Is Retirement Planning a Must?

 Is Retirement Planning a Must?

• by Dinesh Randive

Retirement planning is quickly gaining speed and is certainly becoming a priority for many people. Based on a survey, nearly 25 percent of the urban customers are getting ready to act on their retirement planning. There has been a huge leap this year as nearly 140 percent increase in people claiming to consider that retirement is a key priority financially.

Retirement is often considered to be a complicated issue to look at in a young age; but as researchers suggest, keeping a good financial plan can help you gain confidence and create a smooth transition from on stage of your life to the other.

Many people who have been surveyed have opted out other investments, buying cars, secondary homes, etc. and have chosen retirement planning as their primary priority. The people among the age group of 28-33 are predominantly looking at retirement as the key and planning towards it. Based on a study, single women feel financially confident about their finances after planning than men.

A survey also found that single women (close to 70 percent) feel financially secure significantly than single men (56 percent). Women tend to invest at an earlier age that is around 25 years compared to men who begin to invest at 26. Although, marriage shifts the trend as men become more responsible and gain confidence about their finances while women begin to depend on their men for the same.

While women tend to consult and go for conservative mode of investment, men think of retirement as an immense financial priority based on a survey. Overall, while looking for financial retirement plans, both men and women have their ways of planning towards it.

The UNFPA report also suggests that the number of Indians above 60 years is predicted to rise to 55 percent by the year 2050. The common mindset among people who are young is to make enough money for their retirement and live peacefully. This not only makes them feel good, but it also brings the question of have you saved enough for as long as you live? There are many things which require your money after you retirement and one of the primary thing is medical expenses. Therefore, it is better to plan for your financial retirement considering all these facts.

Benefits of planning retirement early.

 Benefits of planning retirement early.

• by Dinesh Randive

The basic trait of good investor is start investing early. By investing early one gets two benefits, namely the time value of money and power of compounding. The earlier you start saving for your retirement lesser the burden. Let’s consider two people who starts saving for retirement at different age as mentioned below:

Person A, age 25, saves Rs.5000/- monthly for his retirement.

Let’s assume he invests in a financial instrument which fetches 15% per annum for next 25 years.

Person B, age 35, saves Rs.15000/- monthly for his retirement.

Let’s assume he invests in a same financial instrument which Person A has invested and gets 15% per annum for next 15 years.
Let the retirement age be 50 years.
Person A gets corpus of Rs.1,62,00,000/-
Person B gets corpus of Rs.1,00,00,000/-
The solution is simple the earlier you invest with little the amount more you reap.

Accommodate for inflation

With rising price, the purchase power of money will decrease. Let’s say you have Rs.100 today, and assume you keep the money safely for 5 years. What would be the purchasing power of Rs.100 after 5 years would be? Say it would be around Rs.90. Now imagine you invested in a financial scheme which is earning returns below inflation, and then you could lose money. Hence a typical investment scheme should accommodate for growing inflation.

Track you investment – don’t overdo it

It is better to track the performance of your investment scheme regularly, typically once in every 3 months. Never track your investment on a daily, monthly or weekly basis, because your emotions vary in line with the market trends. Hence invest in right schemes.

Diversify your investment

It’s always better to diversify your retirement investment rather than investing in a single financial scheme. By diversification you can reduce a risk of losing money considerably. This creates balance between under performing schemes and performing schemes.

Gradually increase your investment when you earning increases

With career growth and proper finance management, you can slowly increase your investment for retirement fund. This can be done whenever you’re earning increases. This has two advantages one is you get the power of compounding and also you are indirectly accommodating for growing inflation.

Buy a necessary medical insurance.

You should typically buy medical insurance, which should take care of your medical expenditures in case you fall ill. This will help you prevent erosion of your retirement savings.

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Visualize your retired life

 Visualize your retired life

• by Dinesh Randive

Visualize your retirement and create a budget for your retirement

Research reports say that only 15% of people are saving sufficiently for their retired life. This tells that a large number of individuals are not planning for their retirement which is a harsh reality. It is better to start planning early and put things in action than starting late and realizing the mistakes made later. Visualize your retired life and then start planning early.

Avoid or get rid of all your debts

Ensure that all your debts are completely re-paid on or before your retirement. Be it a home loan, car loan, personal loan or any other loan, make sure you choose the term of these loans before your retirement age and then repay them. Only then will you be able to enjoy your retired life with 100% financial freedom, not when you have to repay your loans.

