Hello Friends I have started this thread to discuss various firms that are offering Life Insurance in India, which options are good like how much premium or how many years, coverage terms and which firm is giving more benefits, any comparative study? Is life insurance a must? or how does it help in paying for life insurance in India and who should especially opt for it?? I welcome all of you to share your experiences and valuable suggestions.:cheers Thanks Sri
Generally, a pure term cover is enough if you want insurance. you can get for a greater amount for ex: 30 lakh at a low premimum. If you expect insurance to get you returns after some years, the CAGR (compounded annual growth rate) i.e. the average interest for the years would be just 4% or little over than 4%. In my thought, it's always better to go for pure term cover and then invest the rest of the amount in mutual fund or equities or if you want still insurance linked MF, go for ULIP - ULIPs may not solve the objective of insurance nor the investment in my view. Spread your investments into different baskets like FD, Gold, MF, Equities, etc. For FD, Gold - either physical or exchange traded mutual fund, MF -go for the ones that has good past record, equities - you need to have good knowledge. And most importantly see that you and your family have good medical insurance. that's more important.
Hotcolain, I beleive you are in financial advising. the question by Srividya is very clear why insurance and the pros and cons.. i would request you to answer them in detail. i have seen you saying that distribution of investment is a must than keeping everything in one basket, it is a wise suggestion but let us hear more about insurance.
I have a small company with three employees - is it better we get a group health insurance plan or all get individual plans? what are the tax benefits? I was told you can deduct more of the premiums if you are a company rather than an individual?
Rosella I think you can take group insurance, that way you can also claim Tax Deductions for your company as a small business. However best option is call up the Insurance companies and check what are the options available and take the quotes for both plans and see which one is feasible
Term Insurance: Why it makes more sense Many people are aware of the endowment plans of life insurance but are not aware of the benefits of term insurance. This is one good article i found on the net (personalfn.com) which give a good insight into the benefits of term insurance. Hope you find this article useful and interesting. -Lakshmi ======================================================= How many people in India know what insurance really means? Not many going by the various plans that have been sold over the years. While different individuals plan their finances differently based on their needs and incomes, it is also true that all individuals need to have a term plan in their financial portfolio. Also other insurance plans can co-exist in your portfolio. How is insurance defined in layman terms? Insurance is protection against financial loss arising on the happening of an eventuality. In life insurance parlance, the event happens to be the death of an individual. To begin with, there are two basic types of plans; endowment plans and term plans. All other plans are actually variations derived from these two. In an endowment plan, the premium paid covers a savings element that is invested in different investment instruments to generate returns in the long-term. A term plan, being a pure risk cover plan, only administration expenses and mortality charges are covered in the premium. There is no savings element in the premium being charged to the insured; as a result the insured does not receive anything should he survive the entire term. So why are we advocating term plans? The reasons are very clear. A term plan offers the insured a higher sum assured at a very low cost. And this is the fundamental principle of insurance. But in India, history suggests that insurance has always been sold, it has rarely been bought. Blame the unscrupulous insurance agents for this. To really understand this statement, one has to take a look at the agent’s commission structure of various plans. Premium paid on term plans is lower compared to the premiums on other plans. An illustration will make things simpler to understand. Suppose an individual aged 30, wants to buy a term plan for a sum assured of Rs 1,000,000 for a tenure of 30 years. The premium in this case works out to approximately Rs 3,500. The agent will get Rs 1,050 as commission in the first year (@ 30%). But if the same individual were to buy an endowment plan, other things remaining the same, the premium would amount to Rs 27,500. And the commission on the same would be Rs 11,000 (@ 40%). <CENTER></CENTER><CENTER>Term Plan Vs Endowment Plan</CENTER><TABLE border=1 cellSpacing=0 borderColor=#dddddd cellPadding=2 align=center><TR vAlign=top bgColor=#eeeeee><TD align=right><TD align=left>Premium (Rs)<TD align=left>Commission (Rs)<TR vAlign=top><TD align=left>Term Plan<TD align=right>3,500<TD align=right>1,050<TR vAlign=top><TD align=left>Endowment Plan<TD align=right>27,500<TD align=right>11,000 <CENTER>(The examples above are illustrative. The figures will vary for different companies. Term Plan commission @30%. Endowment Plan commission @ 40%)</CENTER> It can be seen from the structure that commissions offered to the agent on term plans are the lowest that they can get compared to any other plan. Another reason for term plans being a more prudent option than other plans is its suitability to all individuals irrespective of their age, sex, earning capacity and lifestyle, and risk-taking ability. This plan is a necessity for all concerned as it offers maximum (cover) at minimum (premium). Ideally, a term plan should be taken for the maximum possible tenure available from the insurance company. In fact, many insurance companies have come out with variations of the term plan. Some offer a different term plan for non-tobacco users, some companies. offer a special rebate for female lives insured. The tenure too varies from insurer to insurer. The individual should look into all the term insurance options before picking an insurance policy. Individuals should therefore consider first taking a term plan at an early age. Because, the earlier it is, the cheaper it gets. More importantly unlike other plans, it’s never too late for term insurance.
