Category Archives: Investment Plans

There was a time when everyone wanted a government job and there were reasons behind it. The first and foremost reason was the financial security and perks. Once, a person gets a government job, his financial situation used to be secured.

But, today, there are hardly any government jobs in the market. Consequently, most people go for private sector jobs. These jobs pay well and generally, the salaries are much higher than the government jobs.

At the same time, there is no security. Private sector jobs are said to be tumultuous ones. Private companies hire people with a condition that their services can be terminated any time. The notice period is also quite short – in the range between one week and 3 months.

So, that is the kind of insecurity private sector jobs bring. If the financial condition goes wrong, companies go for mass lay-offs. Plus, there is no provision for pension, in the private sector.

You have to save for your future by your own means, and there is no way out but to adopt financial discipline.

Are you living a financially in-insecure life?

If you are also working in a private sector company and feel insecure, then you have to act now. There are solutions available, but they work, only when you take a proactive approach and practice financial discipline.

The insurance industry in India provides for solutions. Guaranteed income plans are one of them. By investing in these plans for a certain period of time, you can expect a guaranteed income which can support you in case you lose your job for any reason.

There are people who are able to replace their salary income by these plans. Yes, that is possible!

How to start?

Taking the first step is important. It is said that a journey of a thousand miles starts from one single step. So, the early you begin, the faster you will be able to amass financial resources.

The first step is to research and shortlist a few well-performing guaranteed income plans.

You can visit insurance comparison portals like www.policyx.com for this purpose. The portal can provide you the list of major features in an easy-to-understand manner. What is the age limit? Well, you can start investing in a Guaranteed Income Plan from the age of 18 years. The maximum age limit is 60 years.

Considering that hardly a youngster of 18-20 years has patience and wisdom for investing in such plans, let’s assume that you start at the age of 30 years. By this time, you are well-aware of the financial uncertainties of your job, and can act smart.

The policy term of Guaranteed Income Plans start from 10 years and usually go up to 30 years. It depends on your present age. For instance, if you are 40 years old, you can go for a policy term of 20 years. The period can vary, if you wish to retire early or want to start getting stable income after a certain age.

Are there any additional benefits?

Many people think that investing in Fixed Deposit offered by banks is a viable option. They offer guaranteed returns. But the returns are quite low. They may not even match inflation rates. At the other end, Guaranteed Income Plans are a type of investment insurance plan, which offer several additional benefits which banking instruments do not offer.

For instance, you get a life cover under these plans. If in case you lose life during the policy term, your nominee gets a fixed corpus, which can support their basic needs. Further, there is a provision of accidental death coverage also.

Moreover, you can claim tax deductions of up to Rs 1.50 lakh every year. Section 80C of the Income Tax Act has provisions under which you can deduct you taxable income by up to Rs 1.50 lakh for investing in life insurance plans.

Bank deposits, at the other end, are taxable. The income from interest generated from bank fixed deposits is taxable, after a limit of Rs 1 lakh. This income adds to your taxable income, and can wipe out a substantial amount of your annual income in the form of tax.

Thus, it is advisable to invest in Guaranteed Income Plans and avail the aforementioned features, for a financially secured and prosperous life.

[Source: http://www.policyx.com/blogs/topics/life-insurance/investment-plans/]

Evaluate Your Risk Appetite

One of the choices you need to make while buying an insurance plan is whether to go for a unit-linked policy (Ulip) or a plan on the traditional platform. In order to be able to decide correctly, you should know your risk appetite, or your to lerance to financial risk.There are four aspects that can help evaluate your risk appetite.
They are:

1) Age/stage of life: Your age is an important factor that helps while deciding your risk appetite. It is evident that the younger you are, the more risk you can take.
Besides that, at a younger age, the likelihood of a steady income is higher, which means that you are in a safer position to overcome any financial setback. Apart from that, you will also have fewer dependents to take care of.