Always have emergency funds and protect them

Emergency situations can happen at any time and the expenses can be very demanding, especially when you get older. So you will need to revise your emergency funds on a year by year basis and enhance them based on inflation and change in your expense levels. They will also give you a sense of security.

Have a budget plan for retirement too

It is good to have a vision in career life and it also good to have a vision for your retirement life also. You need to visualize your retirement goals and create a budget for that too. Retirement means that you will not be working anymore and will have to pay for your expenses. You may need to spend more on travel and medical expenses.

Grow your retirement money

Find out how much retirement corpus you will need when you retire. A good financial planner can help you in finding right answers to your questions and can be of great help in this regard.

Reduce taxes

Your retirement income and corpus need to be tax efficient. You need to pay taxes only for the interest accrued. You will need to carefully select your investment option that can help you in reducing tax in your retired life.

Have enough medical coverage

Plan you medical coverage well in advance because your employer will stop covering you under the group mediclaim. At old age, medical expenses can become inevitable and lack of proper planning in this aspect can create a lot of trouble.

Create a will

To avoid any relationship conflicts among your next generation, you will have to draft a will that will distribute your fixed and financial assets to your legal heirs.

Simple steps to plan for the New Financial Year

 Simple steps to plan for the New Financial Year

• by Dinesh Randive

The month of April marks the beginning of the New Financial Year. What better time could there be to take charge of your finances and make the right decisions with respect to your savings, investments, insurance cover and tax saving ideas? If you have not started your financial planning, then now is the right time to act on it so that you can complete this financial year well.

Create a budget set a goal

First step is to design your budget for this financial year. To make a budget, you need to note down the anticipated annual income for this year and the expected expenses such as existing loans, rent, medical expenses, and kids’ education and so on. You should also take into account other expenses such as travel, lifestyle expenses and entertainment expenses other than the priority expenses. By listing down your approximate expenses, you will get an idea as to where you are spending more. Once you know this, you can allocate funds to priority items and try to reduce other expenses. This will help in saving money which you can invest wisely to earn good returns. Another important part of creating a budget is to set a financial goal. Your financial goal for this financial year could be anything from opening new investments to buying a car or taking that long desired vacation.

Savings and investments

The next step is to plan your savings and investments. Once the budget has been framed, it makes it kind of easy to allocate funds for your short term needs in the form of savings and for your long term requirements in the form of investments. It is recommended that you contribute to your savings and investments on a monthly basis as you would do for your priority expenses. You should also first analyze your previous savings and investments, see where you stand with your financial goals and adjust your savings and investments for this financial year accordingly. If you are going steady with your investments, see if you could venture into any other new investments this year. By accelerating your financial goals, you could help yourself retire earlier or retire with an even better corpus. Apart from this, you should also concentrate on your emergency funds. You should always have an amount that would cover your expenses for a minimum of 6 months and you should never touch this amount.

Plan your taxes

Tax planning is also an important part of any financial planning. Rather than waiting until the financial year end, it is good to plan for your taxes at the beginning of the financial year. This will help you to avoid last minute hurried investments that you will be forced to make without much research. Planning your taxes in advance will help you to not only save more on taxes but will also help you to earn better returns on thoroughly researched investments. So, get in touch with your financial advisor/ tax consultant and plan your taxes now.

Try to clear your debts

Whether it is a home loan or a car loan, take account of all your debts at the beginning of the financial year. Clearing your debts should be your priority. You should try to clear the most expensive debts first and then move down the ladder. Apart from home loan, which would help you to save some taxes, you should make sure to clear all other loans as soon as possible. Never accumulate any loan on credit cards as their interest rates are astronomically high compared to all other loans.

Insurance cover

Take account of your current insurance covers including your health cover. If you do not have a proper life insurance cover already, sit with your financial advisor and find out the right amount of cover that you would need to protect your loved ones and buy a policy as soon as possible. You should also check the status and cover of the health insurance for yourself and your family members. Make sure that all your insurance policies are up to date without any dues and also have a sufficient amount to keep up with your current standard of living. If you find that your existing insurance cover lacks sufficient funds, then buy an appropriate top up for your policy.

