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How to Ensure a Regular Income Stream for Your Family?

When you are the principal source of income for your family, it becomes a duty and a moral obligation to provide for your family's needs. Hence, one of the best ways to ensure that your family continues to thrive even in your absence is to set up multiple sources of income that they can live off in case of emergencies.

Here are tips on how to set up multiple income streams for your family and its benefit in the long run.

What to Consider When Setting an Income Stream for Your Family?

There are some important factors that you need to keep in mind while deciding on multiple sources of income for your near and dear ones.

1. Establish a Budget

The very first step in ensuring multiple financial sources for your family is to know their needs. The budget that you decide on can include their regular monthly expenses and other sustainable monetary goals. When creating a saving strategy for the future, consider the inflation rates so that you do not have to lower your living standards in your old age.

2. Plan For Crisis in Advance

If you wish to create a foolproof financial plan, take into account unforeseen situations that you may have to deal with. In today’s scenario, with a global pandemic and price hikes, a long-term plan for a passive income source will give you the freedom to live comfortably and sustain your family’s expenses.

3. Research on Income Streams

There are many options for income streams, such as earned income, inherited income, passive income, etc. However, you have to decide which one will be the best to meet your family's needs. In case you are seeking a stream of income that will take inflation rates into account and give returns, then you can opt for investment income.

4. Compare and Choose

Various financial products in the market provide different beneficial solutions. So compare and choose a savings plan that works for you and your family.

However, if you want a source of income that will provide life coverage and generate assured returns, then a guaranteed savings plan will be an excellent choice.

Let us take a look at what a guaranteed savings plan is and how it can help you and your family.

What is a Guaranteed Savings Plan?

You must have often wondered what will happen to your family when you are not there to look after them as a principal breadwinner. It is not a pleasant picture. However, you can save them from financial hardships with an insurance plan. A guaranteed savings plan is a life insurance plan that provides a sum of money to the members of your family in case of your unexpected demise. They can use it to pay off debts or fulfil any other financial obligations.

5 Beneficial Features of Guaranteed Savings Plan

The plan is flexible, so customise it according to your income and savings needs.
Decide the term for which you want to pay the premium, the mode of payment, and how often you want to make the payments, annually, quarterly, monthly, etc.
Choose your preferred pay-out options of a lump sum amount or a regular payment option for the insurance return.
In case of your sudden demise, the beneficiaries of your policy will receive financial support in the form of regular income.
The insurance premium and pay-out also qualify for tax benefits under Section 80C of the Income Tax Act, 1961, which will only add to your savings.

How Does Guaranteed Savings Plan Help Create An Income Stream?

Amidst the current unpredictable market conditions, a guaranteed savings plan is a feasible option to set an alternate income source. You can use the plan as an extra source of income in the following ways to meet your financial needs:

1. Customising the Plan and Pay-Outs

You can customise the insurance plan and the return pay-outs to better align with your needs. You can choose to receive the payments on a monthly or quarterly basis according to your financial needs so that you have an alternate money source for emergencies. The regular pay-outs from this plan can help you cover home loan EMIs, pay for your child's higher education, etc.

2. Meeting Additional Future Expenses

Your current income can be enough for you today, but in the future, you may have additional expenses to account for. You may have medical expenses, educational loans, and other financial obligations. The regular pay-outs from the guaranteed savings plan as a source of earnings to meet your additional financial needs of not only the present but also the future.

3. Substituting Your Primary Income During Retirement

A person can't have the same level of energy to work and earn money that they have in their youth. During those times, you can use the payments from the insurance plan to support yourself. Moreover, this can also act as a substitute for your primary source of income in your old age so that you do not have to make drastic changes to your lifestyle.

If you are looking for ways to make your money grow without any added risks, and also set up multiple streams of income, then guaranteed savings plans are a great option for you. However, since this is a significant financial decision, go through the terms and policies carefully before putting in your money.

FAQs about Regular Income Stream for Your Family

Why does a guaranteed savings plan work?

Guaranteed savings plans work because they provide high tax-free returns in the long term. Moreover, they are also flexible, which means they can be modified to individual needs and also provide insurance in uncertain situations.

What is the drawback of the guaranteed savings plan?

One slight flaw of the guaranteed savings plan is that you can lose all the financial benefits if you do not pay the premium amount for the entire term of the plan.

What documents are required for availing of a guaranteed savings plan?

For applying for a savings plan, you require medical documents, address proof, identity proof, proof of salary, and other KYC documents, depending on the requirements of your provider.

What is the difference between health insurance and term insurance when it comes to income protection?

Health insurance plan can protect your savings during a medical emergency or treatment, while term insurance focuses on giving your family a large payout or sum assured if you pass away; it is ideal for income replacement.

Other Important Articles Related to Financial Planning For Family

Financial Family Planning Guide

Structure of Family Business

Investing as a Married Couple

Family Income Planning

Challenges of a Family Business

What is a Family Business

Topics to Discuss Before Marriage

Tips to Set Up Multiple Sources of Income

Important Articles About Financial Planing

List of Saving Schemes in India

Financial Planning Guides

Emergency Fund Planning

Financial Planning for Couples

Financial Planning During Recession

Financial Planning for Family

Financial Planning & Analysis

Financial Planning for Students

Understanding Inflation in India

Financial Planning for Business

Disclaimer

This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.