Categorized | Life Insurance

Life Insurance - Think Beyond Tax Planning

Life insurance Policy is not a mere tool for income tax planning. It offers more than just saving tax. To put it simply, life insurance is a legal agreement between the Insurer and the insurance company. Under this contract, in case of insurer’s demise, his family gets a fixed sum of money. In turn, the Insured needs to pay annual premiums till the policy is active. The product enables the insured to mentally be at peace by securing the future of his family. Apart from this, the need to posses a life insurance policy arises due to the varied other benefits it has to offer.

Security
Life Insurance safeguards your loved ones against unforeseen events. It provides financial security in your absence.

Goal-oriented Savings
Based on different needs at particular stages in life, life insurance products can be tailor made to ensure your dreams are fulfilled. Be it your child’s education, marriage, retirement etc.

Safe Long-term tool

Life insurance is far from being over-exposed to market risks as it focuses on long-term returns. As a sector, life insurance is regulated by IRDA which ensures the safety of all its stakeholders.

Assured Income & Dividends

It provides a continuous source of income during the latter stage of life. A few participating policies provide dividends too.

Collateral Against Loan

Policyholders have the option of taking loan against the insurance policy.

Life Insurance provides the dual benefits of protection and security in its purest sense. Now, let’s detail out the different types of life insurances,

Term Insurance

This is a pure Risk cover at a pre fixed price for a specific time period. A fixed sum of money (sum assured) is to be paid to the beneficiaries if the insured dies while the policy is active. Term insurance is the cheapest life cover.


Whole Life Insurance

This policy covers the individual for his whole life. The Death Benefit is paid to the beneficiaries.
 
Endowment Policy

It’s a 2-in-1 product in which the insurer gets a dual benefit of insurance and investment. The Premium gets partially allocated towards the sum Assured and the remaining gets invested to earn bonus.

Money back policy

Money back policies provide both life insurance cover for a specified period and savings, which are paid out at fixed intervals. The insured is eligible to receive fixed proportions of the Sum Assured at pre-set intervals. If the Policyholder survives the complete term, the insured gets the balance sum assured on maturity. This payout would include the Bonus or guaranteed addition, if any.

Unit Linked Insurance Plans

These are market linked insurance products providing both, insurance and savings.  Under ULIP, the premium paid is invested in stock markets, government securities and corporate bonds. Generally, insurance companies let you decide the percentage of exposure towards insurance and market linked returns.

Annuities and Pension

It provides a series of monthly payments on stipulated dates given that the life insured is alive on the stipulated dates.

There are a variety of life insurance products out in the markets. But remember to get the right amount of insurance Coverage based on you age, income and dependents. Then, consider periodic payments in case you have fixed expenditures lined up in the coming years. Look at the premium amount that needs to be paid by you every year. Read the policy carefully and pick that one which suits your needs.