How to Lower Your Life Insurance Premiums without Compromising on Coverage?

The Life Insurance Policies  are the must have term plans and are crucial in today’s world as it gives you the financial protection against the unforeseen health situations like sudden illnesses or accident related treatments. Though the term plan gives an array of benefits like protecting you and your family from different health conditions based on the plan chosen and gives the tax benefit, still these come with an inevitable harder side of it, the premium– It is the expense towards protection of the family. 

Premium is the undeniable part of a term plan and is included in the family budget.

Term plans are a no-frill product that insures you for a predetermined period and ensures the financial security of your family in case of unexpected demise of you during the term of the plan. There are certain factors like your age, genetic disposition and your gender which play a role in determining your premium by the insurance companies.

However, there are ways to keep the premium lower without compromising the coverage benefits.

·         Determine your coverage requirement–Selecting a term plan that optimizes your budget and the coverage requirement is very important. Taking a higher coverage will cost you higher premium and many a times basic coverage fits the requirements for most of the people.

·         Avoid unnecessary riders or add-on – Since Riders and add-ons for extra coverage of any kind increases the premium, evaluate carefully the additional coverage requirement.

·         Staying healthy to be eligible for lower premiums – A healthy person has less chance of getting lifestyle diseases like diabetes and heart issues also there is less likelihood of early death.That interprets into lower premiums charged by insurance companies for your term plan. Avoiding smoking and drinking can save you on premium payment as insurance companies charge extra for these unhealthy habits. Prevent obesity as well to get the benefit on your premium.

·         Starting the term plan early in life–When you are young and healthy, the premium is much lower and this remains usually same until the policy term is over. Policy term could span 10, 15, 20 or 30 years. Locking in a higher term could lock your premium to a lower amount. You will get some flexible term plans which gives add-on cover at different stages like marriage and parenthood requirements. These work to your benefit with lower premium if you start those at early stage of life. Also gives the option to increase the coverage as required.

·         Save money on Annual payment option – Insurance companies provide flexibility of payment schedules like monthly, quarterly, half-yearly or annual. But annual payment turns out less expensive overall as the whole amount is paid in one shot and the company saves the repeated administrative cost on it and pass on the benefit to the customers. If there is no budget constraint, then go for an annual payment and save some on your premium.

·         Buying term plan policy online – Buying a policy online is a cost effective alternative for the company as well as for the customers. It reduces marketing, distribution and office work of the insurer since the customer does all the input of information. The saving that company makes in this context passes on to customers, at least partially in the form of reduced premium.

Term Insurance Premium Calculator -

This is the simple and specially designed tool that helps a perspective buyer to determine the premium amount. You can calculate the premium of term plan that you need to pay in order to get insured for a specified sum in case of unfortunate demise of the policy holder. In this way it helps you to compare the plans offered by different insurers and opt for the best suited one. To get a term plan online and to avail all the benefits of an online policy purchase, this calculator is the most used and appropriate tool for comparing the different insurers on a single common platform in India.

The premiums decided by the insurance companies depend on the rating and underwriting methods of various factors and parameters of individual companies. It is a good idea to shop for the benefits and coverage and comparing the premium for the different term plans offered by companies before purchasing one. Additionally, you need to compare the insurer performances regarding their customer service records, claim settlement procedure and timeline as well as the overall rate and reputation of the company.

Source; How to lower your life insurance premiums without compromising on coverage?

BEST AGE FOR INVESTING IN PENSION SCHEMES – CLICK2COVER

Do you know what pension plans are designed for? Yes, they are solely designed for your retirement planning. Pension plans provide you with a promise of income inflows for your entire life. This way, when you retire, you do not have to worry about your income coming to a standstill. Pension plans are, therefore, a good tool for retirement planning, aren’t they?

Yes, they are and that’s why you should have a pension plan in your financial portfolio if you want to plan for your retirement. But, do you know when you should buy a pension plan? Since retirement is perceived to be a long period away, we delay in investing in a pension plan. But, is the delay good?

What if I tell you that though your retirement is far away, you should start planning for it right now? Yes, you heard me right. Retirement planning is an essential financial goal, one which you should start at the earliest. Want to know why? It is because of the following two reasons:

·         The miracle of compound interest – if you remember your math lessons correctly, you would know what I am talking about. Compound interest lets you earn interest on any interest you have already earned. Confused? Don’t be. Through the process of compounding, any interests you earned on your savings get added to your invested amount which is again eligible to earn future interests. Due to this compounding feature, if you make investments over a longer period, you can accumulate a good corpus. For this to happen, you need to start saving early.

