Your only companion at every step in life

You never know when calamity strikes. The only way to fend it off is to have insurance and make sure you are financially secure.

The root of every life insurance plan rests on the principle of creating a financial back-up that you can leave for your near and dear ones if something were to happen to you. The importance of Term Plans, which offer only death cover, cannot be undermined and is a must-have for anyone with financial dependents. The key to ensuring that your family is financially secure is to start early and to understand your financial goals before choosing insurance products. Once the foundation is laid, there is a choice available to add insurance to start one's needs and procedures.

Likewise, the biggest financial blow you can face is owing to your ill-health, which at times, could render you in a situation much worse than even death.

Eventually, Health insurance is a comprehensive policy, which covers a wide range of health-related issues and there is a critical illness, which covers life-threatening diseases. "So, what basic health insurance does is to pay for the medical expenses that a policyholder experiences, while critical illness pays a specified lump sum amount to the insured on the occurrence of certain critical ill-ness defined in the policy such as Cancer, Cardiac Problems, Liver Failure, and so on. 

Unit Linked insurance plans or Ulips have made a mark for themselves, more for the wrong reasons than right. These policies combine protection and investment and when managed well, have the right attributes to be your buddy through your life. The plethora of investment options available suit the different risk profiles of individuals from the safest fixed return-type investment at one end to the complexity market-linked ones on the other.

Ulips are the only plans that offer flexibility in the form of fund switch and premium redirection that helps customers to change their investment without having to withdraw from the plan. Through Ulips, you can move across equity and debt investments or a mix of the two in varying proportions, without having to worry over tax implications when switching across the available funds. That these policies come with a lock-in of five years.

Other, form of insurance like motor insurance, household insurance, travel insurance and even protection available for all your electronic gadgets like smartphones and tablet exists. These can help you face the financial risks you all exposed to in case any of these activities up. You never know when an earthquake can strike and shake the foundation of your house or your iPhone malfunctions. These are all risks, which do not come with prior notice, leaving you exposed to vagaries of life. What you can least do is protect your financial interests in meeting these risks.

Mix 'n' Match for your right match

Choosing insurance is not an arduous task if done smartly. All you have to do is clearly list out what you need and then look for the best fit.

ULIP: The paradox of choice can be best witnessed when it comes to insurance. The popularity of Life insurance can now be gauged by the introduction of a new kind of policy- the unit-linked insurance plan or Ulip. Ulips are financial products designed to meet the insurance and investment needs of an individual. Ulips are transparent, customer-friendly products that allow an individual to choose the asset allocation between debts and equity. In contrast, the older insurance plans, popularly known as Endowment and Money Back, largely invest the money into debt instruments. These Policies worked well in an environment of high-interest rate. Ulips come with a five-year lock-in and ensure that the policyholder gets a minimum sum-assured of 10 times the premiums for entry age below 45 years and seven times for entry age above 45 years. Ulips help policyholders tap the wealth creation opportunity in Indian capital markets over the long term, with fund options to suit their risk appetite.

The right mix  

From your perspective, you should view insurance in a holistic manner than viewing it in isolation as life, health, motor and other forms. Evaluate your financial position-future financial goals, liabilities, the essential things in life that you cannot do without and the financial risk associated with these goals. For instance, when you start your career and are single, you don't need a Life insurance policy at all. Instead, you need a Health insurance policy. The first life insurance product one should buy is the Term plan. This help to ensure that the family has a financial safety net to fall back on, in case of an unforeseen tragedy. Term insurance is a no-frills plan, designed to ensure that in the event of the policyholder's death, the family gets the Sum-assured. As these do not have any savings or investments component, the premium cost less compared to the quantum of insurance cover.

Insurance basket

One should have a Health insurance cover at every stage in life. The rising cost of health care aside, unlike life insurance, which primarily works in case of an eventuality with you, Health insurance is something that you will need in your own lifetime. The choice within the available Health insurance basket is plenty. But does not mean that you need them all. Make sure you have a Basic Health Insurance Plan that covers you for health-related hospitalization and treatment including surgery.

More importantly, buying a policy is not a one time exercise. Circumstances in life change and so do financial needs. One should periodically say, once every five years, review the existing insurance coverage and keep on increasing the life cover as per the requirements. There are broad thumb rules, which are good to have in an indicative cover. "A person in the age group of 25-40 should have a life cover which is 30 times the annual income while individuals in the 40-50 age bracket should have a life cover of about 20 times their annual income. Whatever, your life stage, if you have Ulips, do make it a point to review the performance of the fund you have invested in to exercise the choice of shifting among them. Also, make it a point to understand the advantages of insurance policy and how to fit your needs before buying a cover.


Do not blindly buy insurance, it's like a double-edged sword. Buy right for peace of mind, buy wrong and you could be staring into gloom.

Caveat emptor (buyer beware) is the best approach, keep this checklist to ensure you are on top of your insurance.

Picking the right cover 

Read about the various hues of life insurance policies to make an informed decision in choosing the right fit.

Life insurance is one of the most essential financial instruments that one needs, yet, choosing it is no mean task considering the wide array of choices available. To suit the varying needs of people, there are different types of plans, which work best to address these requirements. Read further to know exactly what each type of policy provides to make an informed choice.

Term insurance

This is the most basic type of life insurance, which provides Life cover with no savings or investment returns. It is for this reason that these plans cost less compared to other types of insurance plans. When you take such a policy, you pay premiums towards a fixed insurance cover, which is the sum assured. In case of your demise, the sum assured is paid to the beneficiary's you nominate, which no element of savings or investments tried.

Endowment plans

Unlike term plans, these policies have the element of savings and investments attached to the Life cover. So in this policy, the sum assured is paid out in case of both survivals, at maturity, and death. Since the survival benefit is paid out, the premium outgo in these policies is higher as compared to term plans.

Whole life

As opposed to term and endowment plans, which are offered for a defined time period, say, till the insured turns 65 or 70 years old, a whole life policy covers a policyholder for his or her entire life. There is no pre-defined policy tenure. You can pay premiums till your demise or for a select time frame, with the policy proceeds going to your dependents after your death.

