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Life Insurance
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| This is mainly a solution to provide financial protection to those who depend upon you in the unfortunate event of your death. You should be sufficiently insured so that your life insurance enables your dependents to maintain the existing standard of living and meet their financial goals till the time they are able to start earning through another income source. |
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Life insurance premiums paid qualify for tax deductions under section 80C with a limit of Rs. 1.5 lac in a financial year.
There are a variety of Life Insurance policies to suit everybody as per his choice & requirement.
There are Term Plans where the nominee gets the money if the policyholder dies during the term of the policy. The policy holder gets nothing if he outlives the policy term.
Then there are savings-oriented plans. These come in various forms.
Endowment Plans- On surviving the term, the policy holder gets the sum assured and bonus + additional returns earned by the policy (also called Final Additional Bonus)
If the policy holder dies during the policy term, the nominee gets the sum assured plus the bonus earned by the policy.
Child Plans- Similar to endowment plans; these plans accumulate money for child’s education and marriage.
Money Back Plans- In these plans a portion of sum assured is paid back to the policyholder at regular intervals throughout the policy term. At the end of the policy term the remaining sum assured along with the bonus is given.
Whole Life Plan- Such plans give insurance cover to the policy holder till the time he is alive unlike other plans where the life cover ends with the policy term. This is a very good option as at higher age there is possibility of premium loading due to health problems or denial of the cover due to major diseases. The premium of the policy also increases with the age. So it is advisable to opt for a whole life cover policy at a lower age.
Pension- Under this plan you can save money upto an age you want to have pension. Thereafter once you attain the vesting age the accumulated fund and bonus is paid back as annuity.
Immediate Annuity- Under this plan one can get pension immediately after depositing a lumpsum. This is very good for those who have received their funds after retirement or who want to park a bulk amount for getting a monthly income for entire life.
ULIP (Unit Linked Insurance Plan)- This is a combination of insurance and investments. They deliver good returns over a longer period of time. There may be short term market fluctuations. They offer several fund investment options. The funds are manages by the fund manager and there are certain service charges applicable.
On top of basic life insurance, at extra cost, one can opt for additional riders like double accident benefit, critical illness cover, premium waiver benefit etc. |
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