·         Affordable savings – when you start investing in pension plans from an early age, you can make small affordable investments to accumulate a substantial corpus. Since compounding works on your investments, such small investments made over a long tenure can yield very good returns and give you a huge corpus.

Let us understand these points with a simple example:

Suppose you are 30 years of age and want to invest in a pension plan which you would require on your retirement at age 65 years. If you make monthly contributions of Rs.2000 for 35 years, you get a corpus of Rs.28.49 lakhs (approximately) or Rs.29 lakhs at an interest rate of 6% per annum. Now, if you were to start investing in a pension plan sometime in your 40s, let’s say at 45 years, and want the same corpus, do you know how much you would have to save every month? Rs.6300 (approximately), almost three times the original savings. Imagine!

This is what saving early implies. Investing in a pension plan at younger ages is, thus, advised so that you can accumulate a good corpus and that too by making small and affordable savings.

So, one thing is certain. You should start buying pension plans when you are young. But when we talk about the best age, what should it be? Let’s find out:

In your 20s

20s is the period of fun, frolic and merriment. Graduating from college and getting that new job brings in financial independence and you are too busy fulfilling your various dreams. At this age, pension plans take a backseat. Even then, after fulfilling other priorities, you must endeavor to invest in pension plans even when you are in your 20s so that you can get a good corpus on retirement.

In your 30s

This phase is a serious retirement planning phase. Despite planning for children’s future and creating assets, you should start saving small amounts for your retirement planning. For your affordability, you can start saving small amounts monthly towards a pension plan and later supplement your savings through another plan.

In your 40s

Investments in pension plans should be aggressive at this stage. If you had already started saving in your 30s, you can make small contributions but if you still haven’t bought a pension plan it is time you wake up. Buy a pension plan today and start your investments.

In your 50s

A phase where retirement planning takes the center stage, isn’t it? In this stage you should supplement your retirement investments by buying other pension plans. If you have already invested in a plan, stay invested.

In your 60s

With retirement round the corner, you should simply sit back and watch your investments yield returns. You can invest in immediate annuity plans whereupon you would get annuity payouts instantly. Find the best pensionplans in India with single premiums for this purpose.

Retirement is a golden phase which can be enjoyed if you have made financial provisions for it. Pension plans should be bought at the earliest for the maximum possible benefit. If you are dilly-dallying your retirement planning, take heed of this advice and start planning your retirement today.  

Source: BEST AGE FOR INVESTING IN PENSION SCHEMES 

Choosing the Right Retirement Plan for Your Golden Years

Do you know why retirement is termed to be your golden period? It is because during this period you are free from most of your life’s liabilities. You have enabled your children to stand on their own feet, created sufficient assets for your family and taken care of your family’s expenses. Now, you have a responsibility only to yourself, a responsibility to fulfill your dreams and live life carefree. But can retirement be carefree if you do not have sufficient funds to live out your years?

No it cannot be. Retirement cannot be golden if you have no funds to meet your expenses. To create such retirement funds pension plans help. Pension plans are life insurance plans which promise a regular payout from a specified date (of your choosing) till you are alive. So, pension plans provide you a regular income in your retirement. But, do you know how to choose the right pension plan for your retirement?

Choosing a correct pension plan is important if you want to live out your retirement peacefully. Here are some factors which would help you to choose the best pension plan for yourself.

·         Plan type

Pension plans come broadly in two variants. One is the deferred annuity plan and the other is the immediate annuity plan. Deferred annuity plans allow you to accumulate your retirement corpus over a period by paying premiums. You can then use this corpus to avail annuity throughout your lifetime. Immediate annuity plans, on the other hand, start paying annuity immediately after you make a lump sum payment onetime. If you are young and have time to create a corpus, you should opt for deferred annuity plans. On the contrary, if you are retiring soon and want annuity payouts immediately, choose immediate annuity plans.

·         The returns

Deferred annuity plans can be traditional pension plans which pay a guaranteed addition or bonus during the plan tenure. They can also be Unit Linked Insurance Plans (ULIPs) which invest your premiums in market-linked funds. Traditional pension plans pay very conservative returns while ULIPs provide attractive market-linked returns which are also adjusted for inflationary trends. So, you should preferably choose unit linked pension plans for a better return.

