Many of us consider insurance just another investment for tax saving. Our day-to-day life is full of unpredictable risks on account of loss of life, loss of income, critical illness, disability etc. Insurance planning means figuring out adequate cover against "insurable risks" and getting the maximum out of the premium you pay. Tax exemption is just another aspect of it.
Having the right insurance cover gives you peace of mind as it provides financial support to your loved ones in case of a contingency.
The basic three Life Insurance Plans available are as folows :
Endowment Insurance Plans
Endowment insurance plans provide life insurance cover for a specific period. If the insured survives the term of the policy, he/she receives the sum assured plus bonus / participating profit / guaranteed additions, if any.
Endowment plans are advisable if the insured wants to purchase a product that provides both - insurance cover and savings. Many people prefer to buy such policies for terms that mature during their retirement period. Often, the maturity amount is utilized to supplement the pension income.
Term life insurance policies are the purest form of life insurance, as they do not offer any survival benefits, just death benefit. Term life insurance plans are pure risk cover plans where only administrative expenses and mortality charges are built into the premium costs. Term Insurance is the cheapest form of life insurance.
In some term life insurance plans, the premium paid for the entire term of the policy is returned to the insured person on surviving the policy term. Needless to say, the premiums for such policies are higher.
Unit-linked Insurance Plans
Unit-linked Insurance Plans (ULIPs) combine the benefits of life insurance policies with mutual funds. A certain part of the premium is invested in listed equities/debt funds/bonds, and the balance is used to provide for life insurance and fund management expenses. Returns earned on investments ie. the value of the investment or the sum assured, whichever is higher, is paid to the insured or nominee.
Please contact us for more details. We will be happy to help you.