2) Asset ownership: If you already own assets such as real estate, gold and fixed deposits, they will serve as a ready cushion for you, in terms of financial stability. Therefore, strong asset ownership or high net worth means that you can afford to take a higher financial risk and secure you against fluctuations in the market.

3) Investment experience: Your knowledge about investments and understanding about the market are crucial to identify your risk appetite. People with prior experience in investing in financial markets understand the long-term impact of short-term fluctuations in the market, hence, can take more risk.

4) Investment horizon: Your investment horizon is linked to your financial goal. It normally implies how long you would like to stay invested with a certain plan. If what you have in mind is a long-term goal, you can opt for a risky portfolio with high returns, as the risk would reduce over time. However, if your goal is a short-term goal, opting for a safer investment tool is advisable. Your decision for choosing the right Best Investment Plan  product should be based on your tolerance of financial risk. Opting for an insurance product in line with your risk appetite ensures proper asset allocation and maximises your returns from the product.

Source from : http://investmentinsights.bajajallianz.com/insights/index.php/articles/evaluate-your-risk-appetite/

Smart Investment Decision Begins with Buying Smart Investment Plans

There are various approaches to contribute for what’s to come. Customers need to precisely learn what investors ought to do as well as what to avoid for the best investment plan choices. Without doing productive contribution, majority of people can just procure money by fulfilling goals.

But, they need to work more in case they require more money. Buying the best investment plan online is a one stop solution to increase wealth. These plans give higher profits if investors make a thorough research on the product before selecting the one.

Investing in the best plan is not enough; policyholders also need to boosts their investment income, so they can avail good benefits from the market. Therefore, work on the insurance products and keep yourself updated with latest market trends.

Generally, decision of investment plan buyers is largely influenced by the actions of neighbors, relatives or acquaintances. Therefore, avoid the impatient nature and herd mentality. People have a tendency to invest in a particular investment plan just because potential investors are doing the same.

But, such strategy won’t work and bound to backfire in the future. Some investors behave very impatient and do not like to wait any longer to invest their hard earned money.

Such behavior will create an adverse effect on the investments which these people have made. Hence, be careful and act patiently while selecting the best investment plan online. It makes sure that investor will definitely reap lots of benefits from the plan.

Customers can also take help of industry experts or wealth advisors to make the right decision. If person fails to make the correct decision, it would incur big losses on his money.

Get all the basic ideas to improve Investment  insurance plan r income so that policyholder’s decision will prove successful. Knowing pros and cons of a product is necessary to get good benefits.

Source from :  http://blog.policyboss.com/investment-plans-in-india/smart-investment-decision-begins-buying-smart-investment-plans/

Effects of Insurance Policy Loading on Premium

Majority of people are not attentive of the availability and purpose of ‘loading’ in Indian insurance policy. In fact, many policyholders are not aware with the fact that it affects premium amounts and insurance policy benefits as well.

As per the insurance companies in India, loading is an extra cost built into the Indian insurance policy to include losses which are more than expected for the insurer resulting from covering a policyholder who is prone to a risk form.

This feature comes into consideration when an insurer is handling a high-risk customer and is resorted to by insurer in case where the risk level to the individual is more than in ordinary circumstances. This can be because of medical history, a job etc.

Insurance companies in India cannot demand expensive premiums depend on an adverse claim history in the previous policy years and hence, the waiver on claims loading is the biggest advantage for policyholders.

Another beneficial advantage to the insured person is that premium amount can remained same for around three years, so it will bring consistency in costs and insured person need not worry about premium hike at least for the first three years.

It clearly means that premium amounts possibly wouldn’t have increased due to loading factor. The amount of life insurance premium is based on the age, term period, Indian insurance policy type and amount.

The very important factor which calculates the premium is age because as age increases, the probability of mortality also increases. This additional premium charged from the adverse life is known as ‘loading’.

People lives in areas where political instability is common have to experience residential loading. Generally, residential and occupational loading is in the form of a fixed rupee value.

Generally, loading occurs in health and life insurance policy. In general insurance category, there is ‘claim based’ and ‘underwriting based’ loading. However, claim based loading has been dropped from healthcare plans after the introduction of Health Insurance Regulations 2013.

