Thursday 21 July 2016

Insurance - Basics

Insurance is a promise of compensation for specific potential future loss in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss.
We all know about insurance but many times we ignore some basic features of insurance policy.
Here we will try to explain some of the words which your agent normally use while explaining any insurance policy.
By explaining the below terms we want to make you familiar with your insurance policy.
Sum assured (also known as Cover) - This refers to the amount paid out on a policy if you die within the Term of insurance plan. In case of an endowment policy Sum Assured can be paid out on maturity along with the bonus and in case of Money back policies a part of Sum Assured is paid out on regular intervals and on maturity along with the bonus. On regular intervals. Endowment policy It is the guaranteed amount to be paid out at maturity with or without Bonus (Depend upon the policy).
Premium - The owner usually pays a fixed premium amount in exchange for the insurance company's guarantee to cover any economic losses incurred under the scope of the agreement of insurance.
Bonus - It is the amount added to the basic sum assured under a with-profit life insurance policy.
Surrender value - The amount payable by the insurer to the owner of an investment-based plan in case he opts to terminate the policy after three years (the mandatory lock-in period) but before its maturity date. The surrender value will be the premium paid till date minus surrender charges and any outstanding loans due.
Endowment Policy - In this plan the amount is paid to a policyholder if he lives survives the term even after the tenure of the insurance contract or to the beneficiary if the insured person dies before the date on which the policy matures.
Term Insurance - Term life insurance is a life insurance plan in which person can get the huge insurance coverage with fewer lower premiums. In this plan beneficiary will get the cover amount only if the insured person dies within the policy term. Unlike Endowment policy policyholder don't get any amount if insured person lives even after the policy expires. One should have at least one Term Insurance policy. One can consult a financial planner for the best possible insurance solution.
Whole Life Insurance - A life insurance policy where benefits are payable to a beneficiary on death of the insured, whenever that occurs. The premium payment can happen for a specified number of years or throughout life.
ULIP - It is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. Some part of the amount invested in Best Ulip Insurance plan is used to provide the insurance cover and the remaining is invested in equity and debt investments and denoted as units.
Money Back Plan - A plan in which part of the sum assured is paid back to the policyholder at regular intervals and a part of sum assured is paid at maturity along with bonuses.
Rider - An add-on benefit available at the option of the policyholders that may alter certain features of a policy by increasing or restricting benefits.
Survival benefits - The amount payable to a policyholder under an investment-based plan if he survives the policy term. Typically, it is the sum assured plus returns (guaranteed additions / bonus) accrued.

Source:
https://bestulipinsurancepolicy.wordpress.com/2016/07/21/insurance-basics/

Monday 18 July 2016

Unit Linked Insurance Policies - Advantages and Disadvantages

In this world, every person wants to secure his family. He can invest money in PPF, Mutual funds, insurance plans and many more.
There are numerous insurance policies provided by various insurance companies. So we cannot easily decide the perfect policy for ourselves. There is a short description of some life insurance policies that may help you in choosing the right plan.
Term Life Insurance: - Term life insurance is an insurance which gives coverage for a particular time of period. After this period, the policy holder can continue his policy or can drop his policy. If the policy holder dies in the term period, nominee will get the death benefit. This insurance plan is very affordable. The policy holder can pay a low monthly premium that is based on the term length and amount of the coverage you choose.
Whole life insurance: - Unlike term insurance, a whole life insurance policy gives the coverage for the entire life not a particular time of period. In this insurance policy, the policy holder gives the insurance premium amount from the date of issue of policy until he completes 100 years. If he dies in this period, then his dependent will get the face value of the policy. This policy can also use as an asset. A person can also take loans from the cash accumulation with the help of policy. If the person reaches at the age of 100, he will get full amount immediately.
Money back insurance: - In money back insurance plans, the policy holder will get periodic payments of partial survival benefits during the term of the policy. The main feature of this policy is that if the insured person dies during the policy term, the death claim will be given to his nominee with sum assured without deducting any of the survival benefit amounts.
ULIP insurance plans: - ULIP plans are the combination of investment and insurance. This is a long term, systematic and goal based investment plan. One can get tax benefits under section 80c of the Income Tax Act. The two key features of this product are flexibility and transparency. Many ULIP plans provide options to increase or reduce premiums after three years.
Riders: - Riders are additional benefits that one can opt to include in one's policy over and above what the insurance policy provides. These add-ons come with extra premium charges that depend on the rider you have opted. One cannot buy these riders separately.
To summarize, there are details of some insurance policies that may help you to select the right plan for you. Before purchasing any insurance policy, an individual should compare all the policies and choose the policy that meets his requirements.
This article provides the information about various insurance plans. As we know that "insurance is a contract between the insurer and the insured person". So each person wants to choose the correct insurance policy.

