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

Click to know more on Life Insurance

Nine Ways to Cover the Cost of Life Insurance

Many people may they think they have a good understanding of life insurance. Often, this may not be the case. When asked how much they thought life insurance would cost for a year, 80 percent of those who answered a recent survey overestimated the cost of term insurance 1 by more than twice what it really costs.

The primary reason many people hesitate to purchase life insurance is the belief that it’s too expensive. That’s unfortunate considering that life insurance can help protect the financial future of your family should something happen to you. When you look at the numbers, the cost of coverage should not be a barrier for many people.

For example, a healthy 30-year-old man can get $250,000 of term coverage from Farmers New World Life Insurance Company for $22.68 a month 2. With the average monthly cost of $613 for a cell phone, or $644 for a cable subscription, life insurance is a relative bargain. As you can see, life insurance can be affordable.

Here are some money-saving ideas to consider that can benefit many areas of your life in addition to helping cover the cost of life insurance:

Create a budget. Track your expenses: knowing where your money is going may help you identify areas where you can easily reduce your spending. There are many free money management tools and apps that can assist you with this.

Quit smoking. It benefits your health, and a pack-a-day smoker can save over $2,000 per year based on the average cost of a pack of cigarettes 5. Non-smokers can also expect lower Life Insurance in India rates – all other factors being equal – than smokers.

Bring your lunch to work. By not spending just $5 a day you are looking at saving about $1,200 a year. You don’t have to bring your lunch every day: even bringing your lunch every other day can result in savings that can help cover the cost of a life insurance policy, and possibly even more.

Eat out one less time per month. If it costs you about $30 on average each time you go out, reducing this number by once a month will allow you to save over $300 a year.

Bring coffee from home.  Do you spend $3 a day on coffee during the work week? If so, this can add up to $720 per year. Cutting this number in half can result in significant savings.

Save your loose change. It may not sound like much, but setting aside fifty cents a day over the course of a year will allow you to save more than $180.

Take advantage of all company benefits and discounts. Your company may offer corporate discounts on gym memberships, cell-phone data plans, hotels, concerts, etc. that can help you save.

Organize your closet. This can have a number of advantages. You can save time in the long run knowing where everything is located, and you may find forgotten items, reducing the need to purchase new ones. Consider consignment for items you no longer want to keep.

Research major purchases. Check product reviews, price comparisons, features, and other aspects of any product you are looking to purchase. Wait for sales for additional savings and discounts. A little research and timing can save big $$$ on a purchase.

Start small to save big
Starting with some small steps, you can easily find the money to pay for life insurance. The hardest part of any change is getting started. Once you do, things usually start to fall into place, the process becomes much easier, and you can begin to recognize the positive impact it has on your life.

Life Insurance can positively impact your life by providing you comfort in knowing that it will help support your family financially in what may be a distressing and uncertain time. While no one likes to think about a time when they can no longer care for their family, your family’s needs will still be there even if you are not. Contact me today to discuss your options regarding life insurance and how it can help you and your family.

1 Data from the 2015 Insurance Barometer Study by Life Happens and LIMRA.

2 Policy form 2000-230 or applicable state variation. Rate is based on a 20-year Farmers Value Term, 30-year-old male, non-nicotine Platinum Elite underwriting class. Electronic Funds Transfer required. Issuance of a policy and rates are subject to underwriting guidelines and approval. Premiums are subject to change after the initial term period.

3 New Street Research, The Wall Street Journal, March 9, 2014

4 Report on Cable Industry Prices, Federal Communications Commission, May 16, 2014

Farmers New World Life Insurance Company is not licensed to sell life insurance, accident and health insurance, or annuities in the state of New York.

Life insurance issued by Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.

[Source: https://bloglifeinsurance.wordpress.com/2015/08/29/nine-ways-to-cover-the-cost-of-life-insurance/]

Demystifying ‘Return’ on Life Insurance

Demystifying ‘Return’ on Life Insurance from Mihir Shah

Life insurance in India has major growth potential

The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalised. With a one-player market to 24 in 13 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition.

There have also been a number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had a path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth.

The decade 2001-10 was characterised by a period of high growth (compound annual growth rate of 31 percent in new business premium) and a flat growth (CAGR of around two percent in new business premium between 2010-12), according to KPMG.

There was exponential growth in the first decade of insurance industry liberalization. Backed by innovative products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this frenzied growth also brought in its wake issues related to product design, market conduct, complaints of management and the necessity to make course correction for the long term health of the industry.

Regulatory changes were introduced during the past two years and life insurance companies adopted many new customer-centric practices in this period. Product-related changes, first in ULIPs (Unit Linked Insurance Plans) in September 2011 and now in traditional products, will have the biggest impact on the industry.

NEW PRODUCT GUIDELINES

The new guidelines for both linked and non-linked products will now come into force from the beginning of year 2014, an extension of three months from earlier specified date. This additional period will ensure that life insurers enter the crucial quarter of Jan-March with a full bouquet of products and the sellers are well trained in the nuances of all these new products.

These product guidelines are in line with the IRDA's regulatory theme of customer orientation and long-term nature of the life insurance in India business. The guidelines follow two overarching themes of providing Guarantee and enhancing Transparency. The major changes introduced include - Higher Death Benefit, Guaranteed Surrender Value and mandatory Benefit Illustration for all life insurance products.

The changes related to death benefit and surrender value may marginally reduce the customers' overall maturity benefit, i.e., policy IRR, especially at higher ages but will ensure that life insurance serves the purpose of providing life cover which no other financial instrument offers.

All ULIPs are currently sold mandatorily with a personalised Benefit Illustration. This requirement is now being extended to other product forms. The new guidelines have also provided for setting up a "With Profit Committee" at the board level.

While personalized benefit illustration will provide for greater transparency in the pre-sales discussion, the With Profit Committee is likely to lead to greater governance in the administration of Participating policies. Premium paying term linked distributors' commission will promote the long-term nature of insurance products.

FUTURE LOOKS GOOD

India continues to be a country of savers though we have witnessed a decline in the household savings rate in the past couple of years. In India, the problem lies in household savings lying idle or getting invested in saving instruments that do not help them achieve their life stage goals. There is a worrying trend of larger portion of household savings getting into non-productive physical assets such as real estate and gold.

But even then, the future looks interesting for the life insurance industry with several changes in regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. World over it has been observed that the life insurance industry does behave in a counter cyclical manner in many cases, e.g., in a situation where the economic growth is slowing down, due to other factors such as high current account and fiscal deficits, currency depreciation, high interest rates, savings rate will continue to be high, leading to higher demand for life insurance.

Life insurance is a big savings vehicle along with banking in such uncertain economic environment and so we expect the industry to fare reasonably well. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will also support the growth of Indian life insurance.

For life insurance, it is time to re-commit itself to customer-centric behaviour, product solutions based on consumer needs, ethical market conduct, transparency and governance. The growth will be the natural outcome for now and years to come.

[Source: https://bloglifeinsurance.wordpress.com/2015/08/25/life-insurance-in-india-has-major-growth-potential/]