Investment Insurance Policy companies in India cannot demand expensive premiums depend on an adverse claim history in the previous policy years and hence, the waiver on claims loading is the biggest advantage for policyholders.

Source from : http://blog.policyboss.com/insurance-policy/effects-insurance-policy-loading-premium/

Insurance Policies: Risks that could trip you

Has your life insurance consultant ever told you about how much life insurance you need to secure your family’s standard of living (SOL)? Were you worried when you heard that your neighbor had to settle for lesser return on his Unit Linked Insurance Plan (ULIP) for surrendering early? It is your responsibility to ask the consultant as many questions until you actually understand the pros and cons of investing in life insurance, otherwise the risks could trip you.

Buying an Incorrect Plan

The very first risk is buying an incorrect plan. The primary objective of buying any life insurance policy has been as a risk mitigating tool to protect a person’s family and its standard of living, not merely as an investment for the sake of returns. While a pure term insurance plan provides a lump sum payout in the unfortunate death of the policyholder, it does not pay anything if the policyholder survives the policy term. On other hand, a person who wishes to get maturity benefits of the policy if the policyholder survives the policy term along with the comfort of protection of the family otherwise, can opt for a traditional or a market-linked endowment plan.

For instance, the new ULIPs (after September 2010) have become very low-cost as compared to those plans offered before this period. However, the lock-in period for new ULIPs has been raised from three years to five years. Therefore, one cannot withdraw money from unit-linked insurance plan before five years or use this investment vehicle for immediate liquidity, but for future fulfilling financial goals. Notwithstanding the benefits of new and low-cost ULIPs, one should remember that since these plans invest in the equity market, the returns will be in line with the volatility of the stock market. People with low risk appetite should stay away from investing in equity funds as they may panic due to short term volatility and exit at loss.

A policy holder should go through detailed checks and balances when buying an insurance plan. After deciding the type of plan to be bought, the decision on the premium paying ability of the policy holder will influence the quantum of premium and thereby, the insurance cover. It is advisable to agree on a premium that will not adversely affect the policy holder’s ability to pay, should there be adverse financial conditions in any particular period during the term of the policy. The policy holder should read and understand all policy terms and conditions thoroughly as well as reveal all pertinent information about medical and family history, before signing the dotted line.

Not cross-checking the credentials of insurance agent/consultant

Another risk could be that of not cross-checking the credentials of your insurance agents. Often, a few insurance agents insist on buying a new policy with the renewal premium amount for an existing policy looking at their short-term gains or uses other ways and means to misguide a policyholder or a prospective insurance buyer. Such practices have resulted in customers being skeptical towards all insurance agents and insurers. It is better to conduct due diligence about the insurance agents and the suggested plans from other sources, before buying a plan.

Buying insurance as a tool to save tax

The next risk arises from the fact that life insurance is still majorly considered as a tool to save tax in India. Though a life insurance policy, purchased in any particular year to avoid higher tax payment will provide a financial protection in an unfortunate event, the sum may not be adequate for your family to maintain the same standard of living. A general thumb rule of buying life insurance to provide adequate financial security to your family and protect your future financial goals is that you buy life insurance worth 8-10 times of your current annual income, not just the amount of the premium that covers the gap to meet the limit in Section 80C of the Income Tax Act.

Not considering the brand

One more important risk is that when you buy life insurance, you’re counting on the insurer to keep its commitment years or decades from now. Therefore, it is important to consider the brand and the companies backing this promise. It’s better to pay a slightly higher premium to a trustworthy insurance company and be sure of a payout in case of the unfortunate demise of the policy holder or after the policy term, instead of paying a lower premium to a new, untested industry player.

Once you are mindful of these risks, deciding to buy the right investment Insurance Policy  will be a piece of cake.

Source from: http://lifeinsurance.bajajallianz.com/tax_insights/insurance-policies-risks-that-could-trip-you/