Insurance Blog

Why should I get insured ?

The question that arises, when anyone hears the word “INSURANCE” or “POLICY” is “Why should I take insurance?”. This article is an introduction to series of blogs which will educate an insurance naive. The next articles will focus up on suitable plans for appropriate age groups.

Insurance is unlike, any other financial instrument that provides short term returns. Many people compare insurance as their investment option. The comparison finally leads to loss of insurance and wining of Mutual funds in this unequal chase.  This comparison is like a running race between fish and a fox, which is completely irrelevant.

Insurance is a financial instrument that safeguards the financial interests of the family in the absence of the sole bread winner. People consider insurance as unnecessary money sucker as they are unaware of the benefits or they are mis-educated about the products. This stereo typing happened due to term plans, which won’t return any benefits if policyholder survives.

Scenario in insurance market has changed with the entry of endowment plans, which will provide maturity benefits if the policyholder survives. These policies paved path for many hybrid policies, which were now being targeted based on the age groups and their requirement.

Insurance which was born with an aim of providing financial security is now equipped with an investment feature with new age structured policies. As they were basically targeted for insurance the returns provided on survival will be little less compared to investment options like MF’s, stocks and Bank FD’s. This is negated by the life cover that no other financial instrument is providing.

Considering insurance as an investment option is a right move for low risk profile individuals. Tax benefits provided under 80 ( C ) and 10(D) are unique to insurance, which will provide an edge over low risk financial products like Bank recurring deposits.

For people who are interested in taking risk were also accommodated in insurance segment with the help of ULIP’s (Unit Linked Investment Plans). These plans will allocated 1/8th of premium to insurance and rest in stock markets. Variety of funds were available for selection and can be chosen by policyholder himself. In case policyholder faces confusion, fund managers will guide based on their risk profile. Risk profile is being determined by giving questionnaire to customer. Funds are allocated based on customers preference and can be swapped if needed. This instrument gives an option to invest in insurance and stocks   at the same time.

Insurance has became a wholesome financial instrument, which can cater to the requirement of all segments of individuals. Besides reducing the risk of financial liability in case of risk, insurance also provides a chance to raise funds for future needs. These options make insurance a mandatory item in every individual’s portfolio.

Taking a loan on your insurance

A life insurance is more than just a death benefit. It’s a good investment option for those who know the ground rules and can choose smart.

It comes with several hidden benefits, and one of the most important would definitely be that fact that you can take a loan on your life insurance. Making money out of your insurance, can be a great way to generate some tax-free income, although you need to keep in mind that you need to structure the decision carefully.

Keep in mind that you can only leverage your life insurance and not make it an alternate income. Also, the amount that you wish to borrow depends on the different types of insurance that are available and the amount of cash that you have accumulated.

One of the pros of taking money from your insurance is that, the interest rate is low and there isn’t much of an approval process.

As intriguing as it sounds, you need to reconsider your decision carefully before jumping into it, because unlike a conventional loan, if you fail to repay the loan, the money would be deducted from your death benefit that your beneficiaries would get. Although the risk may look minimal, you need to keep in mind that the idea behind taking a life insurance is to cover the lives of your loved ones, financially.

Thus it is always essential that you stay away from easy temptations and, take a loan only when you know you’ll be able to repay it. 

So, how much loan can you take out of your insurance?

Technically it is possible for you to borrow up to the cash value you have accumulated within your permanent or whole life insurance policy, and you can do this by contacting your life insurance agent financial planner. Also keep in mind that unpaid interest can create trouble.

That is, if you fail to cover the full interest due, that unpaid interest will accrue as income and be added to the loan balance.

Unlike a bank loan or credit card, policy loans do not affect your credit and there is no approval process or credit check because, in simple words - you are just borrowing from yourself. Just make sure that you aren’t venturing into policy loans without assessing the risks.

So when an unexpected incident occurs, and you need to repair your house due to a natural calamity or pull in some cash for your small business, or pay for a brilliant college opportunity – go ahead and take benefit of the cash value that you have accumulated in your policy!



It is said that Insurance is about playing defence, when your assets are an offense!

How true.

We all know that both the defence and the offense of a team have to be strong in a team, in win the game. Here are the six best things about insurance, and why you should get one ASAP.

1.       Risk Cover

We live in a world that’s filled with uncertainties. With both mortal and financial danger lurking in each and every corner that we come across, it is only justifiable that you take insurance cover to make yourself immune against these threats and dangers. Insurances cover you and your loved ones against risk.

2.       Great Tool for Planning Life

Your kid wants to be a Scientist. But you and your spouse are working in an average paying job, that you fear you may not be able to afford your child’s dream. Or consider an alternate scenario where you want to buy a house or even have a comfortable retirement.

It doesn’t matter what your goals are, but insurance will help you cover your life as well as save for these goals according to your lifestyle and the estimated risk involved.  

3.       Healthcare

Going to the hospital – especially in case of accidents and terminal illnesses can be emotionally demanding, but they can also drain your wealth or put you in a crises. Having health insurance plans that offer the benefits of protection against critical diseases and hospitalization expenses will ensure that your health is financially covered.

4.       Income

Life insurances are a sure way to have assured income – especially through annuities.  The money saved during the earning life span will now provide a steady source of income during the retired phase of life.

Insurances also provide tax benefits, and can be a great tool to cover mortgages and loans.

What’s more, insurances provide economic growth without taking the investment risk, through the annual announcement of dividends and bonuses.

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