Insurance Planning – Part 2
In last
article we had discussed why insurance is important for everyone and how to
determine the right amount of sum insured. Today we are discussing about the
type of life insurance product available in the market. Every insurance plan
has some positive and negative aspects so before going with any insurance plan
we should understand plan in very well.
Term Insurance Plan:
It is the
basic form of insurance that pays a lump sum amount on the only unfortunate
event of death of the insured person. If you survive the whole policy term it
pays nothing. Due to the no return from this policy on survival of insured
person, people often do not show interest to purchase this policy. In reality,
it is very good plan for any earning individual. The premium of this policy is
very low compare with other insurance plan. People can get adequate cover with
very low paying premium. A 30 year old person can get Rs 50 lakh insurance
cover to pay around Rs 7,000 in a year. The amount of premium would be constant
during the whole policy term. The adequate money receivable under this plan
helps you family members to meet their expenses and future need. Your life is
precious so always take an appropriate insurance cover according to your life
style.
Endowment Plan:
These
plans are also known as traditional plan. It provides you insurance cover
during whole term and if you survive whole term it returns a lump sum amount at
the time of maturity. It attracts most of the people as it provides insurance
cover and returns both. Although, the return of these policies are very low in
the range of 4-6 percent which do not beat even inflation but still people go
with this plan. The premium of these endowment plans is much higher than term
insurance plan. If you satisfied with low return with safety then these plans
for you.
Money-back plan / Child Plan:
It is
another form of endowment plan and provides some part of sum assured at fix
interval. The all other features are same as endowment plan. The premium are
very high on these plans and rate of return same as traditional plan. These
plans are made to fulfill your intermediate goals which are far like 5 year, 0
year etc.
The above
mentioned plans are related with life insurance. We will discuss about non life
insurance products in the next article.
If you want more information
regarding investment and insurance or you have any other query about investment
feel free to ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
