Written By Afina on Selasa, 12 Maret 2019 | Maret 12, 2019


 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. 
LIFE STAGE BUYING: Buying  insurance is not a one time affair.  The  insurance need changes as per life stage and one should provide for each one of them. Reviewing  requirements  at every life stage or after 5 years  helps. For those who are single or have recently  started career, the immediate  need might not be there unless there are a financially dependents  parents or siblings ,. However even for them buying   insurance early in life helps in keeping the premiums  low because of age and medical 9issues  connected  with higher ages. As one move up the life stage., gets married and have children, the  insurance need rises. Keeping and adequate coverage not only helps family maintaining  the same standard of living but also helps in achieving  certain  life goals such as kid’s education or marriage.  Since education is the prime concern for most Indian parents, investing  in a child plan will ensure that the education of your kid goes unhindered  whether or not you are a around. Its is a  very likely  that during this  period, one takes a home loan and adds on the exiting  financial liabilities. Getting  not just the home loan insured  but also any other form of loan such as a car or personal loan is a must.  The value of the human life is unlimited. Still most of us consider  it enough  to keep a life cover of Rs. 2 lakh- Rs. 5 lakhs  or Rs 10 lakh . Will it suffice ? Will such amount be enough to replace one’s  income be enough to replace one’s income  for the next several years? No wonder we at most times are under-insured during  our life time.  GET REAL VALUE OF YOUR LIFE: Human life value (HLV) approach to calculating  the  insurance requirements  takes into a account  four factors annual income, annual expenses  years to retirements and inflation adjusted cost of  expenses. From these  factors a reasonable accurate assessment of the value of your income can be made. First  deduct all your personal expenses  such as a food, clothes, travel, entertainments  from your annual income after deducting personal expenses  is what your family consumes. Second see how many years of earning  are left your retirements  age minus your current age.  Project  family expenses up  to retirements. Add non-recurring expenses , like your children’s  higher  education  or their marriage. The shortfall is  
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. ...

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