Ulip

Unlike other plans, the unit-linked insurance plan (Ulip) is a combination of life cover and market-linked investments. In case of death, your dependents will receive the higher of the sum assured or the value of investments, and in case of maturity, the policyholder receives the policy investment value.

Rider

With each life insurance plan, you can attach an additional risk cover to be guarded against accident or lii-health, at some extra cost. This way you can expand the scope of both life and health insurance for yourself, your spouse, parents, or any dependents, to go beyond life protection.

 

Important Considerations When Choosing the Right Life Insurance Plan

Just about everybody needs life insurance. Unless you are in the top 1% and have enough in savings and investment to cover final expenses and allow your family to maintain the same standard of living, it is best to maintain some level of coverage. Deciding which type of policy to purchase can be confusing,

 

however, and there are some factors to keep in mind when you begin shopping.

There are two general forms of life insurance to choose from; permanent life insurance and term life insurance. The one you choose will depend on your specific circumstances, needs and goals.

When to Consider Term Life Insurance: Term is the simplest form of life insurance. For a set annual fee (often broken down into monthly payments), you purchase a policy that pays a death benefit for a specific period of time. Typical policies have terms of 10 years or 20 years; or if obtained through an employer, they are typically valid for as long as you are employed by the same company. 

Term life insurance is a good option for:

Temporary Income Replacement: When you are working and raising a family, it is up to you to keep a roof over your heads and food on the table. But if you are the main breadwinner and something should happen to you while your children are still minors, it could become a major financial hardship for your family. A term life policy with a length of 10 or 20 years can provide assurance that this financial burden is lifted in the event of a worst-case scenario.

Budget-Conscious Consumers: There is a significant difference in cost between term and permanent life insurance. For example, a 35-year old female non-smoker who is in relatively good health can expect to pay around $50 per month or less for a $500,000 20-year term life policy. For a permanent life policy, it could cost that same individual with the same level of coverage anywhere between $300 and $500 per month (or more).

When to Consider Permanent Life Insurance: Permanent life policies are far more complex and can be used for much more than just life insurance. They are often used to save money, as an investment vehicle, tax reduction strategy, estate planning, and much more. As the name implies, the main difference between term and permanent life insurance is that term life insurance has a future expiration date. Another major difference is that with permanent insurance, the policy builds cash value over time, which can be borrowed against or even cashed out if needed.

Permanent life insurance is a good option for:

Long-Term Coverage: If you want a policy that will be in force for as long as you live, permanent insurance is the way to go. Coverage stays in force even if you live to be 100, so you can be assured that your heirs will collect a death benefit at some point in the future.

Saving and Investing: There are numerous ways to use permanent life insurance as an investment vehicle. If you are more conservative, you can opt for a guaranteed return with a whole life policy. If you are more adventurous and want to shoot for higher returns in stocks, bonds, equity funds, etc. you can choose a variable life insurance policy. Just be warned that poor returns on investment can severely impact the cash value and death benefit of such policies.

One thing all life insurance plans have in common is the tax-free death benefit. This means whatever the level of coverage you have, you can be assured that every dollar of it will go to your loved ones, and not one penny is taken by the government.

Choosing the right life insurance plan ultimately comes down to your individual needs. And with so many options, it is best to speak with an expert who can help sort through all the choices to find the best plan for you and your family. Independent life insurance agents are best equipped to provide this type of guidance in an objective manner. Because they are not captive to any single insurance carrier, they are able to shop life insurance plans for you among the top insurers in your state, saving you time and money.  

When to get Life insurance?

Who should get it?

64% of people say they haven't bought life insurance because it's too expensive, yet they overestimate its true cost by more than double.

The sooner you buy life insurance, the less it may cost over time. Having life insurance makes sense for these individuals:

• Married
• Married With Kids 
• Single Parent 
• Stay-at-Home Parent 
• Parent of Grown Children 
• Retired 
• Family Caregiver 
• Small-Business Owner

Life insurance may never be cheaper or easier to come by than now, while you are young and healthy. Protect your loved ones today at  www.iciciprulife.com or call to me +91-9934147674

10 Things You Should Know Before Purchasing Life Insurance

This information will help you decide how much coverage you need, how long you’ll need it, and what you can afford to pay.

There’s no question that buying life insurance is a big deal. After all, no one wants to take out the wrong type of policy, or pay too much for the right type of policy.

Knowing that, here are 10 things you’ll want to look for, know, and consider before buying life insurance.

1. Review Your Insurance Needs

Talk to an insurance agent. He or she can help you evaluate your insurance needs and give you information about available policies.

2. Decide How Much Coverage You Need

How much of the family income do you provide? Does anyone else depend on you financially? How will your family pay final expenses and repay debts after your death? Based on the answers to these questions, decide how much coverage you need, for how long and what you can afford to pay. You want to make sure that you buy enough life insurance to cover the financial effects of an unexpected or untimely death.

3. Assess Your Current Life Insurance Policy

If you already have a life insurance policy, do not cancel it until you have received the new one. You then have a minimum period to review your new policy and decide if it is what you want. Keep in mind that you may not have to cancel your current policy. You may be able to change your policy to get the coverage or benefits you want now.

4. Compare The Different Kinds of Insurance Policies

There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years but does not build up cash values that you can use in the future. Cash-value life insurance may be one of several types: whole life, universal life and variable life. Your choice should be based on your needs now and in the future and what you can afford.

5. Be Sure You Can Afford the Premium Payments

Before purchasing a life insurance policy, be sure that you can handle the premium payments. Can you afford the initial premium? If the premium increases later, will you still be able to afford it?

6. Have an Insurance Agent Help You Evaluate the Future of Your Policy

How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level of cash value build-up. Ask your agent for a year-to-year display of values and benefits.

7. Keep Your Current Policy

It is important that you do not drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance policy may be costly.

8. Understand Renewal Policies

You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also, ask if you will lose the right to renew the policy at a certain age.