Source: http://ulipinsuranceindia.weebly.com/ulip---blogs/-unit-linked-insurance-policies-advantages-and-disadvantages

Friday 15 July 2016

Investing Hard Earned Money in ULIPs in India

Until recession struck and the stock markets saw a steep fall, these used to be one of the widely sold products by insurance companies in India. However, a crashing stock market shattered the hopes of investors who were pained to see the NAV of their policies plunging down and putting them into losses.
Fundamentally, these plans remain a good investment vehicle but the extraordinary returns that the stock market offered in the bull time had raised expectations of the investors to wildest levels. These investment plans are actually intended to be investment for a long term; hence buyers should avoid making judgment by observing its performance over a short term.
ULIPs in India are now more attractive and safe
In the year 2010, with a view to protect the interest of the consumers, IRDA had introduced a few changes in the ULIPs. IRDA made it mandatory for such plans to have a 5 year lock in period. It also revised the structure of charges.
The way to go about investing your hard earned money
If your past experience with ULIPs has not been pleasant, it is wise that you rather not be biased. You can hope for good investment returns from your unit linked saving plan by being disciplined and prudent.
1) Allow your money to remain invested for a longer term - In case, the markets fall, do not panic to liquidate. Rather continue with your premium payment and be assured of decent return rates.
2) Plan your premium payment as a systematic investment plan - Rather than paying your premium in one shot, opt for the systematic investment option under which you can stagger the payment of the premium over a 12 month period.
A few ULIPs also offer the investor an option of switching between investment plans. Currently, if you have invested in a 100 percent equity saving plan and you have a sense that the equity market will be underperforming during the year, you can switch your investment into a saving plan that primarily comprises debt. A unit linked investment plan will allow you a free number of switches every year.
These days, some insurance companies are offering new versions of these investment options for money back policy in order to get back customers
Buy a ULIP online
It is preferred that you buy Ulip Insurance India online as it can save you the cost of agent commissions. In fact, some insurance companies in India are offering these saving plans only as an online offering in an attempt to save on the distribution cost and pass on the benefit to the Policyholder in terms of lower policy charges. Moreover, when you buy a policy online, you also get the facility to compare various plans whilst sitting in the comfort of your home, so that you may buy a policy that fits your needs as well as your pocket.
Investment plans comparison can save your time and money. Easy policy helps to compare saving plans by providing free quotes online.

Source: http://blogs.rediff.com/bestulipinsurancepolicy/2016/07/15/ritikashah11998-42/

India Insurance - Unit Linked Insurance Plan (ULIP)

In India, Unit Linked Insurance Policies (ULIPs) are insurance policies that combine risk coverage with investing in the stock/debt markets. In effect, they are designed to behave as normal insurance policies plus mutual funds.
An investor's contribution to ULIPs gets invested in specific types of portfolios that he/she chooses. The policy typically pays back based on market returns on investments at the end of the insured period. Therefore, it forms an interesting savings instrument that can get good risk cover.
Features of ULIPs include:
1. Units allotted under ULIP schemes have Net Asset Values (NAV) declared regularly, like a mutual fund
2. Investors can invest across types of portfolios similar to mutual funds - growth equity, balanced, debt funds, etc. Investors can move across portfolios, typically at nominal costs
3. Investors can invest as a lump sum (single premium) or make premium payments on an annual, half-yearly, quarterly or monthly basis. Premium amounts can be changed over the course of ULIP's life
4. Investments qualify under Section 80C of the Income Tax Act. Maturity proceeds from ULIPs are tax free. There are no long term capital gains tax and 10% short term capital gains tax on equity portfolios within ULIP. For debt funds, long term capital gains tax is 10% while short term is at the investor's marginal tax rate.
5. However, charges charged by insurance companies can be quite confusing - therefore, investors should compare them with similar mutual funds to see if charges quoted are reasonable.
Despite their interesting structure and potential benefits, investors are better off clearly understanding portfolio types offered, performance of fund managers and expenses/fees before investing in ULIPs.

