Term Insurance

Term Insurance vs Other Insurance Policies

The life insurance you buy is the security blanket you carry for your family. There are many types of life insurance policies in India. Let’s take a look at them and understand why Term Insurance is the best option when it comes to life insurance:

1. Endowment Plan [Insurance plus Savings]

This life insurance plan gives you a combination of insurance and saving. The premium you pay is divided into two where a certain amount is kept for life cover, while the rest is invested by the insurance company. Sounds amazingly attractive right? Because here if you outlive the policy term, the company will offer a maturity benefit. Moreover, these plans promise to offer bonuses periodically, which are paid either on maturity or to the nominee under death claim. It sounds like it concentrates more on what you get when you live rather than what your loved ones get when you die, which is the whole point of life insurance in the first place. But on death, the maturity is payable to the nominee. But how much is the question!

Let’s say that you take an endowment plan for 30 years for which you pay a premium of Rs 20,000 – Rs. 25,000. What do you get in the end? The maturity sum received would be Rs. 10 lakhs approximately. Would that take care of all the troubles?

Hence it’s important to remember that the whole purpose of a life insurance policy is not to make returns rather, to protect your family in the event of your untimely death. It’s best not to mix life insurance with investment options. To make returns there are other options like Mutual Funds, that help you to earn substantial returns by making investments that are based on your financial goal and risk appetite.

2. Unit-linked insurance plan (ULIP)

This particular combination of insurance and investment is a comprehensive life insurance products that look to provide productivity towards the money invested. The premium you pay towards a ULIP goes partly as your risk cover (insurance) while the rest is invested in funds. You can invest in various funds (bonds, equities, debts, market funds, hybrid funds) offered by the company based on your risk appetite.

For instance, you take a ULIP for 20 years with premium payouts of 20,000 every year, and you have assured a sum of Rs 2 lakhs along with whatever amount you receive on an investment. The great thing about it is that you are putting your money to good use, but you might as well earn the returns through Mutual Funds that give you more flexibility as per your risk appetite and have the freedom to invest with complete transparency in secure platforms like MyWay Wealth.

3. Money Back – Periodic returns with insurance cover

A unique kind of insurance package, wherein a specific portion of the sum assured is paid to the insured on periodic intervals as a survival benefit. It serves like a source of income in a way along with the eligibility to receive the bonuses declared by the company from time to time. This is a way for you to meet your short-term financial goals.

For example, you take on a Money-back Policy for 20 years with Rs.20,000 – Rs.25,000 as your premium each year. You have been assured a sum of Rs.5 lakh which will be paid to you on regular intervals along with accrued bonuses

4. Whole Life Insurance – Life coverage to the life assured for whole life

Unlike the term insurance, which is for a specified term, whole life insurance covers you for your whole life, or in some cases, up to the age of 100 years. The sum of coverage is decided at the time you purchase the policy and is paid to the person you nominate the time of claim along with bonuses if any. But say you were to outlive the age of 100 years, the company would pay you the matured coverage amount.

In comparison to term plans, the premiums are much higher but it offers the facility for partial withdrawals after the premium payment term.

3. Term Plan [Pure risk cover] – Recommended

This is true life insurance. Unlike other life insurance products, this concentrates on one thing alone, covering for the loss of your life. This plan assures the dependants a specific sum of coverage with no hassles whatsoever. There is an option to widen up the coverage. The death benefit can be payable as a lump sum, monthly payouts, or a combination of both as per your choice. The only catch is that there is no payout if the life assured outlives the policy term.

For instance, let’s say you are a non-smoker male looking for a term life plan of Rs.1 crore cover. It will cost you approximately Rs.6, 800 to Rs.10, 500 every year. Doesn’t seem too costly, does it? Term insurance is best known for delivering high assured coverage at low premium rates. Say you’re the breadwinner of the family, in the case of your untimely death, your family is supported with an enormous amount of money which helps them to replace the loss of your income. Moreover, the money could be utilized to pay off loans, monthly household expenses, child’s education, child’s marriage, etc.

Now that you know Term insurance is the best form of life insurance. Don’t hesitate to buy a Term Insurance Plan with MyWay Wealth today.

All you need to know about National Savings Certificate (NSC)

The avoidance of taxes is the only intellectual pursuit that carries any reward.

— JMKeynes

Payment of taxes is an important duty for every Indian citizen. It helps the governments to provide us with the best infrastructure and services. Having said that, paying taxes deprives a chunk of our gains. To prevent this, we normally choose saving schemes that allow tax deductions. Our topic of discussion is one such instrument that is known for its tax benefits: National Savings Certificate (NSC).

This is an instrument provided by the Government with the objective to encourage savings, allow tax exemptions, and ensure definite returns during retirement.

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All you need to know about Atal Pension Yojana

Worrying does not empty tomorrow of its troubles, it empties today of its strength

— Corrie Ten Boom

As humans the biggest worry we have is regarding our future and what is going to happen with us. But it doesn’t do much good to live in anxiety. Rather than speculating on what might be, it would be wise to take action to shield yourself from any rocky roads ahead. A pension is an account that allows you to save up for your retirement. Pension schemes are like an ice pack; stored in your refrigerator to use in case of a headache or so. Similarly, the pension you save can be withdrawn in case of an emergency, or it can be taken after retirement to serve your needs.

A few years back I remember watching the news on the Annual Budget speech given by the Finance Minister Arun Jaitley. The highlight of that year’s speech was the new pension scheme called “Swavalamban Yojana”, known today as Atal Pension Yojana. What’s special about this scheme launched by Prime Minister Modi on May 2015, is to have a pension scheme for the unorganised sector in India. The grey economy seems to grow bigger and bigger each year in India. This scheme makes sure that this sector realizes the importance of pension and increases the percentage of Indians opting the same.

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Are Fixed Income Securities good options to diversify one’s investments?

A lot of customers investing in Direct Plans of Mutual Funds on MyWay Wealth ask us something along the lines of:

  • What are Fixed Income Securities?
  • What are different types of Fixed Income Securities?
  •  Are Fixed Income Securities something that an investor should consider when diversifying their investments?

So, today I decided to talk about Fixed Income Securities in detail.

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Image: Stock Markets

What’s NOT wrong with the markets today!

The Great Indian Markets: Are we turning it into a game of smoke & mirrors?

It intriguing to look at how media today has the power to sensationalise an otherwise regular event. Like it always does, media has continued to amplify the current situation (with pink newspapers buzzing with headlines with keywords like “crash”, “bear-grip” and “meltdown”).

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