9. Read Your Policy Carefully

Do premiums or benefits vary from year to year? How much do the benefits build up in the policy? What part of the premiums or benefits is not guaranteed? What is the effect of interest on money paid and received at different times on the policy? These are all questions that you should be able to answer by reading your policy thoroughly. Your agent can help you understand things that are unclear.

10. Review Your Life Insurance Program Every Few Years

How will inflation affect your future needs? Do you need more insurance when your family size increases? Review your policy with your agent every few years to keep up with changes in your income and needs.

How To Choose The Right Life Insurance Policy!

I received this article on the importance of life insurance from Forbes and decided to share it. Having adequate life insurance can't bring your loved one back, but it can help provide you with financial security. I have numerous female friends who are living financially secure because their husbands had life insurance.

Whether it’s just you and your spouse or your family consist of a houseful of kids, a top priority for your peace of mind is having the right whole or term life insurance to make sure your loved ones are protected. Because there are so many options available, it’s easy to put off making a decision if you are overwhelmed with your choices or don’t properly understand them. The following 10 suggestions can help you make the right decision for you and your family.

1. Get multiple insurance quotes that include all options or restrictions so you know exactly what is available.
2. Stay away from any agent or organization that cannot or will not fully explain exactly what you are buying and why.
3. Always remember that you are the client. At no point should you feel bullied or intimidated into buying something that you aren’t sure of.
4. Though you certainly want to purchase adequate coverage, don’t overbuy. If your premiums are too high to manage because of the extras that have somehow found their way into your policy, you will be much more apt to allow it to lapse.
5. Once you find a company or agent that you are comfortable with, ask questions. The clearer you are on what type of life insurance rates and options are right for you, the easier it will be to agree on a package that suits your requirements.
6. Consider life insurance for the whole family, not just adults. Expenses that follow death or serious illness or accident will add more stress to an already devastated family.
7. Remember to regularly check your policy for changes that may affect you or your family. Almost all companies will send out notices to explain changes that they have made so make sure you review them.
8. Review your policies relevance regularly and update as your family and their needs change.
9. Consider your life insurance a fixed and non-negotiable expense in the same way you would your mortgage or car payment. It’s easy to consider life insurance as a luxury rather than a need, when in reality that is definitely not the case.
10. Don’t be overwhelmed by “what if” or worst-case scenarios.

No one wants to leave their family early, and no one wants to leave them struggling financially as well as the emotional trauma they will experience with the loss of a loved one. The proper whole or term life insurance can let you get on with the business of living while knowing that should the worst happen, your family is protected.

Insurance and its Essential Role to Play in the Life of an Individual

People are always after their security. And, there is not even a single person to live here on earth who would not like the idea of living a secure and safe life. With a sense of security comes the fulfilment of basic necessities like clothing, shelter and food.

Economic security means satisfying his or her needs like medical care, shelter, food and more not only in the present but even in the near future. This always comes with the economic risk that is derived from the differences in the expected outcome.

The good thing is that economic risk is carefully managed by the insurance industry. In such a formal arrangement of insurance, insurance policyholder pools all his risks with other policyholders. But then, a particular policyholder is no longer required for establishing a direct connection with other policyholders.

Insurance and its Main Function

Insurance is mainly a useful tool that helps in reducing all financial losses or hardships. This is mainly present because of the risks that come with it. Actually, all people may be considered as the victims of unexpected situations like theft, accidents, injury accidents, fire, severe weather, illness, lawsuits and many more. They are prone to risks at work, home, travelling and cars.

In buying a policy, you are also making regular payments like the premiums. If you will be making a claim, an insurer will be paying out for the possible losses that are covered under the policy. In the event that you’ll not be making a claim, you’ll not have the chance of getting your money. This will be pooled with all of the premiums from other policyholders.

In deciding on the type of insurance to choose from, you need to keep on thinking about:

• The Reason Behind Choosing for the Coverage
• Things to Include in your Coverage
• The Affordability
• The Length of the Coverage

The Specific Role to Play by an Insurance Advisor

You need to always remember that an insurance advisor has his or her essential role to play in terms of financial planning. He or she is the professional person to help you with your purchase of a policy. They are making a great and connection with the company and customers around.

An insurance advisor has his or her specific role to play in finding insurance solutions that are after meeting the needs of clients and building the sales of a company. Therefore, an advisor is required for playing his or her essential role. By getting the assistance of an insurance advisor, expect that you will also be getting the trust of a customer and an insurer.

Among the specific roles to play by an insurance advisor include understanding the investment and insurance protection needs of a person. Apart from it, he or she has the role of recommending and identifying the best solutions in meeting the clients’ needs. Product portfolios are also offered for the guaranteed satisfaction of all clients. Such formalities are also completed by an advisor for the policy to be issued completely.

Sifting through the odds and probabilities of insurance

When buying insurance look for a policy that meets your needs instead of forcing yourself with what the policy offers.

This might sound preposterous, but gambling and insurance are the same. Both depend on olds and probabilities. Actually, insurance is a type of gambling where the insurance company is betting that nothing bad will happen to you. However, you too take insurance hoping nothing bad happens to you, but it does occur, you create a financial cushion by way of insurance.

For instance, you take life insurance to protect your dependents, health insurance to protect your health,
motor insurance because someone may hit your car, householders insurance to protect your home, and travel insurance in case something happen when you are travelling. The list goes on, depending on what you find valuable to protect.

Yet public perception of insurance has taken more beating than accolades, especially life insurance. The primary reason for perceiving insurance to be something of a rip-off stems from the gambling mentality. After all, in gambling on an average, the house (Casino) always wins, it is for the reason that most people often confuse themselves when it comes to insurance and either go uninsured or land up taking insurance without clarity and remain under-insured.

Insurance is actually the only financial instrument that transfer financial risk from you to itself. So, when you purchase an insurance policy, a specified risk of loss is passed from the policyholder to the insurer. You pay a cost, which is nothing but the premium and is similar to a wager in case of gambling, and you are on. Insurance company pool the premiums they receive from several people and protect themselves against catastrophic or by further insuring themselves with insurance.