By following these 5 simple steps you can start this financial year in a good way and you can be sure to gain more wealth at the end of it. These steps will also help you avoid the last minute tension and stress that you might have to face otherwise.

Tips for a clean start for this financial year

 Tips for a clean start for this financial year

• by Dinesh Randive

This April, take the time to start a fresh financial calendar by cleaning up your finances. You can achieve this by first clearing all the clogs, take account of your finances, check your debts and evaluate your investment portfolio. This is just similar to clearing the clutter in your kitchen or bedroom closet. Here are some simple tips to gear up for a better financial year.

Design the new financial calendar

As we know, the first step is to list your financial goals – both short term and long term goals. Next, you have to pick the right investment plans to fit these goals. Now design your new financial calendar that will prioritize your requirements according to your goals and timeline. Your calendar should also include the dates for tax filing, investment payment dates, policy premium dates, and any other EMI dates as well.

Take account of your finances

Take into account your income and expenses. Compare the data with your budget. Take into account all your utility and credit card bills. Make sure to set the room for checking your income/ expense report with your budget on a regular basis in your new financial calendar. Check if you are going overboard of your budget in any area and if there are any such cases; see how you can get them back on track.

Revisit your investments

We all know that in order to achieve better returns from your investments, you need to keep a regular watch on your investment portfolio. So, when you are starting your new financial calendar year, make sure to take the time to go through your current investments, your budget and requirements, and ways to compensate for the investments that are not doing well. There may be changes in your requirements this financial year compared to last year. So, you need to set your financial calendar such that you will have the arrangement to check your investment portfolio periodically.

Check all your outstanding loans

Loans/ debts are a very important element of your finances. By clearing your loans as quickly as possible, you can accomplish your financial goals easily. Too many outstanding loans and irregular repayment of loans can affect your credit score. Prioritize and clear the loans that have higher interest rates first. Any outstanding credit card bills will be your highest priority as they are the ones with exponential high-interest rates. Clearing home loans should be the last one as they help you to save taxes.

Look into your insurances

Last but not least, when starting a fresh financial calendar year; evaluate your existing life insurance and health insurance policies. Make sure that they are up to date and in accordance with your current standard of living. If you do not have adequate or no insurance cover so far, then now is a good time to purchase a top up or a new insurance cover respectively.

Investing for the first time? Consider these tips before you begin.

 Investing for the first time? Consider these tips before you begin.

• by Dinesh Randive

Getting that first salary from your first job in your hand is always a never forgettable moment. As you start earning, you get financial independence to spend as well as to save. Handling money differs from one individual to another, in other words, it means that the way one spends and saves money is quite different. However, what you should be careful about is not to take your financial independence that you have for granted and become a spendthrift neither become too concerned about saving money for future and cut short on the things that you need to enjoy now. You should grow a good savings routine, be it big or small and invest your money properly in a planned manner. Here are some tips that will help you if you are just starting to invest money.

Plan your financial goals

Planning is the first basic step for investment as with any other task in life. You should have clarity about your short term and long term requirements and plan to save for them accordingly. This will help you to decide the amount that you need to invest and the time period for each investment.

Do your homework

It is important to do proper research patiently about the various investments options available. You cannot skip this step as this will not only help you to reduce your loses but will also give you a clear picture of where to invest to get the maximum returns in the timeframe that you need it. If you think that you do not have the time to do the groundwork, you can always get help from professionals, your financial advisor on this.

Start early

You should always make sure that you start your savings/ investments as soon as you start earning. Though you might not be able to contribute a considerable amount initially, it is always good to start as early as possible to get yourself into that routine and most importantly to reap the benefits of compounding.

Maintain a balance

You should always aim at striking a proper balance between earnings, future income, and investment. You should neither spend all the money nor save/ invest everything depriving yourself of the small but meaningful treats. As years pass, your earnings, your expenses and your standard of living everything will slowly rise. You should make sure to take into account all these when you start investing and make room to accommodate all of them.

Calculate your risk capacity

Someone said, “The biggest risk is not taking any risk”. It is true and you might not be able to achieve bigger goals in life if you refrain from taking risks. The same applies when it comes to investments as well. You should have a good understanding of your risk-bearing capacity and take some efforts to take up some risks while investing. At the same time never go overboard with your risks taking capacity to earn more returns.

