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Financial Planning for Policemen

IndianMoney.com Research Team | Posted On Monday, July 01,2019, 03:59 PM

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Financial Planning for Policemen

 

 

Policemen play an important role in ensuring protection for people and properties. They enforce the law in India. It’s believed that police officers have no sound knowledge on financial planning. Though this may not be true, many policemen do require financial planning.

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Financial Planning for Policemen

What is Financial Planning?

Financial planning is a systematic process which provides framework for accomplishing short and long-term goals, which may be buying a dream house or car, retirement planning, children’s education and marriage. The process of financial planning requires you to define your finances (assets, liabilities and income), current and future financial goals, and risk appetite.

Thumb rules might come in handy for policemen who have just begun or are in the middle of their career. The first rule says that a certain percentage of your monthly income must be saved. There is another rule called the 50:20:30. According to this rule, 50% of your monthly earnings should be towards living expenses (groceries, household expenses), 20% towards savings and the remaining 30% for spending (food, travel and outings).

See Also: Financial Planning: Do it Yourself?

Why Financial Planning for Policemen?

Policemen require financial planning to enjoy a financially secure life. Just a few decades ago, policemen used to work until retirement, whereas some policemen today, like to retire early. Everyone wants to be financially independent after retirement, without depending on children and other family members.

Your total savings must be sufficient to maintain a decent lifestyle and manage medical expenses after retirement. It is crucial for each police officer to understand the importance of financial planning:

  • Helps monitor cash inflows and cash outflows and control unwanted expenses.
  • Enables you build wealth, minimize tax obligations and accelerate savings.
  • Assures better wealth management and maximizes the return on investment.
  • Reviews insurance requirements.
  • Assures that your dependents are financially secure on an unexpected demise.

See Also: Step By Step Financial Planning

Additional Heath Insurance Cover for Policemen

Police officers enjoy government-sponsored health insurance plans from the Police Department. Unfortunately, such a policy is not adequate to cover all ailments. So, police officers may be advised to buy an extra health insurance policy to fight against unexpected critical diseases. A family floater health insurance policy of Rs 4-5 Lakhs (sum assured) can meet family health requirements.

This health insurance plan also covers cashless hospitalization offered at the network hospitals. Seek the assistance of financial advisers to lock-on to best health insurance plans. Policemen can look at Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana which are excellent government schemes for the common man.

See Also: What Does A Financial Advisor Do?

Pradhan Mantri Jeevan Jyoti Bima Yojana

Pradhan Mantri Jeeven Jyoti Bima Yojana (PMJJBY) is a government-sponsored term life insurance policy, offered to the people in the age group of 18-50 years. The tenure of the policy starts from 1st June and ends on 31st May each year. The yearly premium of PMJJBY is Rs 330 a year. The Ministry of Finance has revised the premium structure on a quarterly basis on the basis of the date of request.

Annual premium

Quarter

Rs 330

June, July and August

Rs 258

September, October and November

Rs 172

December, January and February

Rs 86

March, April and May

If you avail this life insurance plan, the beneficiary of the policy gets death benefit of Rs 2 Lakhs. The premium enjoys tax deduction under Section 80C of the Income Tax Act, 1961, up to Rs 1.5 Lakhs a year. It does not offer maturity benefits unlike other products and can be renewed once a year.

Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an accident insurance plan offered by the government. It was proposed in the 2015 Union Budget speech. PMSBY is offered to the people in the age group of 18-70 years and is renewable each year.

Cover starts from 1st June and ends on 31st May each year just like PMJJBY. Death and disabilities from accidents are covered, while death due to suicide is not. The annual premium for the plan is just Rs 12, which is collected via the auto debit facility from your bank account. For permanent total disability and accidental death, the policyholder gets a sum of Rs 2 Lakh and Rs 1 Lakh in case of permanent partial disability. Considering these benefits, police officers may be advised to buy the government-backed insurance products to be on the safer side.

See Also: Steps in the Financial Planning Process

Investment Planning for Policemen

Just like other people, policemen can invest surplus corpus for various needs. Not everyone succeeds when it comes to investments. You must have the requisite knowledge, expertise and experience to be a successful investor.

There are many options to invest, but choosing the right investment vehicle is challenging. We appreciate if you can visit IndianMoney.com to seek unbiased financial advice and enjoy a holistic financial education. The platform also allows you to check your credit score for free.

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