10 Financial Checkpoints in the new Financial Year

The financial year 2015-16 started more than a month back. Thats how fast time moves. Now that you are well into the new financial year, make sure you do not miss out checking on the following 10 (ten) financial checkpoints to have a financially rewarding year..read on..

How much Life Insurance Cover do you actually need?

Life is unpredictable. Therefore, Life Insurance is necessary to mitigate the financial risk to your family if something happens to you. Most people do not understand how much cover do they actually need, and that's why they are either under insured (too big a risk to take) or over insured (wasting their money). 

Let us find out how much life insurance cover do we "actually" need...Read on...

Are child insurance plans worth buying? (QandA : 009)

Question : 009
Are child insurance plans worth buying?
New parents are often overdrawn towards life insurance towards their angel who has probably just arrived on this planet. But is their any merit in buying an insurance plan for a child?

What is the most critical factor to select a life insurance company?

Question : 007
What is the most critical factor to select a life insurance company?
Irrespective of whether you have shortlisted on a term insurance plan or a whole life insurance policy depending on your need, the next most critical question is to select the insurance company you can trust.

Stuck with a wrong life insurance policy? Options for you..

It is not uncommon to get into buying a life insurance policy which we should never have bought. In India, because of the lack of financial education at an early age, we tend to mix insurance with investments. We all have done that mistake at some point of our financial decision making. But, having bought the policy and paid a few premiums, what are the possible options with us? Should we let the policy lapse? Should we surrender? Read on..

What are electronic Insurance Repositories

IRDA has formally launching the Insurance Repository System (IRS) and you can now demat your insurance policies. Here's what you should know about this new concept. READ ON..

Difference between Sum-Assured and Guaranteed-Returns in Life Insurance Policies

'Sum assured' and 'guaranteed returns' are the two commonly used terms when it comes to life insurance plans. Although both the terms are linked with monetary benefits of a policy, there is a significant difference between the two. Understanding the difference can help us make the right choice of the insurance policy for ourselves and our family members...read on....

Term Insurance Vs Whole Life Insurance

Background

When it comes to buying life insurance, neither there is any dearth of plans nor are the insurance companies and their well meaning agents shying of bombarding you up with options. Two of the most fundamental life insurance plans are Term insurance and Whole life insurance. Knowledge about the right insurance plan to buy for yourself can not only save you lot of money but also give you the appropriate risk coverage.

What is a paid up life insurance policy?

Introduction
I have seen many people who buy insurance policies and start paying premiums only to realize after a few years that they need to continue to pay the premium for another 20 years or in some cases, even throughout their lifetimes. After 3-4 years, they seem to be running out of finances to continue to pay regular premiums for the policy to stay in effect. Do not lose heart. Insurance industry provides a provision in such cases.

If you take it literally, a paid up policy is a policy where life insurance is paid up and you don't have to pay any more premiums.

Can multiple insurance policies cover the same risk?

Background

Insurance policies are designed to ensure that the recipient of the policy benefits do not collect more than the claim is worth (risk coverage), regardless of how many insurance policies may be in force. 

Insurance is designed to protect against financial losses from damage. It is not meant to be used as a way to gamble and make money off damage to your business or personal assets. If you own multiple policies that cover the exact same risk, the payout result depends on the type of insurance coverage.

Health Insurance Tax Exemptions under Section 80D

After Life Insurance, Health Insurance is probably one of the most critical risk mitigation actions that you would under take. While life insurance would cover the risk related to your life and some optional top ups like critical illnesses or accident cover, health insurance is more related to covering risks wrt the expense you may have to incur on account of hospitalization for small, medium or critical illnesses.

Those of you who are in regular full time jobs with reputed organizations might be ignorant of various health insurance nuances and its income tax related implications, for the simple reason that your employer would have you and your family insured for health.

Life Insurance Policy Tax Exemptions - Section 10(D)

This month, one of my old life insurance policies with LIC, which my dad had subscribed for me when i was young, got matured and i received the final amount with bonus in my bank account. While it always feels exciting to receive such amounts in your bank account, it was important for me to understand the tax implications for the same as well.

There is a general perception amongst the taxpayers that all premiums paid for Life Insurance is eligible for deduction under Section 80C subject to overall limit of Rs.1.50 Lacs. Further, it is also a misconception that all sums received from the insurance company against your life insurance policy is exempted under section 10(10D).

All about Top-Up Premiums

What is Insurance?
Insurance is a form of risk management, primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.

Who is an Insurer & Insured?
An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy.

Grace Period in your Life Insurance Policy

 

What is Life Insurance Policy?

A contract under which an insurance company agrees to pay money to a designated beneficiary upon the death of the policyholder. In exchange, the policyholder pays a regularly scheduled fee, known as the insurance premiums.

What is a Grace Period?

Typically, all insurers of life insurance companies provide for a grace period for the payment of the premium towards the policy. Grace period is typically 30 or 31 days from the due date of the insurance premium. You must check your policy documents for the exact grace period applicable for your policy. No penalty - either as interest or delayed payment - is required to be paid if full premium is deposited during the grace period.

