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| May (First) 2013 |
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| DELHI PRESS MAGAZINES : WOMAN'S ERA |
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WOMAN'S ERA / ARTICLES
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| PLAN AND SECURE YOUR FUTURE |
Calculate –before buying an insurance policy. |
By Vatsal
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| Insurance must find a place in an
individual’s portfolio irrespective of
the tax sops. The primary purpose
of insurance is to indemnify the
insured’s dependants from loss of
income, in the event of the
insured’s demise.
I Life insurance: Life insurance is
a contract between the insurer and
insured. The person who insures his
life is called the insured. The
company which insures his life is
called insurer. The insured is
required to pay some amount of
money in regular intervals. These
payments are referred as premiums.
According to the principle of life
insurance a sum of assured money
is paid to the insured in case the
policy holder successfully makes all
the payments and the policy comes
to an end. On the contrary, if the
insured dies of an unexpected event
the sum assured is paid to his
dependents irrespective of full
payment of the policy amount. The
insurance company pays the money
on death or after the policy period
whichever occurs first.
It is also a source of financial
security for the insured dependents
after their life. When the breadwinner
of a family dies due to some
unexpected events or for reasons like
prolonged illness the life insurance
policy is a boon to the family. They
can make use of the funds paid by
the insurance company to meet their
needs without which they would have
landed in a financial lurch. Life
insurance is another means for
saving. Individuals and families who
take up a life insurance policy have to
pay premiums periodically.
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Therefore
they will naturally be forced to allot
sufficient funds for this purpose. This
practice encourages thrift and also
helps them to plan for some
productive schemes in a similar
manner. Life Insurance policies also
help people to take care of their
families in case of retirements. This
can come as a great relief especially
if the person who retires does not
have alternative sources of income
to take care of his family.
Buying tips for life insurance
policies: Buying an insurance policy
is an important decision. You have to
make all calculations and consult as
many people as needed and make
your move meticulously. Insurance
industry is a lucrative business.
Unless you are shrewd you may be
wooed by tall claims and pay a heavy
price. Similarly, any wrong or
improper move would upset your
plans and might cost you dearly while
buying life insurance.
The most important tip in buying
an insurance policy is deciding the
coverage you need from insurance
besides the type of policy. Many
consumers make a wrong decision at
this important place by purchasing
more than what they need or less
than what is required. It is necessary
to seek the advice of a qualified
financial planner for making an
investment decision.
The next important issue is
regarding the price of an insurance
policy. Insurance is a long-term
investment and you got to make a
good bargain to secure death
protections and monetary benefits.
Of the other factors the most
influential one in deciding the quote
of your life insurance is health. You
are therefore expected to maintain
satisfactory medical records.
Moreover, it is best to go for an
insurance policy at an early age as
the premiums tend to be lesser.
Check out the different prices of
insurance policy prevailing in the
market as different companies
charge different prices for the same
policies. At the same time the
benefits offered might also be
somewhat different from company to
company. Many people are misled
due to the volume of business
operations undertaken by an
insurance company. Insurance
policies of small companies are in a
way better when compared with the
insurance policies of bigger
companies for a specific reason.
When an insurance company is
wound up other companies
generally share the risks and
return all the money to the
stakeholders. In such
circumstances it becomes difficult to
repay in the case of a bigger
company than a small company.
Divide your investment into
several segments and invest them in
multiple policies. This helps in
reducing risks and as well as
enjoying several benefits. Select an
insurance policy that provides
coverage to critical illness, no matter
the sound health you enjoy now.
Read the insurance documents
carefully. You need to be sure that
you have received the right policy
and that you are satisfied with the
grounds and terms on which the
policy has been issued.
Types of life insurance policy:
There are two major types of
insurance policies – term life
insurance and permanent life
insurance policies.
Term Life Insurance is a type of
insurance policy whereby the insured
pays a fixed sum for a period of time.
This sum remains constant. The
premium charged is very nominal.
The Policy holders normally survive
even after its expiry unless they are
affected by fatal disease or injured in
an accident. Whole term insurance
policy is another classification in term
life insurance. In a whole term
insurance the insured pays the fixed
amount throughout his life.
Permanent life insurance Is an
expensive policy. This policy cannot
be stopped on any occasion as long
as the premiums are paid regularly
and customer doesn’t want to end the
policy. In a permanent Life Insurance
policy customer pays premiums for
an indefinite period, irrespective of
the fact they exceed the amount to
be distributed to his dependents in
case of death. It is however advised
not to choose permanent insurance if
your motive is solely investments and
tax exemptions.
Health Insurance: Health
Insurance also known as Mediclaim
in India provides a person the cover
against the medical care costs arising
from disease or accidental injuries.
Health insurance is a crucial financial
product that every individual must
have irrespective of their age. It
allows him to focus on getting the
best treatment without bothering
about the financial costs of the same.
Depending on the terms of the
health insurance policy it covers
all or part of the medical costs
of treating the disease or
injury including doctor’s
consultation charges,
medicine and nursing
costs. Treatment can
be sought in any
recognised nursing
home or hospital across
India. This policy however usually
does not cover routine medical
expenses like outpatient care, and
daily medicines.
Health insurance in India can be
bought both as an individual or a
family and as a group. Group Health
Insurance is bought by either an
employer or an association for its
members. Usually, health insurance
coverage is available to individuals
above the age of 3 months to a
maximum age of 65 years. To avail of
the benefits of health insurance, one
needs to pay a yearly premium or the
cost of insurance. The amount of
coverage needed Insurance is
usually available from Rs 50,000 to
Rs 500,000 in multiples of Rs 25000
or Rs 50,000 depending on the
insurer. Any amount of health
insurance premium paid up to Rs.
15,000 would be allowed as
deduction from the total income for
income tax calculation purposes.
Most health insurance plans are
available only on an annual basis -
timely renewal of your health
insurance policy is of utmost
importance.
Buying tips for health insurance
policies: To purchase health
insurance, a person needs to pay an
annual fee to the company for this
coverage known as premium. He
chooses the amount of coverage that
he wants by paying a high or low
premium. The higher the premium
more the coverage.
Decide on the family members
that you want to cover through health
insurance.
Decide on the amount of coverage
needed, based on your estimate of
health costs and your existing
coverage from employer provided
insurance, etc.
Compare the options of taking
individual policies vis-a-vis a floater
policy or critical illness or other
specialised policies based on your
requirements.
Compare the offerings of various
insurance providers. One can buy
health insurance either directly from
any general insurance provider or
from insurance agents or insurance
brokers.
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