Give yourself a big gift, make good use of year-end bonuses, plan to buy insurance

        For most people, year-end bonuses are not only a recognition of their past year's work, but also a rare opportunity for financial planning. How to ensure the safe appreciation of this fund and further provide security for the future is a thought-provoking issue. This issue of 'Finance Column' introduces various insurance and wealth management tools, providing investment references.

                Young office worker Xiao Yuan is about to receive a year-end bonus of NTD 100000 this year. He wants to save and increase his value, but is worried about the risk losses caused by investments. At this time, insurance with dual characteristics of "risk sharing" and "appreciation" perfectly meets Xiao Yuan's needs.

        Why choose insurance?

        Compared to other investment methods, insurance has five major advantages:

        1. Class savings function: Some life insurance products include a survival insurance benefit payment plan. When the insurance period expires, you can receive the maturity benefit or survival insurance benefit, so there is a class savings function.

        2. Leave love without debt: When the insured passes away during the insurance period, the death claim of life insurance can provide a living reserve and contingency fund for the family. If the deceased is the main source of income for the family, proper insurance planning can temporarily alleviate the financial burden on the family and maintain their original quality of life as much as possible.

        3. Reserved tax source and tax saving function: In the event of the insured's death, there may be some tax expenses, the first of which is inheritance tax. If family members do not have enough cash, they may face the problem of not being able to pay taxes and inherit. In this case, claim money is an important source of cash.

        4. The policyholder has the right to decide on wealth inheritance: The policyholder can inherit assets to designated beneficiaries through the policy, and can also choose the distribution ratio and order.

        5. Policy loans and termination fees provide future working capital: After long-term payments, some life insurance products (such as lifetime life insurance) will accumulate policy value, known as the "policy value reserve". If there is a need for funds, the insurance premium can be used to propose policy loans or policy termination to the insurance company to alleviate financial crisis.

        Common types of insurance products

        1. Life insurance: combining protection and appreciation

        This is a product that provides personal and family financial security. In the event of an accident or death of the insured, the insurance company will provide a sum of insurance money to ensure the financial safety of the family. Life insurance is usually divided into "term life insurance" and "lifetime life insurance". The former provides protection for a specific period of time, with relatively cheaper premiums but no cash value after maturity; The latter is valid for life and can accumulate cash value during the policy's duration, providing liquidity for the future. Xiaoyuan's use of year-end bonuses to purchase lifetime life insurance not only provides protection, but also accumulates funds. Although the growth rate of this cash value is relatively slow, it is not easily affected by market fluctuations and is very suitable for people who pursue stable appreciation.

        2. Investment type policies: combining risk and investment

        For investors with strong risk tolerance and a desire for higher returns, investment policies are a worthwhile choice. They can combine insurance and investment, investing a portion of the premium into the investment market, such as stocks, funds, bonds, and other financial products, while the other portion is used as protection fees. The biggest attraction of this type of product is that it has the opportunity to obtain higher returns as the performance of the investment market grows, while retaining basic protection functions. On the other hand, market fluctuations also bring higher risks. When choosing a product, it is necessary to assess an individual's risk tolerance and regularly adjust the investment portfolio based on market conditions.

        3. Savings type insurance: low-risk stable appreciation

        This is a low-risk insurance product that increases assets in a stable manner, suitable for people who are unwilling to take on market risks and hope for capital appreciation. Although the return rate is lower than stocks or funds, the safety of the principal is high, and it can provide additional protection.

        4. Health insurance: Transfer medical risks

        With the increasing cost of medical care year by year, the financial risks brought by major diseases or medical accidents cannot be ignored. Therefore, using part of the year-end bonus to purchase health insurance is also a wise decision, which can help cope with medical expenses, transfer economic risks to insurance companies, especially in the event of major illnesses, and avoid financial difficulties due to high medical expenses. Although these products do not have investment functions, they can indirectly protect the security of other assets and the economic stability of households.

        5. Annuity insurance: Reserve in advance for retirement life

        This is an insurance product specifically designed for retirement life, suitable for people who hope that year-end bonuses will become stable cash flow in the future. Usually, after the insured reaches a certain age, a regular payment of funds is made every year as a living guarantee, so that the insured will not fall into financial difficulties due to retirement income loss, and the annuity payment is stable and not affected by market fluctuations.

        How to choose the appropriate insurance product?

        When choosing insurance products, in addition to assessing an individual's financial situation, financial goals, risk tolerance, and protection needs should also be considered comprehensively.

        1. Financial goal: If you want long-term stable appreciation, you can choose life insurance or savings type insurance; If you hope to have the opportunity to pursue high returns, investment policies are a worthwhile option to consider.

        2. Risk tolerance: People with strong risk tolerance can consider investment policies; On the contrary, one should choose life insurance or savings type insurance with lower risk.

        3. Protection needs: Choose different types of protection products based on individual and family protection needs, such as health insurance, life insurance, etc., to ensure sufficient economic support in case of emergencies.

        epilogue

        Insurance, as a financial product that combines asset preservation and asset accumulation functions, is increasingly recognized by more and more people. It is recommended to fully evaluate one's own needs before purchasing, and then select suitable products to steadily accumulate personal assets and ensure financial security and steady growth.

        Image source: freepik

        #