All you need to know about life insurance A useful article i came across about life insurance. -Lakshmi ========================================================== If by any chance investors have forgotten that the tax-planning season is at its peak, there’s no need to worry! The repeated advertisements and sales calls enticing them to buy tax-saving products will serve as reminders, ensuring that they don’t forget and in turn end up paying more taxes than required. But the flipside is that investors also run the risk of getting invested in a product that is not suitable for them. Without doubt, insurance products would rank among the most aggressively sold ones during the tax-planning season. And therein lies the root of the problem. Insurance products continue to be largely sold and bought for the tax benefits they offer. The ‘insurance’ aspect is often overlooked. For the uninformed, contributions towards life insurance premium are eligible for deduction from gross total income under Section 80C of the Income Tax Act. The need for insurance Insurance must find a place in an individual’s portfolio irrespective of the tax sops. The primary purpose of insurance is to indemnify the insured’s dependants from loss of income, in the event of the insured’s demise. Hence, the decision to buy insurance should be solely based on the individual’s needs for protection; the tax benefits must be treated as incidental. The year-end approach Waiting for the end of the financial year (read tax-planning season) and then making a hasty investment decision is not a good idea. Insurance should be bought when the need arises and not simply because it’s the tax-planning season. Furthermore, buying insurance in a rushed manner at the end of the year deprives investors of the opportunity to conduct a thorough evaluation of the available options. By opting for the wrong policy, one runs the risk of being underinsured. The ‘ignore insurance’ approach Then there are individuals who tend to ignore buying insurance all together. Instead, they count on things like investments or the presence of friends and relatives to provide for their dependants, if an eventuality occurs. Such an approach is fraught with risks. In dire circumstances help from all quarters is always welcome; however, relying solely on the same is not prudent. Hence, having a sound life insurance policy in place is a must. Investments and a support system (family) can always play a vital, but secondary role. Beware of mis-selling Investors, who are convinced about the importance of insurance and decide to buy the same, have another obstacle to face in the form of mis-selling. Mis-selling is a rampant practice in the insurance segment. Over the years, several insurance advisors have been guilty of selling products that were right for them (helped them earn higher commission income), rather than the investor. Also, concealing relevant facts about the product, leading to misinformed decisions isn’t entirely uncommon. Unit linked insurance plans (ULIPs) would easily qualify as both the most popular and mis-sold products. Hence, being associated with a competent and ethical advisor is vital; also, investors should acquaint themselves with adequate information before zeroing on any product. How to buy insurance The process of buying insurance can be divided into two steps. First, decide how much insurance is required and second, decide the type of insurance product that can help meet the requirement. How much insurance an individual requires can be determined using the concept of Human Life Value. It refers to the monetary value of all the ‘yet-to-be fulfilled’ needs of the dependents plus all the outstanding liabilities. <LI type=square> How to determine your HLV The next step will be to zero in on the right insurance plan that will help meet the objective. Broadly speaking, three popular variants of life insurance policies are available i.e. term plans, endowment plans and ULIPs. <LI type=square> <LI type=square>Types of life insurance policies Term plans are very straightforward i.e. they only provide an insurance cover. In other words, if the policy holder survives the policy term (i.e. the period for which the policy offers him insurance cover), then he gets nothing i.e. there is no maturity benefit. They have the lowest premium structure. Endowment plans differ from term plans in one critical aspect i.e. the maturity benefit. Unlike term plans, these plans provide maturity benefits under both scenarios – death or survival. Since endowment plans provide maturity benefits in both the scenarios, their premium tends to be higher than the premium on term plans. ULIPs are innovative products combining both insurance and investments. They are market-linked i.e. they invest in equity/debt markets. They also offer maturity benefits under both scenarios – death or survival. Typically, they have the highest premium structure. Finally, buying insurance is a continuous activity. Every individual’s needs change over a period of time. This in turn necessitates a review of the insurance portfolio. Over a period of time, most individuals would need to purchase additional insurance to ensure that they are adequately covered. The insurance advisor can play an important role in reviewing the portfolio and recommending which policies should find place therein. Hence it makes sense to be associated with an advisor for whom insurance is the core activity.
I am not sure of your investment appetite. Rule no1: Invest in ULIPS, unless you can take the risk Rule no:2: Find out what you want-Insurance risk or returns Rule no:3: trust your instinct- agents may confuse. The popular Jeevan Tarang, Jeevan Anand are really good plans to look at from LIC, by far the best provider in the claims scenario. Jeevan Saral is another good plan to look at. The menu provided by LIC is by far large- 58 plans to date. Just logon to their site and see. No1 Catch- Bonuses cannot be declared by an insurance company in India, until they make a profit-find out how many of them do that, before planning for an insurance plan.
Re: Term Insurance: Why it makes more sense Never mix insurance with investment. Term is best insurance. ., for investments mutual funds seperate., but dont mix with insurance
