01-Why Buy Life Insurance

download 01-Why Buy Life Insurance

of 17

  • date post

    07-Apr-2018
  • Category

    Documents

  • view

    219
  • download

    0

Embed Size (px)

Transcript of 01-Why Buy Life Insurance

  • 8/6/2019 01-Why Buy Life Insurance

    1/17

    May 2005 Why buy Life Insurance?

    Why Buy Life Insurance?Why Buy Life Insurance?

  • 8/6/2019 01-Why Buy Life Insurance

    2/17

    May 2005 Why buy Life Insurance?

    What is Life Assurance?What is Life Assurance?

    A plan that alleviates the effect of death,disability and old age.

    The only financial vehicle that pays a lump sum

    on death, disability, hospitalisation, criticalillnesses.

    Provides peace of mind

    An effective tool for Personal Financial Planning

  • 8/6/2019 01-Why Buy Life Insurance

    3/17

    May 2005 Why buy Life Insurance?

    Why Buy Life Insurance?Why Buy Life Insurance?

    Provides financial security for the family

    . Acts as a toolfor PROTECTION.

    Mitigate financial risks associated with Total /PartialDisability; Critical Illness; Hospitalisation Expenses; Old

    Age; Death.

    The tearing of the Joint Family fabric, makes insuranceattractive for financial independence of the nuclearfamily.

    Is a SAVINGS vehicle. Enjoys Tax benefits (Front EndBenefits of Section 80C, 80(D); Back end 10(10)D -Maturity/Withdrawal Benefits are Tax Free)

  • 8/6/2019 01-Why Buy Life Insurance

    4/17

    May 2005 Why buy Life Insurance?

    NEGATIVES

    Single Buy HouseStartFamily Retirement

    POSITIVES

    Education Better job Marriage Children Wealth CreationPlanned Retirement

    PrematureDeath Loss of job

    Accident &Disability

    Critical IllnessUnp

    lannedRetirement

    Life Insurance mitigates the financial risks of NegativeEvents while boosting the prospects for Positive events

    of Life!

    1818

  • 8/6/2019 01-Why Buy Life Insurance

    5/17

    May 2005 Why buy Life Insurance?

    Why Buy Life Insurance?Why Buy Life Insurance?

    INSTRUMENT

    Safety of Capital

    Preservation Liquidity

    Post tax

    returns Tax Efficiency Risk Cover*

    Provident Fund High Low Good Good None

    Shares Uncertain Good Uncertain Low None

    Bonds Average Average Low Low NoneFixed Deposits High Average Low Low None

    Mutual Funds Average High Uncertain Average None

    Postal Savings Schemes High Low Average Average None

    LIFE INSURANCE HIGH AVERAGE GOOD HIGH YES

  • 8/6/2019 01-Why Buy Life Insurance

    6/17

    May 2005 Why buy Life Insurance?

    What do people save for? Buying house/asset creation

    Childrens education

    Childrens marriage

    Holidays

    Loan repayment

    Retirement

    Threats to income/savings! Premature Death

    Accidents Disability

    Old Age

  • 8/6/2019 01-Why Buy Life Insurance

    7/17

    May 2005 Why buy Life Insurance?

    Money MachineMoney Machine

    If you had a moneyMachine that providesyou with a regularincome to pay for yourdaily expensesWould

    you insure and maintainthis valuable machine?

  • 8/6/2019 01-Why Buy Life Insurance

    8/17

    May 2005 Why buy Life Insurance?

    Money MachineMoney Machine

    For your family you are thismachine.

    Do you have sufficient Life

    insurance coverage ?

  • 8/6/2019 01-Why Buy Life Insurance

    9/17

    May 2005 Why buy Life Insurance?

    Advantages of Life Insurance: if we liveAdvantages of Life Insurance: if we live

    Encourages systematic saving

    eliminates personal selection of investments

    provides a safe investment

    is good property

  • 8/6/2019 01-Why Buy Life Insurance

    10/17

    May 2005 Why buy Life Insurance?