 

The Important Financial Planning Aspects

• by Dinesh Randive

People these days are well aware of the importance of investments. They also make sure to invest their money in different schemes. However, what people fail to understand is that without a goal or a proper investment objective, their investments solve no purpose.

Investing is a broad portfolio without proper calculations or goals might not fetch the returns that you expect and you might even end up with losses in some of your investments. This can be corrected by approaching investments in a systematic manner. Here are 5 important aspects that you need to consider before you start investing.

Goal

It is imperative to know and understand your needs and what you would like to achieve in the financial front. Setting up your long term and short term financial goals will be your starting point of financial planning. Always remember to make accommodations for inflation when planning for your financial goals.

Insurance

The most important aspect of financial planning is insurance planning. Always remember not to mix insurance and investment. It is recommended that one opts for a Term insurance plan to get the right cover at a better rate.

Medical insurance cover is also equally essential. This will help to take care of the expenses during medical emergencies.

Tax

The next step in financial planning is to plan for your taxes as this will reduce the money outflow in the form of tax deductions. There are a lot of good options available to reduce your tax under 80C. Apart from this, one can receive an additional tax benefit of up to 50,000 through NPS investments under section 80CCD.

Expense

Budgeting and expense tracking are two things that people either fail to do or they do not consistently maintain. It is very important to frame a budget and keep track of your expenses. This will help you to cut down on unwanted expenses and improve your savings/ investment. As a thumb rule, the expenses should not surpass 40% of the total income.

Retirement

Though people understand the importance of planning for their retirement, it is ignored for the most part of the earning phase or compromised for achieving other financial goals. It is very important to plan and start investing for your retirement. The retirement corpus that you accumulate has to cover for nearly 15-20 years of no income phase of your life.

It is not enough if you understand and follow all the above aspects of financial planning. You should ensure that before investing you research extensively about the option that you are choosing and then invest. It is a good choice to get assistance from a professional rather than doing it all by yourself. So, get in touch with your financial consultant today to design and execute a successful financial plan.

The Golden Rules of Money

 The Golden Rules of Moneyby Dinesh Randive

Money – It is not just a piece of colorful paper with numbers on it. Money is what that is making the world to wake up and to go to bed. Money is what every individual is after. But not everyone is successful in earning money or to grow the money that they have to make wealth. So, what is it that many people are missing out, yet some people are so good at? The rules are the same for everyone; whether one finds it easy or difficult, if people follow the basic rules given below, then everyone can sure see success in creating wealth.

Emergency fund

It is good to be positive in life. But that doesn’t mean that you should never think of worst-case situations. It is very important to be prepared for emergency situations. You should keep aside a sufficient amount as an emergency fund. This would come handy not only any medical emergencies but also in case you happen to lose your job. Apart from maintaining an emergency fund, it is equally important to have appropriate life insurance and medical insurance policies.

The plastic money cards

The plastic money that you have in your wallets in the form of credit cards and debit cards are helping you to spend money without actually touching it. When you count the paper currency by hand and spend it, you are definitely bound to be at least a little aware and cautious of your spending habits. However, with plastic cards, most times you tend to overspend. The important thing to keep in mind about using plastic cards is that you have to make sure to repay what you have borrowed in full. Your credit score rating falls down when you keep accumulating your loans that are borrowed through plastic cards without repaying in full. A good credit score is vital to avail loans in the future.

Start early

“Early bird gets the worm.” This quote can be applied to emphasize that you need to start saving and investing early in your life in order to attain your financial goals in life. It is recommended that you start saving and investing as soon as you start your first job and earn your first salary. When you save over a long period of time in the proper channel, your interest and principal gets compounded. The compounding power of money is more than what you may think. You can use mutual funds to save/ invest regularly and enjoy the power of compounding.

Don’t be afraid to take risks

No pain, no gain. Now that you have decided to start early in life to save/ invest, you should be ready to take some risks with your investment choices. Nothing wrong in playing safe; but you might also not be making high gains. Make use of normal bank savings account to save for short term financial needs as well as to secure your emergency fund as you might need to be able to access this quickly and easily. However, for long term financial goals take some risks and invest in options such as mutual funds. Only when you take some risks and stay invested over a long duration, you can create wealth and make your money earn money for you.