Everyone with financial dependents definitely needs a Term Plans do not offer any returns. And, because there is no return on surviving the term of the policy, people do not see the opportunity and now offer term plans, which return the premiums if one survives the tenure.

 

As financial complexities have grown, so have the offerings from insurers have come up with a wide range and mixture of plans. Naturally, this has meant that policies have got complex and there is difficult to understand and is put-off. Most individuals need to know about the health, life and motor insurance options. If they own a house, they need to consider insurance for their home.

Fear is an ally of insurance, you fear things will go wrong and hence you take insurance. It's again somewhat akin to gambling, where the lure of desire works. The first step to understanding insurance is to undergo a needs analysis. For each type of insurance, think about whether your fear is rational. If it doesn't keep your money in your pocket. This way you will not only know whether you need insurance or not, but you will also be able to evaluate how much risk you are exposed to, how much you can take on your own, and how much necessarily needs to be transferred to an insurance policy.

Insurance fables

Insurance is a financial instrument to transfer risk and should be seen in that vein and no more.

MYTH
I am too young to need any form of insurance at this stage in life. My family does not need life insurance, as I am in good health now, which means any payment towards a life insurance policy is an utter waste of money. I am also insured by my employer as part of a group life insurance, which takes care of my need for life insurance, so why should I waste money over life insurance on my own? Anyway, the best way to arrive at the amount of insurance cover I need is to multiply my income by 10-12 times.

I have a group health insurance policy from my employer, which takes care of my healthcare needs. I am healthy and in no hurry to fall sick, instead of putting money in a health insurance policy, I would rather spend it more productively. Health insurance anyway comes with several exclusions, making it an expensive proposition that pays out in few cases only.

The tax benefits from insurance are really worth it to take both life and health insurance. In case of life insurance, you can avail of tax deductions under Section 80C of the Income Tax Act for up to Rs.1,5; lakh in a financial year. I also stand to gain from the tax-free status of the proceeds from a life insurance policy at the time of its maturity, which why I look for a savings and investment policy. Similarly, if I opt for health insurance, I could avail of tax deductions under Section 89D of the Income Tax Act up to Rs25,000 and Rs30,000 (for senior citizen).

REALITY
Life insurance is a good idea for people who have sizable assets, debts and financial dependents. The quantum of life insurance cover that you will need depends on your life stage, income, liabilities and other factors. There is no one-size-fits-all-model or rule of thumb to determine how much cover you need. Every individual's life insurance needs vary significantly and it's completely plausible that two people with exactly the same annual incomes will have drastically different life insurance needs due to individual factors such as the dependents, risks, assets, and more. Undergo a needs analysis to arrive at the right amount of insurance that you need.

Group insurance works as long as you are part of the group. So, if you quit your job, the insurance stands cancelled with effect from the day you leave the organisation. The premiums on both life and health insurance depend on your lifestyle. Typically, the healthiest individuals see the lowest premiums, but other factors that affect cost include lifestyle choices like smoking as well as your occupation and hobbies.

There are different types of policies and each covers different types of risks. Analyse the risk you are exposed to and how much of it you can retain and how much of it you can transfer to an insurance policy. Take insurance based on your needs, and not because there is a tax benefit that comes when you take a policy. At best, the tax benefit should be an added advantage and not the prime reason for taking any form of insurance.

 

Why you should buy a term plan

Rahul Shah, 30, an IT professional, has three dependents - his parents and his wife. Shah's annual salary of 8 lakh is good enough to support his family, but he is worried. Since he is the sole breadwinner, his dependents could be under tremendous financial stress in the event of his untimely death. Therefore, to mitigate the risk, Shah is considering buying a life insurance policy.

However, given that there are over 20 life insurance companies offering a variety of products, Shah is trying to zero in on a policy that would suit his requirements best. Life insurance can be broadly classified into five types: Whole Life Plans, Term Plans, Endowment Plans, Money-Back Plans and Unit-Linked Insurance Plans (Ulip).

All products come with tax benefits of up to Rs.1.5 lakh, under Section 80C of the Income Tax Act, 1961, on the premium paid. Keeping in mind, Shah's family and monetary background, financial planner Hemant Rastogi of Wise-invest Advisors are of the view that a term plan would be his best bet. The reason is that such plans provide the most cost-effective risk management cover at very low premiums.

WHAT'S A TERM INSURANCE

Term Insurance is a life insurance policy where the insured pays a premium at regular intervals(quarterly/bi-annually/annually) and the insurer agrees to pay the beneficiary or the nominee the sum assured in the event of the insured's premature death during the policy term.

But, if one survives the policy term, term insurance would not provide any survival or maturity benefit ts. Of late, however, insurance companies have also come up with term plans that pay back a certain per cent of the total premium paid, if the policyholder survives the tenure. But then why should Shah choose a term insurance policy over other products.

1 PROVIDES FINANCIAL SECURITY

Pure Term Plans are not an investment option, but a means to financially secure the lives of your loved ones and help them meet their lifestyle needs in the unfortunate event of the death of the insured. As the years roll by, however, the insurance cover must be revised from time to time to meet the changing needs.

The right amount

Unfortunately, there are no easy answers because the right amount is always a moving target. Depending on where you are in your life stage, the target may keep changing and, at some point in time, you may be in a position where you would not need life insurance at all.

However, the thumb rule, according to most financial planners, is that considering rising inflation, the appropriate cover should be 10 times your annual income. Remember that an inadequate cover defeats the very purpose of buying insurance in the first place. At the same time, you must not be over-insured.

Policy term

Considering 60 years as the retirement age, the policy should ideally run for the entire duration till the time you retire. For example, Shah should buy a term plan for 30 years (i.e. 60 - 30 (his present age)), to ensure his family will have the much-needed financial cushion to fulfil their financial needs and obligations in the years ahead, in his absence.

2 IT BRINGS PEACE OF MIND

The feeling of having covered your life with term insurance can be quite gratifying. You will feel a lot relieved for sure. Your home loans, other liabilities are all under severe threat once the main source of income is gone. Term insurance will take care of all of it. So buy your term insurance NOW.