What happens in case of death during the grace period?

The policy stays in force during the grace period. If the insured dies on the premium due date or during the grace period, the premium due for the policy month in which the insured dies will be subtracted from the death benefit. Apart from this, there is no other impact on the death benefit of the policy as long as the death happens during the grace period.

What happens if you do not pay by the end of the grace period ?

If you do not pay any premium by the end of the grace period, this policy will lapse as of the premium due date. You may put the policy back in force by meeting the requirements of the Reinstatement provision. In such a scenario, the beneficiary is not applicable for any death benefit. For re-instating the policy, it is advisable to read the policy documents and comply to the stated requirements.

What if you are moving from one insurance provider to another ?

Never cancel a policy that you are replacing until the new policy is in force. If you actively cancel a policy THERE IS NO GRACE PERIOD. You can let it go into the grace period if your new policy is close to going in force, but you and your agent should be very careful not to let it lapse until the new policy is in force.

Summary

The grace period is a very generous thing insurance companies provide. Make sure you understand it and always keep track of when the premium reminder should be coming and don’t hesitate to call the company or your agent if you think you should have received a premium reminder, but haven’t.

Take care

Cheers

Manoj Arora

 

"Free Look Clause" in your Life Insurance Policy

What is Life Insurance Policy?

A contract under which an insurance company agrees to pay money to a designated beneficiary upon the death of the policyholder. In exchange, the policyholder pays a regularly scheduled fee, known as the insurance premiums.

What is a "Free Look Clause" in your Life Insurance Policy?

As per the directions of the Insurance Regulatory and Development Authority (IRDA), every life insurer, while issuing the policy, is obliged to offer a 15 day grace period to the insured for going through the terms and conditions offered under the policy. This 15 day grace period starts from the time the insured receives the policy. It will be there in your policy as well.

What can the Insured do within the grace period?

If the buyer feels that the policy does not offer what he or she was promised at the time of discussions with the insurance agent, he or she can return the policy and claim a full refund of the premium paid till that time.

Such a clause has helped check the mis-selling of life insurance policies.

The book "Rat Race to Financial Freedom" will go through every aspect of Life Insurance and what policy you should look for that can provide security and coverage to your family. A wise decision in this often neglected area can yield you significantly high returns and provide maximum security to your family, thus bringing your financial freedom goals closer to you. Each penny saved is going to contribute to your goal.

Cheers

Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom

Twitter : @manoj_216

Blog : http://ratrace2freedom.blogspot.in/

Do I need Life Insurance ?

What is Life Insurance?

There are many complicated definitions about Life Insurance, but in subtle and simple terms, life insurance, as the name suggests is to economically , insure a life. This means that if a person whose life is getting insured, dies because of any unforeseen circumstances, the insured sum is handed over to his nominees as per the insurance contract between the two parties.

Is it necessary to have Life Insurance?

Family Security is the key motive behind life insurance. Though Vehicle Insurance is mandatory in India, some critical elements to be insured like Health Insurance and Life insurance are not. This discretion does not mean that we should not get our lives insured. In most cases, my recommendation would be to make sure that the family is secure, at least from an economic point of view, under any eventuality.

What kind of Life Insurance should be done?

There are so many insurance products available in the market that it can definitely become confusing on what insurance product is right for which family member. The book "From Rat Race to Financial Freedom" digs deep into what kind of insurance products should we buy to have maximum security with min investments and what should be the amount of insurance for each family member. There is logical reasoning and common sense in buying life insurance but most of us buy the wrong insurance products at the wrong time and pay unnecessarily high premium. The book will explain you what you need exactly.

Why do we do Life Insurance?

The whole objective of doing life insurance is to make sure that that the family whose bread earner has been lost unexpectedly, does not suffer at least on an economic front and the family is able to take care of its financial needs to a large extent in the unfortunate eventuality of the bread earner's death.

Whose Life should be ensured?

Since the aim of life insurance is to maintain continuity of incoming money to the family with or without the presence of the income earner, it has to be the person(s) in the family who is contributing to family income whose life must be ensured.

Does a Financially Free person need Life Insurance?

That was a very interesting question that came up during one of the discussions on my blog. Once you become financially free, you are no more a source of income for the family. Sounds difficult to gulp, but this is the fact !!. Yes, this is the fact that a financially free person is not a source of income. This is exactly that person comes out of the Rat Race. The source of income in such a case is the portfolio or the nest egg that has been built. It is the nest egg that is generating family income and not the person who created the nest egg. Thats the magic of financial freedom. 

In such a case, if something needs protection or security, it has to be the nest egg and not the person who created the nest egg. In nutshell, if you are financially free, your family is not dependent on you trading your time with income for the family and hence you need not get any life insurance done for yourself !!. This happens to be one of the bi-products advantages of being financially free !!

Post your comments on the blog if you have any queries and i would be happy to answer.

Cheers

Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/