·         The term

In case of deferred annuity plans, you are required to pay premiums over the plan tenure which accumulates into a corpus. Choose higher plan tenure to create maximum savings in your retirement corpus. Ideally, you should buy a deferred annuity plan when young (in your 30s) and continue it for as long as you can. When the pension plan matures, buy a single premium deferred annuity plan to receive annuities from a future date.

·         Types of annuity payouts

In immediate annuity plans, you get multiple choices of annuity payouts. There is increasing annuity, annuity where the purchase price is returned on your death, joint life annuities where annuity payouts continue even after your death if your spouse is alive, etc. Among all these types, you should choose the one which would be suitable for your requirement. If your spouse is alive, opt for joint life annuity payouts so that your spouse’s financial security is ensured even after your death. If you want to leave a legacy for your children, the return of purchase price is a good option. Increasing annuity is good if you expect your expenses to increase over time. So, choose a payout solely based on your requirements.

·         Compare

The last consideration is comparing the different annuity plans available in the market before you settle on one. Go online and compare between the available pension plans. Understand the plan features, compare the annuity rates and then buy the plan.

Pension plans secure your retirement financially if you have ensured to buy the best pension plan. For choosing the best pension plan you do not have to do a lot of work. Just remember the above-mentioned points and then compare the plans which are available. Comparing is essential for choosing the best pension plans whether it is the best single premium pension plan, immediate annuity plan or deferred annuity plan. So, what are you waiting for? Now you know how to choose the right pension plan, don’t you?

Source: Choosing the Right Retirement Plan for Your Golden Years

How much money do you need to meet your retirement needs?

Retirement is an inevitable phase of life. When in the age of 20-30s, it is just a thought but as you near towards 40s, this thought starts gaining importance.

Financial planning plays a key role in achieving your retirement goals and aspirations. After retirement, you would have a desire to travel to different parts of the world or pursue your gardening hobby which you could not take up due to time/money constraints.

Calculate your retirement needs

While doing retirement planning, one question which always matters is what will be the capital/corpus amount with which you want to retire. Though answer to this question is not easy as corpus funds is more tailor-made figure and varies from person to person. It depends on the standard of living and lifestyle of the person. 

Suppose you have a current expense of Rs.50,000/- a month. Extrapolate it with inflation at an average rate of 6% at the end of 20 years (assuming you are 40), you will need Rs.1,60,000/- for monthly expenses. Add in the inflated medical costs minus the current obligation like loan and children’s education, you will still need a corpus of Rs.3.84 Crore.

If you go by this, accumulating such a huge corpus fund is very tough since expenses like EMI’s, children’s education, household and medical expenses form a big chunk of your salary. The answer to this worry is to buy a pension plan.

These plans  are annuity plans which provide you fixed amount every month, quarter, half yearly or yearly as per the terms of the policy.

It  help you secure your retirement in a secure way. It gives you the freedom to choose where you want to invest your money. The money can be invested in debt/government securities (traditional plans) or in equity market (ULIPs).

There are two phases in a pension plan, accumulation phase and annuity phase.

In the accumulation phase, the policy holder pays premium to the insurance company every year and in the annuity phase, the policy holder enjoys fixed income from the insurance company which will be received at frequent intervals.Opting for the best retirement plan India has become a significant aspect of every one’s life.

Benefits of buying a pension plan are:

Ø  Source of regular income

As there will be no paychecks post retirement, pension plans give a boost to the policy holder’s saving by providing regular income.

Ø  Tax Advantage

The premiums paid for traditional pension are eligible for exemption u/s sec 80CCC of the Income tax act.

Ø  Insurance cover to policy holder

The main purpose of these plans  is to help you build a capital fund so that it can provide you a steady income after retirement. However, few insurance companies provide you insurance cover too. In case of untimely death of the policy holder, a sum assured is given to the nominee of the policy holder.

Ø  Easy to buy

With the ease of buying pension plans online, you can compare among the various plans provided by insurance companies and opt for the one which suits you the most. Customer assistance is available around the clock all 365 days of the year.

Ø  Compounding benefit

Investment in pension plan helps you enjoy the benefit of compounding as your money is constantly invested so that the corpus funds are enhanced.

