Wealth preservation has gained precedence over asset management in recent times; especially taking into account the economic volatility that is prevalent currently in the global market. This creates a greater emphasis on Legacy Planning in order to transfer wealth to the next generation.

This is what most financial advisors don’t tell you when they talk about Life Insurance: Legacy Planning. It is a financial tool we ideally don’t associate with wealth transference, since most of the time it is only viewed as a tool to secure funds for financial obligations or to replace the family’s income. But, inherently, Life Insurance is a legacy. You leave behind wealth for the generations to come, so that they are financially secure. And you can do all of this without compromising your current lifestyle. In a way, we can call it ‘Legacy Protection’.

There are three aspects to Legacy Planning:

  • Legacy Creation

In order to plan a legacy, first and foremost you should increase it to fund not only the future, but also your current requirements.

  • Succession Planning

As the name suggests, Legacy Planning involves leaving your wealth to your successors. You will have to decide and plan who will be availing your legacy after you are gone.

  • Equitable Wealth Distribution

Make sure to divide your wealth fairly amongst your loved ones to avoid any disruptions in the family.

You may also want to answer the following questions:

  • How do you want your personal assets and property to be distributed after your death?
  • Have you maintained the contact details of your legal heirs who you wish should inherit your wealth?
  • Have you maintained a repository of your financial documents, legal instruments and relevant information – passwords, codes, keys etc?

There are numerous Life Insurance variants in the market, but one of the most suitable for Legacy Planning is a whole life cover. They may include a unique combination of death benefit, accumulated survival benefits and guarantees.

How a Whole Life Policy works?

How a Life Insurance Policy Works
  • Cover throughout your life

Whole Life Policy covers stay in force till you reach 100 years or till your death, and you/ your nominee will receive lump sum benefit or maturity benefit, accordingly. This lump sum benefit can be passed on as legacy.

  • Living value

Whole life participating plans tend to include a savings component that increases over time to accumulate over a lifetime as a bonus amount.

  • Option to take a loan

Many whole life participating plans allow you to avail loan under the policy, ensuring that you are at a financial advantage while facing an emergency.

  • Legacy bequeathed to spouse and children

With the changing mindset, it is advisable for you and your spouse to take a whole life cover each, which would make sure your children are bequeathed an additional financial resource.


Finally, as we mentioned earlier, Life Insurance gives you ‘legacy protection’. In many ways, it protects the legacy that you wish to leave for your loved ones, while at the same time makes sure you don’t compromise on your present. It not only protects their financial future, but also makes sure they have enough to leave a legacy of their own.

Source: HDFC Life