insurance, life insurance, term plan, endowment, endowment plan, pure insurance, unit linked plans, unit linked insurance plans, ulip, ulips, pension, pension plan, plans, risk, investment, HDFC, LIC, Kotak
Life Insurance helps cover two major risks:
- Risk of dying early
- Risk of living too long
Risk of dying early
If for some unfortunate reason, you were to die tomorrow, it would be a huge setback for your loved ones both emotionally and financially. While there is not much you can do to alleviate their emotinal trauma, you can certainly provide for the financial pinch that they would feel in your absense. You can do that by taking an insurance cover on your life. This insurance cover can be a pure insurance policy (Term Plan) or an insurance cum investment policy (Endowment Plan).
Term Plan
Term plan is a pure insurance plan wherein the entire premium paid goes towards mortality charges and nothing is invested. If the life insured survives the term, he does not get anything back. The benefit of a Term Plan is that it provides a large insurance cover for relatively low premium.
Endowment Plan
Endowment plans are insurance plans where a part of the premium paid goes towards mortality charges and the remaining gets invested. In these plans, the Sum Assured is paid to the nominee in case of death of life insured and if life insured survives the term, the investment part alongwith the appreciation therein is paid back to the proposer. The investors have a choice of where the money should be invested. They can have it completely in debt and get bonuses every year or they can choose to invest in stock market. The plans that invest money in stock market are called Unit Linked Insurance Plans (ULIP). These plans operate very much like mutual funds though with an additional insurance cover. ULIPs have become fairly popular plans with the current boom in the Indian Stock Markets.
Risk of living too long
This is a risk which very few people recognise. What if you were to survive till the age of 100? Do you have sufficient investments to take care of your expenses for so long after your retirement? Pension plans help you cover this risk. In a Pension plan, you invest a fixed sum of money every year while you are working. Then at the date when you retire, you get a fixed corpus. You can withdraw a maximum of 33% from this corpus. The rest is paid out to you in the form of annuities till the time you are alive taking care of the risk of you living too long.
Buying insurance also helps you save tax. Premiums paid towards life insurance are deducted from your taxable income subject to provisons under sec 80C of Income Tax Act.
We help you choose the right plans to cover the above mentioned risks. We give you unbiased advice to select the best plans from all the competing life insurance companies in India viz. HDFC Standard Life, LIC, Kotak Old Mutual, Bajaj Allianz, etc.
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