Life and Health Insurance

Agenda- Importance of Life and Health Insurance , Miselling of Products

- Products for Life and Health Insurance .

- How to Calculate Insurance requirement   - Tax Treatment - Some Quotes and numbers  - Switch in ULIPS - Links and Reading Source -  Q&A Objective : To understand Importance of Insurance and how to make best use of products .  

ImportanceWhy   - Cover Life and Health risk  - Security to Family Why Not  - For Investment - Only for Tax Savings (should not be the primary reason) . Misellings - No proper information given- For meeting sales targets - No proper products sold because of personal benefits like         commissions.     

Endowment or Money back Plans  - Safety  - very less returns (5.5 - 6%)  - No ability to fight Inflation

Term Insurance - Only Life Cover provided without Returns - very cheap premium  - Recommended for everyone 

ULIPS - Long term Products (10+ yrs) - Complex a bit and advised for someone who can utilize the features like Switchings .

Individual Policies - Individual cover- High PremiumFamily Floater Policies

- Family cover as a whole - Makes sense for a family to take.- Less premium

Life Insurance Health Insurance

How to calculate Insurance Cover

Insurance cover = A + B + C - D

where A is Money which can give you monthly income =  Monthly expenses * 12 * 100/(interest rate which bank gives in a year , example 9.5%)

B = Future Debts or Expenses.

C = Some money for contingency or emergency .

D = Your investments or Assets (excluding HOME)

Tax Treatment

Premium for Life Insurance : Tax benefit under section 80C

Provided, premium is less than 20% of the Sum Assured (Now you see how clever was Jeevan Astha) Claim valid for payment towards : Self , Spouse and Children  Premium for Health Insurance : Tax benefit under sec 80D (upto 15k) , for Parents (additional 20k)   

Some quotes and numbers For a 25 yrs old non-smoking male , a cover of 50 lacs for a tenure of 30 yrs would cost : Rs 9k per year (before tax) : Religare Aegon Life Insurance For a 30 yrs old non-smoking male , a cover of 30 lacs for a tenure of 25 yrs would cost : Rs 6180 per year (before tax) : Religare Aegon Life Insurance The cheapest Health Insurance (Family Floater) for a family of 4 (Husband 22-35 yrs , Wife 19-35 , Two childrens below 18 yrs) for 5 lacs is just  Rs 4884 from Reliance Standard: Price WiseRs 11235 from Appolo DKV : Product wise (recommended)     

Power of Switching in ULIPSNAV of LifeStage Pension Maximiser Fund   26th Feb 2008 : 60.63 20 Feb 2009 : 32.62 NAV of LifeStage Pension Protector Fund 

26th Feb 2008 : 14.67 20th Feb 2009 : 16 Value of an investment worth 10 lac on 26th Feb 2008 on 20th Feb 2009 would have become  By Switching :  10.9 LacsWithout Switching : 5.38 lacs  What is switching : making a phone call and saying that you want to switch from Maximiser option to Protector Option , because you feel markets are highly overbought and have started falling and you dont want to take more risk .    

Other Insurance worth consideration

Home Insurance Take this Insurance for your Home when purchased though Loan , these days you get it stuffed with Home loan . Travel Insurance Take this Insurance while travelling to take care of risks involved with Travel (Air) .  General Insurance For you household things while are expensive , against theft , natural disaster etc etc . very cheap premiums . Car InsuranceFor risk against your Vehicles .

Additional Readings and links Importance of Insurance and why its mandatory for your Family  - http://www.jagoinvestor.com/2009/01/secure-for-family-risk-management-part.html 

- http://www.jagoinvestor.com/2008/06/life-insurance-revisited-one-of-my-good.html  Term and Endowment policies  

- http://www.jagoinvestor.com/2008/07/health-insurance-what-is-health-or.html - http://www.jagoinvestor.com/2008/10/why-endowment-policy-are-never-best_08.html  ULIPS - http://www.jagoinvestor.com/2008/05/ulips-who-need-them-who-dont-what-are.html- http://www.jagoinvestor.com/2009/02/how-to-manage-ulips.html  Health Insurance- http://www.jagoinvestor.com/2008/07/health-insurance-what-is-health-or.html  Some websites to check quotes and apply for Insurance Online - http://click2insure.in/- http://www.insurancemall.in/ 

                    Q&A's

Q&A