happens because by investing regularly, your money commands more investment units at lower prices and fewer at higher prices. The net effect is that your average purchase price is as low as possible. So, naturally, your appreciation over the long term is the best possible.

Long term investment option: While there are a number of investment options available to meet immediate and medium term requirements, insurance can effectively help you beat inflation over the long term.  Planning for the future is essential as what costs you Rs. 100 today will cost you Rs. 105 next year and as much as Rs. 200 within 15 years, even if inflation remains at a moderate rate of 5 percent per annum. Insurance is the only long term investment avenue that offers you the option to grow your wealth over the long term and beat inflation.

The secret to making the most of your investment policy is to pay your premiums regularly and leave your money untouched in your plan for at least 10 years, even if you have the option to withdraw it earlier.

Remember! The secret to successful financial planning is to start early, save regularly and think long term.