2 LOW PREMIUM

The premium for a term plan is relatively lower than all other insurance plans because there is no investment element in the amount insured.

According to an online insurance aggregator, a 30-year-old can buy an Rs1 crore cover with a policy tenure of 30 years for an annual premium of around Rs8,500 - the cheapest available option to claim a large cover. In fact, by paying just 1 per cent of his annual salary, Shah will be getting a life cover of Rs1 crore.

3 LOW CLAIM REJECTION

Generally, claim rejections are lower if the policy has been active for 10 years or more. Shah can buy a policy from any company, but he must make complete disclosures about his health, habits and financials to ensure his family's policy claim is not rejected in the event of his death.

Recently, the Insurance Regulatory and Development Authority (IRDA) has mandated that two years after the policy comes into effect, no insurance company can reject a claim stating non-disclosure of facts.

4 HIGHLY FLEXIBLE

When it comes to term plans, flexibility is one of its many advantages. You can opt for an online or an offline plan. Also, for many online policies, companies do not insist on health check-ups if the cover amount is less than or equal to Rs 50 lakh.

One has to just give a declaration during the application process. Even though Shah will not be able to increase the sum assured during the renewal process, he can always opt for a new plan, as and when the need arises. Besides, he can customize term insurance with optional riders without altering the simplicity of the term plan to provide additional protection to his family.

5 RIDERS

Term plans come with a host of riders which provide extra benefits at a nominal cost. Accidental death, Permanent or Partial disability, Critical illnesses, Waiver of Premium and Income benefits are some of the available options. There is no set rule as to who can avail a plan.

It all depends on one's needs. For example, if someone works on the floor in the heavy industries, a waiver of premium or a permanent and partial disability cover can be explored. Experts say one should not buy a rider just for the sake of it because they come at additional costs. The rates vary from company to company and, therefore, one has to read the fine print carefully and watch out for the exclusions.

6 LOW BROKERAGE

When you buy an insurance policy, the commissions charged by brokers or agents are mentioned under the premium allocation charges. This is a recurring expense. Each time Shah pays his premium, a certain per cent of that money goes to his broker or agent. This percentage would vary from one insurer to another and from plan to plan. In terms of certain term insurance products, the brokerage could be as high as 30-40 per cent of the first premium paid and, thereafter, over a period of time the brokerage cost decreases.

However, for term plans the brokerage element is the least and comes at an average of around 5-6 per cent, according to financial planners.

Most importantly, however, if one were to go for an online term plan, brokerage cost would be nil. Given the uncertainties of life - the not-so-safe roads we travel on or other lifestyle hazards in these days and times - a term plan can save you from a lot of worries by securing the lives of your loved ones. So, buy one before opting for any other financial product.

How much Term Insurance should one take?

While this could vary from person to person, depending on the number of assets one has, a good thumb rule would be between 15 to 20 times your annual income. Another way to look at it is, in case of your timely death, what is the amount which would be required for your family to lead a similar lifestyle?

What should be the Tenure of your Term Plan?

Typically one would argue that the longer the tenure the better it is. I would recommend a tenure till (retirement age + 5 years). With retirement, your income drops dramatically and hence the financial dependency on your income also stops. So there isn’t too much of an insurance requirement as such. Also, longer tenures have higher premiums.

Advantages of Online Term Plans 

The benefit of all term plans are the same – whether to purchase online or offline. But the same benefits are available at much cheaper rates if purchased online. I would recommend that you buy online plans because of the following reasons:

• Lower premium rates 
• Faster process – Instant policy issuance in some cases 
• Less paperwork involved (often paperless process) 
• Completely transparent (fill-up the form yourself) 
• No health / medical check-up for certain age groups

And one of the mistakes which most individuals make – Rely completely on the employer-provided life insurance cover. Let me tell you how this can go horribly wrong. Suppose you are diagnosed with a critical illness and you need to undergo extensive treatment for the same, which may go into months. You are almost sure to lose your employment and along with it, the benefits of the employer-provided cover. This does happen – so don’t rely totally on it, especially when the premiums are so affordable.

So buy your Term Insurance NOW!

Four reasons why you should buy Term Insurance Policy online 

There are tonnes of insurance policies available in the market today. But the question is: which one to go for? However, this question should not pop up in your mind if you have been reading the news lately.

Read this headline carefully: "Investors have lost Rs. 1.5 lakh crore due to mis-sold insurance policies".

The reason why the above headline needs to be read carefully is not to notice that there has been mis-selling from the insurance agents, but the sheer number - 1.5 lakh crore worth of our money has been wasted in dud insurance policies.

For most of us, it's a no brainier that only term insurance is the true meaning of life insurance.

If you are looking to buy term insurance, you would have two modes to do that: online and offline. The online form is increasingly becoming popular because of several reasons. However, there still seems to be a bit of fog left in the path of buying online term insurance. Let's look at some of the factors based on which you can choose the mode of buying term policies that suits you best.

1. Cost

Cost is a major factor while going for term insurance. A lot of online term plans are cheaper by 50-70 per cent (or even more) compared to their offline counterparts. Now, this is mainly due to these two factors:

• There is no intermediary involved in the process. You deal directly with the company and hence, the company's costs are less as compared to the offline mode.
• Companies often believe that the mortality risk is lesser in case of online consumers than offline. As a result, they are ready to offer a lower premium in the online mode.

Industry experts believe that such low premiums can bring about a price war in the insurance sector similar to the one in the telecom space. It has to be seen whether these premiums are to sustain in the future. Now, what if you had bought a policy at, say, Rs. 20,000 three years ago and now you get it for Rs.15,000 for the same assured sum and tenure.

There have been many cases where consumers complained they had bought online term plans at higher prices just a few years back. The answer is pretty simple: stop paying a premium for the existing policy and opt for a cheaper one, but do make sure that other factors are satisfied too.