Ø  Flexibility in terms of investment

This plan provide you the flexibility to invest your money in government securities or ULIP’s or a balanced fund which is a mix of traditional pension plan and ULIP.

Few points should be kept in mind while choosing an annuity plan:

Ø  Your present age

If you are in 20-30 age group, then you have time to accumulate the corpus fund. However, early investment always reaps good return as it has adequate time for compounding.

Ø  Revisiting your financial plans with time

Accumulation of corpus fund is an estimated figure. Over time, you should revisit the amount and see if there is a need to revise it as per the current inflation and market conditions.

Ø  Take into account your industry

You might be working in an industry which is fragile by nature. Unusual events like a job loss could impact your investment decisions.

Ø  Take help from a financial planner

As financial planning helps you achieve your desires, in case of any doubt, do not hesitate to consult a financial planner who will enable you to attain your goals.

Source: How Much Money do You Need to Meet Your Retirement Needs?

How to go for the right annuity plan?

Retirement is considered as second innings of life. In the first innings, a person strives to fulfill his career aspirations and is busyin taking care of his responsibilities towards his family. He has set financial obligations like EMIs, children’s education and works hard enough to achieve them. Once he retires, he starts living for himself. The unfulfilled dreams like going on a vacation or serving the society takes a priority. To fulfill these aspirations, one should start planning for retirement as soon as possible. The best practice is to start investing from the time you start earning.

Post retirement, the regular pay checks will no longer exist. The most important concern becomes to maintain your lifestyle. Though you might have savings in your EPF (Employee Provident Fund A/c), but it could be inadequate as the contribution is restricted to 12% of your basic salary every month. Taking a plan is undeniably a must for securing your retirement.

What is a Pension Plan?

It is annuity by nature which gives the policy owner a fixed sum of money at regular intervals. These intervals could be monthly, quarterly, half yearly or yearly.

Who is eligible to take this Plan?

Every individual is eligible to take a pension policy. However, it is restricted to a maximum entry age of 35-75 years. This restriction varies for different insurance companies.

Are pension plans divided into phases?

Yes, They  are divided into two phases. One is the accumulation phase in which the policy holder pays a lump sum amount or regular payments during which the wealth is accumulated. Other is the annuity phase in which the policy owner enjoys the accumulated wealth by getting a fixed sum of money every month.

What are the types of pension plan?

Broadly, pension schemes can be categorized as below:

1.       Deferred Annuity

2.       Immediate Annuity

3.       With or Without life Cover Annuity

4.       National Pension Scheme

Let us explain one by one the above types :

1.       Deferred Annuity

In this, you will have to pay a fixed amount at every interval generally, once in a year. You can also opt for single premium plan wherein you pay a lump sum amount at the time of taking the policy. Tax benefit can be availed on the premium paid under this plan.

1.       Immediate Annuity

As the name goes, the pension will begin immediately. For the purpose of availing immediate annuity, you will have to pay huge sum of money. In case of unusual event like demise of the policy holder, the annuity will be paid to the nominee.

2.       With or Without life cover annuity

In pension plans with life cover,a sum assured is paid to the nominee in case of untimely death of the policy owner. This cover is provided on deferred annuity plans during the accumulation phase.

In case of without cover annuity plans, no sum assured is given to the nominee in case of death of policy holder. However, the nominee receives the accumulated premiums paid by the policy possessor.

3.       National Pension Scheme

This scheme is introduced by the government of India and is being managed by PFRDA (Pension fund regulatory and development authority).  It is a voluntary scheme in which all citizens of India can invest.

With so many options available in the market for pension , it becomes a cumbersome job to opt for the best plan. If you have not planned for your retirement yet, you should opt for the best single premium pension plan in which you are required to pay the premium only once and enjoy complete pension benefits in the annuity phase.

Benefits of opting for Single premium plans are:

•     Beneficial to those who don’t have a stable cash inflow or fixed income
•      No need to remember the premium dates for renewal
•     Good for seasonal business owners

The tax benefits of single premium policies are in line with regular plans. The premium paid and maturity benefits are exempt under the income tax act. However, the premium paid should not exceed 20% of the sum assured. In case the premium exceeds 20% of the sum assured, the balance amount will not be allowed as deduction under the income tax act. Also, the maturity benefit cannot be availed.

Source: How to go For The Right Annuity Plan?