Diversify

Never put all eggs in the same bag. Investment is all about the extensive research and more diversification. Since investments are for the long term, you can make high returns from it only when you put your money in a minimum of 3 to 4 different options. This is important because if one option (stock or fund) is not doing well, then the other options will compensate for that loss. Once again, when you invest in mutual funds you spread your money through various different investments.

Retirement corpus

Like an emergency fund, saving for your retirement is another most important and inevitable financial decision you will have to make. Never keep this as your last priority thinking that you have enough time to save for it. It is not only crucial to start early for building a decent retirement corpus, but you should also ensure not to dig from your retirement corpus to feed any other financial obligation in life. Like all other financial goals such as your children’s education and marriage, your retirement corpus is also equally important.

Know your assets and liabilities

Simply put, assets bring in money, but liabilities take away money. So, you should always see to it that you have minimum liabilities and more assets. You can also find ways to convert your liabilities into assets. Minimize spending more on luxury automobiles and bigger house as these will incur more costs in the future for maintenance and you will gain financially nothing from those. Rather, save that money and invest in another property that you can rent/ lease out to as this will bring in more money.

To summarize, start early and strictly stick to your financial goals. Do not cut short on goal to feed the other. Keep yourself updated with the latest saving and investment tools. If you are not sure of how and where to invest or if you think you do not have the time to do the needed research before investing, it is always good to seek help from a professional. So, get in touch with your financial consultant and set your financial goals to keep going on the right track.

The 5 steps to accomplish your child’s education goals

 The 5 steps to accomplish your child’s education goals

• by Dinesh Randive

Education is the first thing that comes in the mind of every young parent today when they think of a child/ children. To provide the best education possible seems to be the main goal and priority of every parent. The question is how to achieve this goal with the exponentially soaring educational expenses. Whatever be your income, with the proper plan, consistent execution and the right choice of investments, there is no way that you cannot reach your financial goals, which includes your child’s education.

Here are the five basic steps that will help you to easily achieve your child’s education goals or any other financial goal.

Have a realistic goal

The first thing in any financial plan is to have a definitive goal. Know your needs and understand them to define your goal. You can dream big, but you should have a realistic goal so that you can achieve them. When it comes to your child’s education the goal is simple; the primary goal is to support their graduation and the secondary goal is to support their post-graduation. Make sure to plan for it in such a way as to not compromise on your other financial goals.

Fix the time limit

Now that you know your goals, you will also know how long you have to achieve that goal. The earlier you start is always the best. So, say you start planning and investing for your child’s graduation as soon as your baby is born, then you have about 16-17 years and for his/ her post-graduation you have about 20-21 years. Knowing the timeline is very important when you are investing for any financial goal.

Calculate the required goal amount

Research what is the current education fee for the graduation that you wish for your child. Accordingly, calculate the amount that would be required after 16-17 years including 5% inflation for that final amount. This is required to know the minimum monthly/ yearly investment that you need to make spread over these 16-17 years.

Choose the easy and best option for investment

The easy and best option for any kind of financial investment is to keep it regular and small. Instead of aiming to invest big amounts in one shot, it is always best to do comparatively smaller amount, regularly and consistently spread over the given time period. One easy option for it is to invest through SIP or systematic investment plan. You can choose to do it monthly or quarterly. In this way, you will not feel the burden of keeping aside a big amount and you will also be consistent.

You can also do lump sum investment as and when you get some bulk income in the form of bonus or increment.

Pick the right investment means

The last step is to pick the right SIP or stock or bonds or FDs which will suit your requirement depending on the time frame as well as your risk-taking capacity. Simply put, the longer time you have to achieve your goal, you can choose to take higher risks and the shorter time you have you should opt for a safer approach. Even when you have a long term goal, it is good to keep investing systematically in mutual funds and then move that accumulated amount to safe options such as bank fixed deposits or to debt funds during the last two years of the goal.

If you follow these 5 basic steps you will surely accomplish your child’s education goals. You can consult with your financial advisor before you start investing to pick the funds that will suit you the best.

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Did you know about Human Life Value?

• by Dinesh Randive

Do you know what should be the sum assured amount when buying your life insurance? Human Life Value or HLV is a term commonly used in the life insurance sector. In simple terms, human life value is an estimation of the financial value of a human life. This is an estimation of how much money you need to maintain the standard of your lifestyle and meet your financial responsibilities. Usually, HLV is calculated by estimating your income each year until retirement discounting for inflation and expressed in current value.

