Ascertaining How Much Life Cover One Needs

If you have dependents, then it is imperative to have life cover. People usually devote enough time searching from gamut of life insurance products available in the market. But they forget to know how much cover one needs; this fails the whole purpose of insurance. Ascertaining how much insurance do one need is a daunting task. You need to know whether you are adequately insured or not.

While too little life insurance would mean that your family is not financially secure in the event of unfortunate death of the breadwinner and having too much insurance would mean higher outgo of insurance premium.

However, there is no fixed formula to decide how much insurance one needs. Basically, sum assured should be equal to amount which, if invested should fetch a regular income for your dependents to maintain their current lifestyle.

For ascertaining amount of life cover you require, you should take into account some factors such as life stage, risk profile, dependents, disposable income and liabilities. The cover should provide for all the liabilities and future earning potential of the policyholder.

One basic formula to arrive at adequate sum assured is that it should be 10-12 times of your annual earnings. If you have any liabilities such as outstanding car loan, outstanding home loan, your children’s education, their marriage, etc, you can add to this amount.

Another way to arrive at right amount of life cover is human life value method. As per this method, the amount of cover one should buy is directly depended on his economic value or ‘human life value’. This varies from person to person. Human life value is the capitalized value of the net earning of an individual for the rest of his working span.

Another approach is Need based approach or expense replacement. This considers the expense that the family would require to sustain in the absence of the breadwinner. It involves paying off the deceased person’s remaining obligations. It also takes care of future expense needs of the family.

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Significance Of E-Insurance Accounts

Today, when everything is going digital, holding insurance policies has also become digital. You can keep all your insurance policy documents in electronic form in an insurance repository system. It is not only free of cost; it has many other benefits as well.

Simple procedure: You can very easily convert your existing insurance policies in an electronic form.

Safety: In a case of physical documents, there is always a chance of documents getting misplaced or damaged. Therefore, keeping policies in electronic form provides security as there is no such fear.

Hassle free: You don’t need to go to offices of different insurers as everything will be online. Changing person details such as address, phone numbers, nominee details etc for all policies will become hassle free. You have to change it only once and it will automatically change for all policies.

Single view Status: You can monitor your policies status through one common interface. You can also renew your policies online. Annual statements can be obtained in a consolidated manner.

Single KYC: You don’t have to go through Know Your Customer (KYC) procedure every time you buy a new insurance policy as with electronic policies it has become one-time process.

Environment friendly: It is also environment friendly initiative as everything will become paperless, thereby saving trees and eventually environment.
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Questionnaire To Be Asked To Your Agent Before Buying Insurance Policy

Before buying a life insurance policy, it is imperative to ask certain questions to your agent or insurance company so that you can understand each and every minute detail of your policy. This will make sure that you buy a best product that suits your needs.

Q1. Is your agent authorized person?

Firstly, ask your agent to provide his agent license number. Know about his experience in the field. Don’t buy insurance from an agent who fails to show his agent license. All insurance agents have a reporting manager on the rolls of an insurance company. Keep record of the contact details of the reporting manager and the branch office out of which agent operates.

Q2. Which policy best suits my needs?

There is wide range of life insurance products available in the market. Hence, ask your agent which kind of product will help in fulfilling your needs. What may suit others may not work for you as everyone have different financial goals to achieve.

Q3. Are there any alternatives available?

If your agent is pushing any particular product to you, ask him to explain all options available to help you meet your needs.

Q4. How much life cover and other benefits does a policy offer?

Mostly, life insurance policy offer cover ten times the annual premium. However, make sure it with your agent. Ask your agent to assess whether you require more cover. Also, ask your agent about other features of the policy such as pre-mature withdrawals, penalty in case of late payment, etc.

Q5. Are benefits guaranteed or non-guaranteed?

Make sure that benefits promised by your agents are guaranteed or just based on assumptions. Don’t believe your agent if he promises unrealistic returns to you.

Q6. What are the risks of the product?

Ask your agent whether your product have any investment risk. And if yes, ask your agent about the nature and type of risk.

Q7. What are the differentiating factors of the policy?

Ask your agent about the differentiating factors about the product recommended by him to you. Ask him to compare it with other similar products available in the market. This will help you to choose best product.

Q8. What are the inclusions and exclusions of the policy?

Every policy has some inclusions and exclusion, hence; know carefully about them. This will help you to understand the product.

Q9. What premium you have to pay and what you will get in return?

Ask your agent clearly how much premium you will need to pay and what you will get in return in the form of sum assured and cash or fund value at the end of the policy term.

Q10. Will my premium increase after buying a policy?

Premium for a policy is pre-determined, hence, it can’t be increased during the term of the policy. Make it sure with your agent.

Q11. What it is the duration of the policy?

Ask your agent what is the term of the policy. Typically, your insurance policy should cover you till your family is financially dependent on you. The longer the term the lower the premium.

Q12. Does policy eligible for tax benefits?

Usually, life insurance policies offering cover ten times the annual premium is eligible for tax benefits. However, make sure it with your agent.

Q13. What is the premium paying period of the policy?

Ask your agent whether your policy is single premium, limited premium paying or regular premium paying policy.

Q14. What is the lock-in period of the policy?

Life insurance policies have certain specified initial years during which you can’t withdraw your policy; this is called lock-in period. Know from your agent what the lock-in period of the policy is.

Q15. What are the riders available with the product?

Insurance companies offer various riders with an insurance policy. These are optional. These come at a very nominal cost. Hence, ask your agent to explain all the riders available with the plan and there features.

Remember; don’t forget to confirm this with the company provided brochure. And after receiving your policy document, check that it contains all the promises made to you at the time of buying the policy. If you find any discrepancy, you have 15 days free-look period within which you can return a policy.

