GIVE LIFE INSURANCE ITS DUE IMPORTANT
For all those who have financial dependents , life insurance is a must. Life insurance acts as a tool for income replacement. The idea is to not make the surviving family members suffer financially due to the absence of bread earner. Its do not enough to keep the family maintain their standard of living life insurance ensures much beyond it. There are a financial liabilities towards, children which one needs to meet., Life insurance makes sure such goals are met systematically and dreams and aspirations of children are not compromised . In addition if there are housing and car loans , life insurance serves it role in managing them as well. In simple terms, life insurance company, ensures your family doesn’t suffer financially and all your goals are met for a small price by paying a premium, that your pay to ensure it. THE PRODUCT RANGE: Life insurance products help in channelizing your savings systematically into various assets for generating returns over the along term. As wealth gets disciplined savings are goes a long way in meeting the long term financial goals.
On one end of the spectrum are the pure the term insurance plans. They solely cover the risk of the dying. Nothing is paid on maturity I.e. on surviving the policy will replace the income that will cease to accrue. Then there are a traditional insurance plans including endowments and money back plans which are a ideally suited for conservative individuals looking to bundle savings with protections . On the far end is
the market linked investments cum protections plan called until linked insurance plan ideally suited for a those looking for a bundling and exposure to equities as asset class for a higher that inflation kind of returns. Besides protection insurance, products with savings elements helps in meeting one’s long term goals such as kids education marriage or even retirements . Market linked insurance products having equity exposure comes handy in this as equities are said to work best over long term as against other asset classes in delivering higher than inflation adjusted returns. Link your savings in these unit linked insurance plans to long term goals. Be exposed to equities till about three years away from goals and
then start shifting funds from equity fund options to less volatile debt funds. This helps in protecting the gains made.
what you should insure for. Third calculate the present value of the shortfall allowing for a reasonable rate of inflation . You may deduct existing life coverage and account for any debt such as a big ticket home loan to arrive at a more reasonable HLV figure. CONCLUSION: Link your life insurance to your goals. Choose between traditional and Ulips based on your requirements and understanding of the products. Do not invest in any of term unless you have a basic understanding of how these products the work. Once
bought run them will till maturity and refrain exiting earlier as a it would turn costly in surrendering
before the term ends. As a thumb rule, keep life coverage of at least ten times, of your annual income. Above all, ensure you are a not under insured as that would be the biggest mistake in your life. ...