For more details visit: Best Ulip Insurance Policy

Tuesday 12 July 2016

ULIP: Invest the Smarter Way

ULIPs - Unit Linked Insurance Plan (also known as wealth insurance plans) is a package of financial solutions that include the safety of insurance cover with wealth enhancement possibilities. In a ULIP, a part is reserved for life cover and the rest is invested in stocks and bonds as funds. This investment is dependent on the performance of the underlying fund that is chosen by the investor. ULIPs with its two in one arrangement keeps the protection and savings elements distinguished. ULIPs are very flexible and transparent which enables the investor to customize the plans as per the need and unlike other plans once invested, the plan remains unchangeable.
Types of ULIPs include Retirement, wealth, children's education and health plans. Depending on the priority, investment in ULIPs can be done accordingly. Best ULIPs are the ones which have the appropriate life cover, right fund option and a long term investment. In ULIP insurance plans, the charges applicable are well bifurcated. The ULIP charges usually include Policy administration charges, ULIP premium allocation charges, mortality charges and fund management charges. Policy administration charges are deducted on a monthly basis, premium allocation charges are deducted from the premium amount that the investor pays and is used for medicals, cost of underwriting and distributor's fees. The amount that remains is invested in the fund that is chosen by the investor.
Mortality charges are also deducted on a monthly basis. It is the sum assured for providing a life cover to an individual and will vary as per the fund value selected. Depending on the fund chosen, fund management charges are also deducted by the insurance company for the maintenance of these funds. Best ULIPs are the ones which will mention all the deductions clearly before the investment and flexibility options after investment.
Choosing the Best Ulip Insurance Policy rates is very easy provided certain criteria are considered before investing. Understanding the plan, ULIP charges implied, comparing different products offered by different companies and going for the best ULIPs that fits the need will work well. One can buy ULIP online if they are clear about the kind of investment they want to make. Top ULIP plans are usually the ones with favorable ULIP premiums, long term investment and a good life cover with a decent mortality charges. Understanding the peculiarities of the ULIP rates and their growth rates and making the investment in life insurance wealth plan especially in a ULIP will give the best results. 

Source:  http://ezinearticles.com/?ULIP:-Invest-the-Smarter-Way&id=5895265  

Insurance Basics Part IV - Unit Linked Insurance Plan - ULIP

A person, 40-year-old investor, was disgruntled with his investments in Unit-Linked Insurance Plan (ULIP). While the equity markets have been rolling, he realized after some research that he was yet to recover the money he had invested three years ago. This, he realized, was not on account of poor fund performance but because of higher initial fund costs. While the people crib is about the non intimation of such expenses by his/her broker, insurance regulator IRDA has come to his rescue, making it mandatory to disclose all charges upfront to the buyers.
Basic rules have to understand the cost structure of a fund before buying into ULIPs. And a basic understanding would save them from heartburn. So how are the cost structured for an ULIP?
COSTS OF OWNING A ULIP:
1) Premium Allocation Charge
The cost structure of ULIPs is such that it starts working to your benefit only after 5-8 years of investing. A part of your premium payment goes into Premium Allocation Charge, which is calculated as a percentage of the premium. This percentage is generally higher in the first few years-the main reason: it takes years to break even on investments. It could be as high as 40% of each year's premium.
2) Policy Administration Charge
A monthly fixed amount that usually rises every year with inflation or as a percentage of the sum assured.
3) Mortality/Rider Charges
The mortality charge per Rs 1,000 of the sum assured varies from 1.3 for a 30-year-old to 6.4 for a fifty-year-old.
4) Fund Management Charge (FMC)
Then you have the fund management charge, an adjustment to net asset value (NAV) on a daily basis. Usually, insurers charge it as a percentage of funds under management. ULIPs could have a fund management charge between 0.5%-2.0percent per annum.
So with so many chargers around what should be the strategy to get good retuns from ULIPs
STAY LONG TO REAP THE BENEFITS:
If you are ready to cool your heels for 10 years, ULIPs will be a viable financial option. If you anticipate some liquidity need in one to three years from now, ULIPs are not for you. You should look at this investment product only if you leave your money untouched for beyond five years. A good time horizon would be around five years to 30 years. ULIPs are meant for disciplined, regular and systematic investment towards a goal.
The reason is that if you invest the same amount in a mutual fund as well as a ULIP, the former gives better returns than the latter because of the cost structure. There is a point of inflexion at six years, then on the Ulip Plans begin to give better returns than mutual funds.
THUMB RULES FIR ULIPS:
Start Early: If you start at the age of 30-35, you can create a 20-year long-term investment by investing in SIP route.
Invest Regularly: Do not get deterred by market swings. A systematic long-term periodic investment will help you go a long way.
Choose your fund:
Depending upon your age and risk profile. Use the switches effectively.
You may have opted for a mix of 75% equity and 25% debt on your ULIP. But when you inch closer towards maturity, minimize your exposure to equity as low as 20%. If the market turns bearish, it may slash your assets at the time of maturity. It's better to bet safe as you are close to retirement, also have a rein on the number of switches though they come free of cost. Frequent change in asset allocation might not be a wise move after all.
You should always have a balanced approach to your investments in your middle age. It protects you better from risks. Now, even if you go for a long-term ULIP, it works to your advantage as it isn't adversely affected by the vagaries of the equity market.
Source: http://blogs.rediff.com/bestulipinsurancepolicy/2016/07/12/ritikashah11998-41/