Features of the Two Leading Types of Term Life Insurance

A fixed time-slot and this happens to be the basis of the life insurance. You are supposed to purchase the policy and keep paying the premium for the present period. After the time lapses, you have two sets of options to consider. First, you can give up the coverage. Second, you can renew the plan. The second time you renew the plan, you may have to comply with completely new terms and conditions. The concept is different from the policies of the permanent type. The latter serves as a source of investment. You can use the permanent form of indemnity for the purpose of property planning.

The essential features

On the other hand, term life insurance mainly has one purpose to serve. Death benefit happens to be the one of the leading purposes of this particular type of insurance. As long as you are regular with the premium payment, you will have no issues in recovering the claim. You are supposed to nominate a beneficiary, and, in your absence, the named individual/individuals will receive the amount. Second, you can also use it for the purpose of replacing your income. The premium rates are more affordable than the other variety of insurance. There is yet another point of advantage. The coverage that you get is just enough, although the maintenance cost is affordable.

The basis of the difference

There are different kinds of term life insurance. It is the modes and modalities of premium payment that sets the basis of the difference. Not every policy may be similar regarding the deal of premium payment. On the one side, you have a term insurance that is annually renewable. The coverage keeps renewing annually. In this particular scheme, the premium rate is not uniform. During the initial years, the premium rate is low, but with the passage of time, the rate keeps increasing. So, if you have chosen for a definite time-thresh of 10 years, you will have the least price to pay during the initial 5 years.

The parameters of selection

Thereafter, the cost will keep multiplying. But things are different with the schemes where the premium payment is uniform for the entire time frame. So, even if your policy is for the stipulated time-thresh of 20 years, the rate is not going to change. The level term of premium payment happens to be the defining parameter of this particular scheme. Your earning potential is going to have a decisive role to play. Accordingly, you can make your choice. Much depends on the expected rate of increase.

The perfect choice

If you think that your earning limit will increase substantially over the years, you can opt for the former scheme where the rate keeps varying with the passage of time. The life insurance that has uniform or level premium rate is an ideal option for the medium and the low wage earners. You know that the income limit is not going to increase drastically with age and experience; as a result, it is better to stay with the level premium rate. It gives you the protection that you need. But at the same time, your expenditure level remains more or less uniform.

[Source: https://insurancelifedotorg.wordpress.com/2014/11/23/features-of-the-two-leading-types-of-term-life-insurance/]

Gamut of Benefits of Life Insurance Plans to Ensure a Sound Financial Future

A common worry that persists is the well-being of your family, if you meet with any untoward situation. Well, life insurance is a viable solution in such a situation. However, any form of loss is a traumatic experience for the family, but the monetary loss is compensated with this insurance plan. This plan provides enough money to the family so that they can meet their immediate financial needs and provide financial security to the family. In short, a life insurance plan helps the family to achieve their financial goal, in case you won’t be there to take care of their financial needs.

Nature of the plan

In Life Insurance Plans, a contract is signed between the policy proposer and the insurer. The insurer agrees to pay benefits or a specific amount to the beneficiaries in lieu of a premium on the event of demise of the insured or on maturity of the plan. Depending on the regulation and nature of the policy, often various critical illnesses might also initiate the payment process. There are limitations on these legal contracts and if there is any exclusion, those are mentioned in the same. Claims on the event of suicide, civil commotion, war and riots are often mentioned as exclusions in these contracts.

The unique solution

You can opt for a gamut of investment options to diversify your portfolio. But, Life Insurance Plans have certain benefits that lure the investors towards the same. This is a unique investment choice among the plethora of options that are available. The insurance plan aims at savings and protects the assets. Financial goal for each differs, and it changes as you grow older. For instance, in the initial phases, you might plan to buy a house, whereas, in the old age, you might focus on retirement planning. These plans help to invest according to the changed financial goal so that you can reap maximum benefits from the plan.

Benefits of this plan

An important benefit of Life Insurance Policy is that it is effective in protection of the assets. This is done in two methods protection of the asset and appreciation of the same. Majority of the financial plans help in appreciation of the asset, but life insurance assures protection of the assets. A major benefit of the plan is that the financial interest of the insurer remains protected on the event of death and illness. The best part of this plan is that you can customize the insurance plan as per requirement and your age.