However, it is best to calculate HLV by estimating all the yet-to-be-fulfilled needs like your children’s education, marriage etc., plus all your outstanding liabilities such as loans and mortgages and also keeping in mind your current standard of living. It is better not to go by just your income from date till retirement because whatever be the expected income the needs will remain constant. You must make sure that the insurance cover must be equal or more than the human life value. The goal is that your dependents are well taken care of, whether you are there for them or not with the help of your life insurance policy.

This might be very confusing and difficult to do it all by yourself. So, it is best to approach your insurance agent today and make sure that you buy a policy that provides the right cover using the HLV calculation.

Life Insurance to cover your debts

 Life Insurance to cover your debts

• by Dinesh Randive

It is a shocking fact that only around 10 percent of the Indians have life insurance. Most people often think that buying a life insurance is a choice and that they can think about it when they are nearing their retirement. But, that is totally a wrong assumption. Buying the right life insurance cover is one of the most vital financial decisions that one has to make as soon as they start earning. Why is having a life insurance cover so important? Well, irrespective of how much one earns, the future is unpredictable for anyone. People can die young or old, healthy or by illness, natural or accidental death. So, if you are the sole earning member in the family then your demise could have overwhelming consequences on your family and loved ones. They might not be in a position to handle day to day household expenses, pay off the existing debts and also uphold the current standard of living.

Of all things, dealing with outstanding death is the most difficult one as there is no choice or compromise that could be made in this. No one would want for their family to deal with this kind of financial obligations during a disaster. With the right life insurance cover, you can cover any kind unpaid debts such as a personal loan, a home loan, any vehicle loan, or credit card outstanding balance.

A right life insurance policy will guarantee that all your outstanding debts will be paid if you happen to have any debt that you were still paying at the time of your demise. Nobody would want to hold their family and loved ones in the position where they are left to deal with the financial responsibilities that they left behind. A good and right value life insurance will safeguard that such a day will never come. Be it a personal loan, property loan, a credit loan or any other type of loan, the life insurance policies that you have will help your family to repay all those debts.

The right amount of life insurance cover and the right type of insurance policy that one needs depends upon that individual’s commitments and requirements. Some might need a lump sum amount that would just help his/ her family to maintain their standard of living and to manage daily household expenses. Others might need a lump sum amount to cover existing debts/ mortgages apart from managing daily expenses. Some people might need money to cover their kids’ education and marriage expenses and so on.  But above all, it is very important to make sure that the insurance policy that you buy covers all your outstanding debts apart from covering daily expenses of your family. The total amount of unpaid debts should be the most important aspect that will decide the amount of life insurance cover one needs to buy. Handling the pressure from debt collectors will be the most difficult situation for the family to face during the loss of their loved one. For example, if one has some outstanding debts that total to 30 lakhs, then he/ she should make sure to buy a life insurance policy that will be at least 60 lakhs. This will help the family to pay off the debts and also have a lump sum to take care of household expenses.

Why wait? Contact your insurance agent today to know exactly the right life insurance cover that you will need to take care of all your debts and also to provide a peaceful and appropriate standard of living for your loved ones even after your demise.

 

How to safeguard your child’s education?

• by Dinesh Randive

Education is the most important aspect of every child’s life. Isn’t it the objective of every parent to give the best education to their kids? However, the cost of education is growing exponentially high every year. If you have not planned and saved ahead, then, you will not be prepared to meet the huge educational expenses of your child. You might even fall short of funds and your child could even end up losing a desired or promising educational choice.

So, it is mandatory that as a parent you start planning and saving for your child’s education as early as possible. If you start as early as the baby is born or at least from the day your child starts his/ her preschool, you can definitely accumulate the desired corpus. Irrespective of what your child might wish to study, if you start investing regularly over a long period of time, also taking into account the inflation factor, you are sure to achieve the goal.

Now, LIC can help you reach your children’s educational goals effortlessly through the LIC’s Jeevan Tarun policy. This policy will help you to secure your children’s future with a limited pay option. This is the best investment option for securing your child’s education and future. LIC Jeevan Tarun with its choice of a couple of different cash back and maturity benefits will help you safeguard not only your children’s education but also other expenses such as marriage. This will guarantee that your children will not face any financial problems.

Features of LIC Jeevan Tarun:

• