Showing posts with label policies. Show all posts
Showing posts with label policies. Show all posts
Saturday, March 8, 2014
Different Types Of Life Insurance Policies Available In India
Life insurance is one of the fastest growing financial service sector in India. Currently, there are 24 life insurance companies in India offering various kinds of life insurance policies with many benefits and riders. The main purpose of taking life insurance is to provide financial protection for the dependants of a person in case of his death.
There are some life insurance policies which have inbuilt wealth creation or investment plans along with insurance. Also, these products are offered as specific tailor-made products for different life stages like, child plans, retirement plans, pension plans etc. A few products offer loan facility along with the life insurance plan. Also, all life insurance premiums offer tax benefits to the insured, as per the Indian Income Tax Act.
Here under are different types of life insurance policies that are being offered in India.
Term insurance policy:
Term insurance offers financial protection for the family of the insured in case of his sudden demise. It is the cheapest life insurance policy that offers high sum assured at low cost. This policy provides insurance cover for a period of time. In India, almost all life insurance companies offer term insurance with different product names. The term policy will be usually available for 5, 10, 15, 20 or 30 years. The policyholder does not get life cover after the completion of the term policy. Further, in India premium paid on term insurance is eligible for tax exemption under section 80C of Income Tax Act in India.
Money-back policy:
Under this policy, certain portion or percentage of the sum assured is returned back to the insured, in case of survival of policy holder. In the event of death during the period of the policy, the nominee of the policy gets death benefits equal to the sum assured and accumulated cash benefits. The premiums of money-back policy are very high compared to term insurance policy.
The money-back policies are offered for a fixed period of time, usually up to 25 years and the policyholder pays a fixed premium periodically (monthly, quarterly, annually) during the policy period. The premiums paid on money-back insurance policies are eligible for tax exemption under section 80C of Income Tax Act in India.
Whole life insurance policy:
As the name suggests, the policy covers risk for entire life of the policyholder. This policy continues as long as the policy holder is alive. The policy offers only death benefits to the beneficiary or nominee in case of the death of the insured. This policy does not offer any survival benefits. So, the whole life insurance policy is mainly taken to create wealth for the heirs of the policyholders, as this policy offers payment of the sum assured plus bonus in the event of the death of the policyholder. The premiums of whole life insurance are costlier than term plans.
The policyholder pays premium for whole life or till some age (say 80 years) or for some period of 35-40 years based on the terms and conditions of the policy. The premium paid on whole-life insurance policies is eligible for tax exemption under section 80C of Income Tax Act in India.
Endowment insurance policy:
Endowment insurance policy is a savings linked insurance policy that provide cover for a specified period of time. The policy holder receives sum assured along with bonus or profits at the end of the policy in case of his survival. This policy is best for those people who do not have a savings or investing habit on a regular basis. In case of the death of the policy holder before the maturity of the policy, the beneficiary of the policy receives only the sum assured amount.
The premiums of the endowment policies in India are costlier than term life and whole life insurance premiums. Also, the premiums paid on endowment insurance policies are eligible for tax exemption under section 80C of Indian Income Tax Act.
Unit linked insurance policy:
A Unit Linked Insurance Policy (ULIP) is a special kind of investment tool combined with life insurance and serves as investment-linked insurance policy. In this policy, some part of the premiums goes into life cover and some part of the premium goes into investment.
The policy consists of investment mix where some percentage of the premium can go into 100% equity funds or 100% debt funds or a mixture of both. Here, the policyholder has an option of choosing funds or he can select the strategy of investing. The policyholder can also has the choice of switching from one fund to other fund. The returns from ULIPS are based only on the performance of the funds. The main drawback of ULIPs is that, it contains high charges (commissions) for managing funds.
In India, ULIPs allow you to claim tax benefits against the premium payment by two ways deduction and exemption. You can deduct up to Rs.1 lakh of your taxable income by investing in ULIPs under section 80C of Indian Income Tax Act. You can exempt from gross income under section 10 (10)D for any sum received from insurance.
Insurance policies have a great role to play in assuring tax savings. As per the policy in India, all regular-premium life insurance policies (except pension plans) in India issued after April 2012, should offer protection cover of at least 10 times the annual income to be eligible for tax benefits under section 80C and 10 (10)D.