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Teaching Children To Be Financially Savvy

Money is important in life and needs to be managed well. To make your children well prepared for future, it is very necessary you should make them financially savvy from their childhood itself. You should inculcate habits of money management from early of their life.

Bank account: As a first step towards making your children financially savvy, you can open a bank account for your children and allow them to operate it on their own under your supervision. This will give them basic knowledge of managing their finances. They will get acquainted with basic terms of financial products.

Teach thumb rules: You can teach some basic thumb rules of managing finances to your children in your day-to-day discussions. You can teach them through different games about real life concepts like investing, saving etc in simple terms.

Set example: Children try to imitate their parents, so they follow their parent’s savings and investment patterns. Therefore, you can teach your children to be financially responsible by controlling your spending, having emergency fund and not wasting money on unnecessary things. When parents themselves are careless with money then how they can inculcate savings habits in their children.

Involving children in financial decisions: You can involve your children in your day-to-day money matters. This could be a good learning opportunity for them.

Set goals: Tell your children to set goals and accordingly spend their pocket money in such a way that they can achieve their goals. Children usually get money from their elders on their birthdays or festivals which they put in their piggy bank. When gets accumulated in fairly big sum. You can ask your children to maintain accounts. Ask them to monitor it and involve them while investing it. Parents along with their children can discuss and decide for what goal this money can be used and how much more investments would be needed for achieving the goal. This will teach children about investments, investing for a goal, monitoring investments and an acquaintance with investment instruments.

Give some power to make decisions: As your children grow up little, you can gradually give them limited freedom to make their financial decisions. Allow them to spend their pocket money on their own. They might make some mistakes but it will teach them big lesson for them that they will remember for their whole life.

Ask to contribute: When your children ask for anything expensive, you should ask them to contribute certain money from their savings towards buying it. This will teach children value of money.

Keep them motivated: Overtimes, children might lose interest in saving money. To keep them motivated, you can reward their efforts them in regular intervals. You can reward them for maintaining their accounts well, for regular savings, for learning new things about money etc.

You can help your children to develop money management skills by putting some extra efforts to teach them benefits of being financially savvy.

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Checklist To Pick Best Travel Insurance Plan

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While preparing for a vacation, people often don’t bother to buy a travel insurance policy. This is because they don’t give a thought to contingencies that can happen in a foreign country. Hence, it would be not prudent to go abroad without a travel insurance policy. Medical cost in most countries are high, even consulting a doctor can prove to be very expensive.

Here is a checklist to help you to pick best travel insurance plan:-

Benefits: You need to look out for certain common benefits that travel insurance plans offers. A travel insurance plan provides cashless hospitalization and if needed covers the evacuation cost. It covers you against mishaps such as loss of checked-in baggage or passport, trip cancellation/interruption and personal liabilities. It also pays for legal support in a financial emergency.

Sum insured: Since the medical cover is the main feature of a travel insurance plan, decide the sum insured on the basis of how expensive medical services are in the country you are traveling to. Medical treatment is very expensive in countries like U.S. A. and Canada than in Southeast Asia.

Duration: If you are a frequent traveler then you can buy annual multi-trip policy. It is valid for a year and usually covers any number of trips abroad. It is a cheaper option than a single trip policy for each trip. This is because the insurer doesn’t have to bear additional administration expenses. It is also convenient as you don’t have to buy a policy and submit document every time you travel.

Add-on covers: Insurers also offers add-on covers such as burglary and fire insurance for your home for the days you are traveling. If you are going for adventurous sports then you can buy a separate add-on cover for it as it is usually excluded in a travel insurance policy.

Compare products: Don’t buy a travel insurance plan just because it is having lowest premium. Always compare companies and their products on the basis of their claims processes, payment options, network of hospitals, etc.

Before leaving abroad, read the claim procedures, keep the required documents ready and save the helpline numbers of your insurer and third party administrator (TPA).

Smart Way To Insure Your Family’s Health

Every individual wants to fulfill their responsibilities towards their dependents. Health and well being of their family members is the priority for all. Any sudden expenses or uncertain mishaps regarding health can make situations critical. You can be prepared for any such situation by having a health insurance. It gives sense of security against specific mishaps without any stress.

No one wants that their family member suffer due to lack of money. All people wants that their family members receive best possible treatment. For this the most appropriate solution is family floater health insurance plan. It is the best way to help your dependent family members enjoy best treatment in a hassle-free manner.

Family floater health insurance plans provide coverage to not only individual buying the policy but also their family members. It covers dependent children, dependent parents and spouse of the insured individual.

It is also more economical way to insure your family compared to buying individual policies for each member of the family. It saves you from the hassle of buying and maintaining separate policies for each member. It also saves you from hassle of paying premium for all members separately.

Here is a checklist that can help you in buying a right health insurance policy for your family:-

Simple wording: While choosing a family floater policy it is more advisable that you choose policy having simple and understandable terms and conditions.

Compare features: Don’t just go with a plan with lowest premium, go with a plan that has benefits that are more relevant to your family needs.

Exclusions: It is very important that you understand exclusions of a policy. It will help you to pick a right policy for your family.

Adequate sum insured: Medical inflation is on the rise hence, you must choose maximum available cover that you can afford.

Renewability: Go for a plan having life long renewability. This will ensure that you are insured when you need it the most.

Increase sum insured: Choose a family floater health insurance plan that provides an option of increasing sum insured in the coming years. You need to increase sum insured as cost of healthcare never remain same.

Cashless plan: Zero-in for a plan that offer cashless facility. It will ensure that you don’t have hassle of collecting documents and submitting them. However, make sure that names of good hospitals are included in the network hospitals list.

Family floater health policies provide coverage to all members of a family in a single policy. It is an easy way to plan for a secured future. All family members can enjoy quality healthcare without any hassle.

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