Types of plan

Life Insurance Plans play an important role in tax planning. There are different types of insurance plans, and you can choose one depending on your need. These are term insurance, whole-life insurance, endowment insurance, pension plan, unit-linked Insurance Plan or ULIP and money-back plan. After you have determined an appropriate insurance plan, you also need to calculate the appropriate amount of insurance to safeguard the financial future of your family. It is advisable to review the plan at regular interval.

[Source: https://insurancelifedotorg.wordpress.com/2014/11/14/gamut-of-benefits-of-life-insurance-plans-to-ensure-a-sound-financial-future/]

Why you should have more than one life insurance policy?

Everyone looks for convenience and easy way out when it comes to complex matters such as claiming tax deduction through life insurance plans. Abhishek Raizada, 38, was no exception. As a sales and marketing director in a multinational company he was earning over 25 lakh a year.

In order to save on tax, he bought a life insurance policy with a premium liability of Rs 1 lakh and ever since he got hold of it, he was paying the premium every year religiously. A year ago, the government raised the tax exemption limit for life insurance premium payment to Rs 1.50 lakh. So, he bought another life insurance policy of Rs 50,000.

Do you think that Abhishek was following the right approach?

More often high-flying professionals are so busy with their work that they hardly get time to think dedicatedly about their investment. Thanks to the exemption under Section 80C of the Income Tax Act that every corporate employee is asked to declare his investment in life insurance products. And everyone takes it very seriously. After all, one can save sizeable tax in the range of 10-30 per cent on his taxable income.

But there is more to it. If you act wisely, you can generate much more from your investment in life insurance plans. Traditionally, life insurance policies are known for their low but secured returns. This is due to the long standing monopoly of public sector life insurance companies which promoted life insurance plans more as a risk coverage tool than return generating investment instruments.

Most people carry this mindset even today – that expecting returns from a life insurance policy is not right and one should just focus on the kind of security it provides to family, and things like that. It is definitely true that the primary objective of a life insurance plan is to cover risk of loss of life. At the same time, it is far from any rationale to not expect returns your investments deserve.

Professionals in the age group of 20 and 45 years should aim for superior returns and not restrict themselves to traditional low yield insurance plans. This is the age when you can generate more income and thus save more. If you invest your savings wisely, you can achieve financial freedom and secure a good life for yourself and your family.

If you are willing to invest Rs 1.50 lakh in life insurance every year, then it is advisable that you go for a combination of various life insurance policies. You can consider 2-5 life insurance policies.

What are the benefits of having multiple life insurance plans?

Well, there are many. You must have heard how companies follow diversification strategy in order to spread their business risks and generate better returns. In fact, many of you must be recommending and working on such plans in their employer organisations. So, why not to follow this approach as an individual, for your own benefit?

Of course, this helps in spreading risks of low returns from low performing companies. You can buy multiple policies from multiple companies. Thus, if one life insurance company is not able to generate good returns, the other one may get you something better.

Also, never stick to one type of life insurance in india plan. Develop a portfolio with Unit Linked Insurance Plans (ULIPs) andE quity Linked Savings Scheme (ELSS). In the mid to long term horizon of 3-10 years, these plans can bring you much better returns than conventional endowment life insurance plans.

If you research on these plans, the top performing ULIP and ELSS plans have pumped returns of over 20 per cent a year than 5-8 per cent of conventional plans. Further, when we compound the returns over a period of time, the implications are much larger and deeper.

Thus, put your money to the best use and generate wealth from each bit of it. At the end, it is a win-win situation for you. In order to shortlist the best-possible life insurance plans, visit insurance comparison portals such as www.policyx.com and make decisions that may turn out to be the most prudent decisions of your life.

[Source:https://bloglifeinsurance.wordpress.com/2015/09/15/why-you-should-have-more-than-one-life-insurance-policy/]

Picking the Right Life Insurance Plan

Picking the Right Life Insurance Plan from Mihir Shah

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