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