Choose and get a best life insurance policy to protect your familys financial condition in your absence.
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There are some life insurance policies which have inbuilt wealth creation or investment plans along with insurance. Also, these products are offered as specific tailor-made products for different life stages like, child plans, retirement plans, pension plans etc. A few products offer loan facility along with the life insurance plan. Also, all life insurance premiums offer tax benefits to the insured, as per the Indian Income Tax Act.
Here under are different types of life insurance policies that are being offered in India.
Term insurance policy:
Term insurance offers financial protection for the family of the insured in case of his sudden demise. It is the cheapest life insurance policy that offers high sum assured at low cost. This policy provides insurance cover for a period of time. In India, almost all life insurance companies offer term insurance with different product names. The term policy will be usually available for 5, 10, 15, 20 or 30 years. The policyholder does not get life cover after the completion of the term policy. Further, in India premium paid on term insurance is eligible for tax exemption under section 80C of Income Tax Act in India.
Money-back policy:
Under this policy, certain portion or percentage of the sum assured is returned back to the insured, in case of survival of policy holder. In the event of death during the period of the policy, the nominee of the policy gets death benefits equal to the sum assured and accumulated cash benefits. The premiums of money-back policy are very high compared to term insurance policy.
The money-back policies are offered for a fixed period of time, usually up to 25 years and the policyholder pays a fixed premium periodically (monthly, quarterly, annually) during the policy period. The premiums paid on money-back insurance policies are eligible for tax exemption under section 80C of Income Tax Act in India.
Whole life insurance policy:
As the name suggests, the policy covers risk for entire life of the policyholder. This policy continues as long as the policy holder is alive. The policy offers only death benefits to the beneficiary or nominee in case of the death of the insured. This policy does not offer any survival benefits. So, the whole life insurance policy is mainly taken to create wealth for the heirs of the policyholders, as this policy offers payment of the sum assured plus bonus in the event of the death of the policyholder. The premiums of whole life insurance are costlier than term plans.
The policyholder pays premium for whole life or till some age (say 80 years) or for some period of 35-40 years based on the terms and conditions of the policy. The premium paid on whole-life insurance policies is eligible for tax exemption under section 80C of Income Tax Act in India.
Endowment insurance policy:
Endowment insurance policy is a savings linked insurance policy that provide cover for a specified period of time. The policy holder receives sum assured along with bonus or profits at the end of the policy in case of his survival. This policy is best for those people who do not have a savings or investing habit on a regular basis. In case of the death of the policy holder before the maturity of the policy, the beneficiary of the policy receives only the sum assured amount.
The premiums of the endowment policies in India are costlier than term life and whole life insurance premiums. Also, the premiums paid on endowment insurance policies are eligible for tax exemption under section 80C of Indian Income Tax Act.
Unit linked insurance policy:
A Unit Linked Insurance Policy (ULIP) is a special kind of investment tool combined with life insurance and serves as investment-linked insurance policy. In this policy, some part of the premiums goes into life cover and some part of the premium goes into investment.
The policy consists of investment mix where some percentage of the premium can go into 100% equity funds or 100% debt funds or a mixture of both. Here, the policyholder has an option of choosing funds or he can select the strategy of investing. The policyholder can also has the choice of switching from one fund to other fund. The returns from ULIPS are based only on the performance of the funds. The main drawback of ULIPs is that, it contains high charges (commissions) for managing funds.
In India, ULIPs allow you to claim tax benefits against the premium payment by two ways deduction and exemption. You can deduct up to Rs.1 lakh of your taxable income by investing in ULIPs under section 80C of Indian Income Tax Act. You can exempt from gross income under section 10 (10)D for any sum received from insurance.
Insurance policies have a great role to play in assuring tax savings. As per the policy in India, all regular-premium life insurance policies (except pension plans) in India issued after April 2012, should offer protection cover of at least 10 times the annual income to be eligible for tax benefits under section 80C and 10 (10)D.
Choose and get a best life insurance policy to protect your familys financial condition in your absence.