    Advantages of Life InsuranceAdvantages of Life Insurance If we Die!If we Die!

    Creates an immediate Estate, in a convenientway

    Worth the Face Value Sum Assured

  • 8/6/2019 01-Why Buy Life Insurance

    11/17

    May 2005 Why buy Life Insurance?

    Life Insurance Products essentially serve 3 different needsLife Insurance Products essentially serve 3 different needs

    Very importantly, lifeinsurance makes sureyou save and gives youfinancial strength toachieve your mostimportant life goals.

    2

    Investment

    Saving

    ProtectionThe first reason tohave life insurance is

    to secure yourfamilys financialfuture.

    Finally, life insuranceis a safe, long-terminvestment

    Money Back Plan

    Whole Life/

    Endowment Plan

    Accident Rider

    Term Plan

    Indicative Age Group : > 35 years

    Indicative Age Group : Upto 35years

    3

    1Disability Rider

    Single Premium / UL

    Plans

  • 8/6/2019 01-Why Buy Life Insurance

    12/17

    May 2005 Why buy Life Insurance?

    Insurance Solutions for Age 25Insurance Solutions for Age 25--3535

    Major Events are Marriage/Family.

    Aspirations are High (Cars, Holidays, ConsumerDurables).

    Recommended Insurance Products are: Whole of life /Unit Linked

    Term products for covering assets purchased on loan.

    Regular premium payment to inculcate savings habits Risk takers can be recommended unit linked products

  • 8/6/2019 01-Why Buy Life Insurance

    13/17

    May 2005 Why buy Life Insurance?

    Insurance Solutions for Ages 35Insurance Solutions for Ages 35--5050

    Major Events are Children, Childrens Education,Childrens Wedding

    Aspirations are High.

    Recommended Insurance Products are: Unit Linked/Childrens Plan for specific planned events like

    childrens education, childrens marriage, travel, etc.

    Endowment/Unit Linked for aspirations like Car, House etc.

    Start retirement planning with deferred annuity products.

  • 8/6/2019 01-Why Buy Life Insurance

    14/17

    May 2005 Why buy Life Insurance?

    Insurance Solutions for Age 50Insurance Solutions for Age 50--6060

    Major Event is Retirement

    Aspirations are Low (Lifestyle Maintenance).

    Recommended Insurance Products are:

    Retirement planning with deferred annuity products.

    Immediate Annuities

    Endowment policies to build up capital to purchaseannuities

  • 8/6/2019 01-Why Buy Life Insurance

    15/17

    May 2005 Why buy Life Insurance?

    How much of Life Insurance to buy?How much of Life Insurance to buy?

    Proceeds from Life Insurance should besufficient to take care of the following withoutrequiring the family to liquidate any immovableasset: Continuation of existing lifestyle

    Take care of all future expenses including Children'sEducation and Marriage

    Repayment of any outstanding loans

    Ideally, the regular savings through life

    insurance should also be a part of the overallretirement plan of the individual.

    The rule of thumb is to have life insurance coverage ofThe rule of thumb is to have life insurance coverage of

    88--10 times the gross annual income10 times the gross annual income

  • 8/6/2019 01-Why Buy Life Insurance

    16/17

    May 2005 Why buy Life Insurance?

    How much of Life Insurance to buy?How much of Life Insurance to buy?

    Most insurance companies provide a life insurance needassessment calculator that works out insurancerequirements based on the present value of futureliabilities and current assets.

    It is advisable to calculate your exact requirement withsuch a calculator.

    Life Insurance requirement changes with time,depending on increasing or decreasing liabilities. Youmust keep checking your need every 4-5 years.

  • 8/6/2019 01-Why Buy Life Insurance

    17/17

    May 2005 Why buy Life Insurance?

    Everyone pays for Life Insurance.Everyone pays for Life Insurance.either you pay for it noweither you pay for it now

    or your family pays for it later!!!!or your family pays for it later!!!!

    Thank You