(Also read: How and when to exit an insurance policy you don't need)

2. Flexibility

The online mode definitely gives you more flexibility and more options in choosing the required term plan. However, you need to do a bit of homework while buying a policy online since here you do not have the privilege of an agent helping you. This is also a blessing in disguise as in the offline mode you might get a bit lazy and leave it to the agent to the fill the form. There have been cases where agents have misplaced customers' information while filling the form - either intentionally or by mistake. This could prove costly during claim settlement.

3. Claims settlement

If there is a concern in the consumer's mind while buying term plans online, it is this. Also, this concern is very much justified since there is no proper claims settlement data to be sure of this mode. This is because companies do not segregate online and offline claims ratios. Hence, you cannot be sure of the exact number of claims settled online.

However, if you have disclosed all your information rightly, there is no reason for you to be worried about the settlement of your claim. Insurance regulator IRDA has imposed stringent rules on insurers, with one of them being that they need to reject a claim (if any) only within 2 years since the policy was purchased. In case your claims are rejected even after proper disclosure of all necessary information, you can approach an Insurance Ombudsman for justice.

4. Sum assured

The average sum-assured tends to be higher in the online mode, because of the lower costs involved as stated earlier. It can also be due to the marketing skills of insurance companies. It is quite common to see an ad similar to this: '1 crore term insurance for just Rs.500 a month or Rs.17 a day.' More often than not, you would be tempted to purchase an Rs. 1 crore cover even when you don't need it.

Also, for online policies, insurers call for medical tests only if the sum assured is more than a minimum amount, say Rs. 50 lakhs or so.

Conclusion

Based on the above factors, the online mode clearly stands out. It is recommended, however, to calculate the amount of insurance required before purchasing a policy. All the facts related to family or personal health should be declared (even if it means higher premium).

Remember, insurance is based on the principle "Berrima fides", meaning utmost good faith.

The Pros and Cons of Term Life Insurance Policies

Term life insurance policies are straightforward policies that are contracted for a set period of time. Many financial experts, such as Dave Ramsey, consider these policies the best type of insurance, while others consider them to be poor value. Here's a look at both sides.

The Pros of Term Life Insurance

These are generally the most inexpensive policies among the many types of policies on the market. They also stay at a fixed rate throughout the contract period. Getting this insurance at a young age ensures a long period with a low monthly payment for the policy. If the contract is for 20 years, the specific insurance amount pays out at the time of the insured's death. There are no waiting periods for this type of insurance, and there are no other fees due. The simplicity and low cost of these policies have made them one of the best deals among insurance products.

The Cons of Term Life Insurance

The major con to buying term life insurance is that it can be difficult or impossible to get if you are in poor health. Once the contract period ends, it may be difficult to renew the policy if there have been health problems during the original contract period. Some people find that they become un-insurable during the contract period and are left after the contract with no insurance at all. There are, however, some policies that have guaranteed renew-ability until a specific age. There may be a high monthly payment due if the insured party smokes, has serious health problems or is obese. These factors can make it difficult to get these policies at all for some people, particularly if they are also middle-aged or older. There may be a health exam to determine the applicant's overall level of health. 

 

10 reasons you need to buy life insurance

Young people think life insurance is something you need to think about when you get old. But that is a big myth!

Buying life insurance is one of the most important financial decisions, but believe it or not, only 10 per cent of Indians are insured. But why is it so important? Well, regardless of how much you earn, no one knows what the future holds. Lots of people die a prematurely every year from illness or accident and, if you happen to be the sole breadwinner in the family and you were to pass away, it could have devastating consequences for your loved ones-their ability to pay household expenses, debts and maintain their standard of living.

The least you can do, therefore, is to secure your family's financial future by buying a life insurance policy. Besides, do not overlook benefits of a life insurance during your lifetime, especially if you are young. We list 10 compelling reasons for buying a life insurance policy.

1. LOOKING AFTER YOUR LOVED ONES EVEN AFTER YOU'RE GONE: This is the most important aspect of life insurance that one needs to factor in. Your family is dependent on you even after you're gone and you certainly don't want to let them down. Whether it's for replacing lost income, paying for your child's education or making sure your spouse get the much-needed financial security, life insurance could save the day for your surviving dependents.

2. DEALING WITH DEBT: You don't want your family to deal with financial liabilities during a crisis. Any outstanding debt-a home loan, auto loan, personal loan, or a loan on credit cards will be taken care of if you happen to buy the right life insurance policy.

3. HELPS ACHIEVE LONG-TERM GOALS: Since it is an instrument that keeps you invested for the long term, it would help you achieve your long-term goals such as buying a home or planning your retirement. It also provides you with diverse investment options that come along with different types of policies.

Some policies are tied to certain investment products that pay dividends based on their performance. If you are opting for an investment-linked policy, be sure to read the fine print to be fully aware of the potential risks and returns.

4. LIFE INSURANCE SUPPLEMENTS YOUR RETIREMENT GOALS: Who wouldn't like their retirement savings to last until they do? With a life insurance plan, you can ensure you have a regular stream of income every month. Putting money in an annuity is like a pension plan- put in some money regularly in a life insurance product and enjoy a steady income every month even after retirement.

5. BUYING INSURANCE IS CHEAPER WHEN YOU'RE YOUNGER: Not every millennial needs a life insurance policy. If you haven't created an emergency fund or you're still living off your parents' money, insurance shouldn't be a priority.

However, if you do have dependents or you have co-signed a loan with your parents (or any other member of your family or friend), whether it be a student loan or a home loan, you need to start considering buying a life insurance policy. Besides, coverage costs are much lower when you're single. Insurance agents may try to sell you a policy that you might not need.

Therefore, do your due diligence or approach a financial planner to determine how much insurance you need considering the other assets you may own. Even if you're single, there may be other dependents and you need to ensure they're taken care of. "The earlier the better. For instance, single people provide financial support for ageing parents or a sibling with special needs. Insurability is another reason to consider life insurance when you're single. If you're young, healthy and have a good family health history, your insurability is at its peak, and you can get the best rates on your life insurance policy."