Saturday, February 15, 2014
Three Types of Home Insurance Policies Explained
Your current home insurance policy may not be providing you with the protection you need. These are the usual kinds of policies that traditional home insurance companies provide:
At the top of the list are perils. These policies specify the types of loss that youre protected against. Included in things that are usually covered are some weather problems like hail or high speed winds, some kinds of water damages, and of course, fire, smoke, lightening, explosions, even damage from a vehicle or airplane crash. Unless you suffer loss or damage to your home or personal property from one of the specified types of loss, youre not protected. For example, a named perils policy will usually cover an accidental fire loss at your home because fire is listed as a covered peril. However, lets say you have a water loss at your home when a water line breaks. If the list of perils in your home insurance policy contains water damages, then you should be covered, but if not, you must pay for the costly repairs on your own. Have a good look at the list of perils in your policy so you understand what is covered, and what is not.
The second kind of coverage is called comprehensive. All-risk policies are another name for these kinds of policies called comprehensive. All kinds of losses are included in these, unless they are listed in the exceptions. Loss or damage due to wear and tear, snow slide or landslide, acts of terrorism, and war are some examples of the types of loss typically excluded in comprehensive policies. Comprehensive insurance policies protect you better than other types of insurance, so be sure to have this type to be covered for most things, except for some rare exceptions.
The third kind of coverage is erred to as broad form. Broad form offers comprehensive protection on the named perils list for your property and home. While this may seem like an interesting idea, its actually quite silly. We will examine what would happen if your TV is damaged as it is being moved, because you are painting and needed to move things around. Damages to your hardwood floors would be covered in this situation, but your television would not be covered here with a broad form policy.
Its confusing, right? Your policy should have the best kind of coverage, ensure that you have comprehensive protection. If you dont, youre not fully protected and will be disappointed if you have a claim.
If there are certain kinds of protection that you need, be sure that they are covered in your comprehensive policy and if not, get what you need by adding it on at an additional fee. In fact, most traditional policies dont automatically provide earthquake protection , nor do they provide the broadest water protection available. They also dont provide enough protection in the event that there are additional costs to rebuild your home to current building codes, which means you could be out of pocket for tens of thousands of dollars. In all cases, you have to pay extra to be fully protected.
Protection from damages caused by anything, even an earthquake, will be included in the better home insurance policies. The expenses in upgrading to building code standards after damages should be included, as well as for water damages of any kind.
At the top of the list are perils. These policies specify the types of loss that youre protected against. Included in things that are usually covered are some weather problems like hail or high speed winds, some kinds of water damages, and of course, fire, smoke, lightening, explosions, even damage from a vehicle or airplane crash. Unless you suffer loss or damage to your home or personal property from one of the specified types of loss, youre not protected. For example, a named perils policy will usually cover an accidental fire loss at your home because fire is listed as a covered peril. However, lets say you have a water loss at your home when a water line breaks. If the list of perils in your home insurance policy contains water damages, then you should be covered, but if not, you must pay for the costly repairs on your own. Have a good look at the list of perils in your policy so you understand what is covered, and what is not.
The second kind of coverage is called comprehensive. All-risk policies are another name for these kinds of policies called comprehensive. All kinds of losses are included in these, unless they are listed in the exceptions. Loss or damage due to wear and tear, snow slide or landslide, acts of terrorism, and war are some examples of the types of loss typically excluded in comprehensive policies. Comprehensive insurance policies protect you better than other types of insurance, so be sure to have this type to be covered for most things, except for some rare exceptions.
The third kind of coverage is erred to as broad form. Broad form offers comprehensive protection on the named perils list for your property and home. While this may seem like an interesting idea, its actually quite silly. We will examine what would happen if your TV is damaged as it is being moved, because you are painting and needed to move things around. Damages to your hardwood floors would be covered in this situation, but your television would not be covered here with a broad form policy.
Its confusing, right? Your policy should have the best kind of coverage, ensure that you have comprehensive protection. If you dont, youre not fully protected and will be disappointed if you have a claim.
If there are certain kinds of protection that you need, be sure that they are covered in your comprehensive policy and if not, get what you need by adding it on at an additional fee. In fact, most traditional policies dont automatically provide earthquake protection , nor do they provide the broadest water protection available. They also dont provide enough protection in the event that there are additional costs to rebuild your home to current building codes, which means you could be out of pocket for tens of thousands of dollars. In all cases, you have to pay extra to be fully protected.
Protection from damages caused by anything, even an earthquake, will be included in the better home insurance policies. The expenses in upgrading to building code standards after damages should be included, as well as for water damages of any kind.
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