6. YOUR BUSINESS IS ALSO TAKEN CARE OF: Life insurance isn't only for yourself and your family. Some insurance policies also take care of your business. If you own a business, then your business partner can purchase your portion of the business without hassle. Your business partner( s) will enter a buy-sell agreement and the payout would go to the deceased partner's nominees, but without giving them a stake in the company. There are two types of life insurance policies-a term insurance policy and a life insurance policy.

While we are all aware of the death benefits these insurance policies provide, we know little about the various options they layout that could help strengthen your financial position.

A term insurance provides protection for a specified period of time (10, 20 or 30 years) and pays out the benefits only if you die during the term. The policy will expire and coverage will end if you outlive your policy. An investment-cum-protection plan on the other hand offers you a lump sum amount on the completion of the term of the policy. These plans also offer you protection but the cover is usually not as high as offered with term plans.

7. TAX-SAVING PURPOSES: You could save taxes with insurance policies irrespective of what plan you buy. The premium you pay on an insurance policy is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C, and for tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961.

8. A TOOL FOR FORCED SAVINGS: If you choose a traditional or unit-linked policy, you pay a premium each month, which is higher than what it costs to insure you. This bit of extra money is invested and it accrues cash value. This cash can then be borrowed against the policy or you can choose to sell it or draw income from it.

9. YOU MAY NOT BE QUALIFIED FOR IT LATER: Life insurance policies run on uncertainties. You may be healthy now and paying a premium for life insurance may seem to be an added financial burden, but if you suddenly fall ill, you may not be allowed to but a life insurance policy. Therefore, it is imperative to buy one early on in your life because it remains in force if your health deteriorates later on. Insurance companies allow you to attach certain riders or benefits to your existing or new policy.

These riders enhance the quality of your insurance. The accelerated death benefit rider, for instance, allows the policy owner to avail all or a part of the policy's death benefit if he or she has less time to live due to a critical illness, or wants to use the money for medical treatment or related expenses.

10. PEACE OF MIND: Death is unavoidable. In the face of tragedy, the least you can do for your family is to secure their financial future. Even if it is a small policy, you know that you've done all you can to help them tide over difficult times.

"Life insurance is a great tool for both protection as well as helping a consumer save in a disciplined manner, which leads to creation of a good corpus. The need for life insurance changes at different stages of your life-cycle depending on the financial obligations and dependencies."

Source: Business Today

Why People Don't Buy Life Insurance

As a life insurance agent, you know that everyone should have life insurance. However, there are some people who don’t buy life insurance. There are a number of reasons why someone might not buy life insurance, but a lot of these reasons can be addressed in your sales presentation if you know what these reasons are ahead of time. Here’s a list of some of the most common reasons why people don’t buy life insurance.

Other Financial Priorities

With high unemployment rates, reduced household income and daily living expenses on the rise, a lot of people feel the need to postpone making any additional financial decisions. Unfortunately, this means they’ll probably put off buying life insurance. Budgeting under difficult financial conditions can be hard and many people just don’t know how they’ll fit the cost of insurance into their budget that is already stretched thin. As a life insurance agent, it’s your job to help someone understand the importance of life insurance and how they can budget for it. However, financial concerns aren’t the most common reason why people don’t buy life insurance. 

Lack of Knowledge

Most people who choose not to buy life insurance don’t buy it because they don’t understand it. They don’t have a clear understanding of what type of coverage they should buy or how much life insurance they need. As a life insurance agent, you need to be able to educate your prospects on what kind of coverage they need. Prospects respond well to an agent who takes the time to offer individualized counseling to improve their understanding of the life insurance products available to them. Once your prospect understands their options, it will be a lot easier for them to envision how to fit life insurance into their budget.

What do you do as a life insurance agent to help your prospects understand what kind of life insurance they need? Please share in the comments below.

10 Reasons People Don't Buy Life Insurance

Many people could benefit from a life insurance policy but still choose not to purchase one. Learn why they should give life insurance another look.

There's no question that not everyone needs life insurance. According to the Consumer Federation of America (CFA), there's little reason to buy it if you don't have any dependents, "since there is no economic catastrophe associated with death."

Even then, though, there are exceptions, with the CFA declaring that "those who expect family responsibilities soon may wish to get coverage early to guard against a health change that could raise costs. Substantial term life insurance is inexpensive for young non-smokers, so paying for what you don't need yet, but will soon, is not a serious burden."

Still, at least the case can be made that if you're single, and especially if you're single as well as relatively young and healthy, you may not feel a pressing need to purchase life insurance as soon as possible.

The same can't be said for a lot of the excuses that people who pass on buying this type of insurance use when asked to explain their hesitation or indifference. In fact, most of the reasons cited by folks who fail to see the appeal or benefit of life insurance are pretty easily refutable, with the following examples being noteworthy cases in point.

1. Life insurance costs too much (or I can't afford it)

Here's the funny thing about this particular line of reasoning: usually life insurance isn't all that expensive.

That depends on a number of factors, of course, including how old you are when you decide to take out a policy, how healthy (or unhealthy) you are at that time, whether or not you're a smoker, which type of life insurance, and how much coverage you want to buy.

If you're fairly young and healthy and you're not a smoker, though, you should be able to get a 20-year, $250,000 level-term policy for less than $200 annually.

This is far from common knowledge among today's consumers, though, with Todd Silverhart, Ph.D., corporate vice president at LIMRA Insurance Research, sharing that the work he and his colleagues have done in this area suggests that "consumers generally do not have a good understanding of how much a life policy might actually cost."

In fact, he adds, "they tend to over-estimate the actual cost a lot," with a good example being that, when asked (as part of the 2015 Insurance Barometer Study that LIMRA conducted with non-profit Life Happens) to guess the yearly cost of the above-mentioned policy, the average person replied $400. The median response from people under the age of 25, on the other hand, was $600, while a whopping one in four assumed the bill to come to $1,000 or more.

2. I don't need it because I have plenty of assets to leave my loved ones

That may be true, but what form are those assets in at the moment? Are they mainly liquid, meaning your beneficiaries could quickly convert them into cash should the need arise? Or are they mostly in non-liquid form, which would mean real estate, a share in a business, or even jewelry?

If it's the latter, a life insurance policy could provide your loved ones with access to some "ready cash" that would allow them to pay off debts that require immediate attention and also let them retain those non-liquid assets rather than potentially sell them for a fraction of what they'd get if they could hold on to them for a while longer.

3. I'm healthy

You are now, but what about five or 10 years down the road? Actually, none of us knows for sure how healthy—or not—we're going to be tomorrow or the next day, let alone a year or a decade in the future.

It doesn't take much Internet surfing to find stories of people who ignored life insurance because they were healthy or young (or both), only to be blindsided by an unexpected medical crisis that made them ineligible for life insurance.

This doesn't mean everyone should run out and buy as much life insurance as they can afford. If you've got a spouse, or children, or a parent who relies on your financial support, though, you should seriously consider at least some form and amount of life insurance. Even if you regularly get clean bills of health from your physician.
 

4. I've got too many other things to worry about right now

Maybe you're recently married, or you're busy prepping for your trip down the aisle. Or maybe you're about to have a baby, or you just had one.

Those situations and many more have prompted a lot of people to put "buy life insurance" at the bottom of their to-do lists—assuming it ever made it onto these lists to begin with.

As was mentioned earlier, though, you never know when something unfortunate or unexpected could happen to you, so if there are people in your life who depend on your income, you should make life insurance a priority again as soon as you're able.

5. I don't understand it well enough to buy it

All sorts of studies have found that one of the main reasons people don't purchase life insurance is that they're confused by all of the varieties and options that are made available to them during the buying process.

According to LIMRA's and Life Happens' 2015 Insurance Barometer Study, for example, 38 percent of participants cited "I’m not sure how much or what type to buy" as their reason for not purchasing.

"Given that buying life insurance is believed to be important and not something that is done often, the uncertainty that surrounds it paralyses many people," Silverhart says.

One fairly obvious solution to this issue is to reach out to an experienced agent so you can be led through the process by a helping hand rather than tackle it on your own.
 

6. I find the process intimidating

According to a 2014 LIMRA study, more than 70 percent of people who purchased life insurance policies through their employer said they were happy with the process and even described it as "comfortable."

A more recent study from the same organization, on the other hand, suggested that those who go to buy life insurance on their own are far less pleased with the experience. In fact, many say they find it intimidating.

Again, this is another situation where working with a professional who knows the ins and outs of the industry would help ease some of the tension associated with such a complex product.

7. I have other financial obligations that are more important than life insurance

For some people, spending their hard-earned cash on vacations, or shopping, or movies, or eating out is more important than using it to pay for a life insurance policy. For others, cable, Internet, and phone bills come before life insurance.

In fact, according to the most recent Insurance Barometer Study conducted by LIMRA and Life Happens, 60 percent of Millennial's consider their cellphone, Internet, and cable payments higher priorities than purchasing life insurance, with 49 percent of those 65 and older saying the same thing.

According to Jim Kerley, LIMRA's chief membership officer, “Consumers today are confronted with more financial demands than ever. Younger shoppers in particular realize they need life insurance, but it’s not a priority for them."

One way to make it more of a priority for younger and older consumers alike, he adds, is to reinforce just how cheap life insurance can be—especially if you spend a bit less on eating out, movies, even your daily coffee run and use the savings to fund an insurance policy instead.
 

8. I don't trust insurance companies or agents

his keeps more people than you may imagine from buying life insurance, as the aforementioned study conducted by LIMRA and Life Happens found that nearly 40 percent of respondents have refrained from it due to the apprehension they feel for insurance agents.

If this describes you, there are a number of places you can go to read up on any companies you're considering doing business with, with A.M. Best, the Better Business Bureau, the National Association of Insurance Commissioners, and your state insurance commissioner's office being four great examples.

9. I'll get to it eventually

Another way of putting the above is to say that a lot of people procrastinate when it comes purchasing a life insurance policy.

"Even though they recognize the value of life insurance and are aware of their need for it, many consumers [30 percent, according to the most recent Insurance Barometer Study] just haven’t gotten around to taking care of that need," Silver-hart says.
 

10. It makes me think about death

Similarly, 30 percent of the men and women who participated in the 2015 Insurance Barometer Study suggested they've avoided buying life insurance because doing so causes them to think about their mortality.

Unfortunately, there's no easy way to combat this particular quandary—other than, perhaps, to point out that the thought of leaving your spouse, or children, or other loved ones in dire financial straits isn't likely to be much more, if at all, appealing thank thinking about passing away.

Frequently Asked Questions

Q: In what kinds of situations or circumstances would I want to avoid or ignore life insurance?

A: Most experts will suggest staying away from life insurance if you're single, or if you don't have any dependents. Many will say the same in regard to retirees—or at least a certain segment of the retired population. There are times when even folks in these situations may want to buy life insurance, though—with two cases in point being young, single people who assist siblings or parents and retirees who help support grandchildren.

Q: Do "empty nesters" need life insurance?

A: Sometimes, yes. For example, are there people in your life who depend on you for financial assistance? If so, you'll probably want to invest in this kind of insurance even if your children have "flown the coop." Another instance when life insurance may make sense for a so-called empty nester is if you're at all concerned about the Social Security “blackout period” that impacts some folks—women, especially—following the death of a spouse. (Because Social Security pays nothing between when your youngest son or daughter finishes high school and you apply for survivors’ benefits—the latter of which isn't possible before you turn 60.)

Q: I'm a retiree. Do I still need life insurance?

A: Whether or not you "need" life insurance as a retiree depends on your current circumstances. If you're free of debt, you no longer rely on an occupation for income, you have children who are self-sufficient, or if you're having a hard time paying your premiums, you very well may not need, or no longer need it. That said, if you're still paying off your house, or if you're supporting one or more dependents—a good example would be grandchildren you may be caring for, or even adult children who are disabled—you could make a far worse purchase than life insurance. 

Source: QuoteWizard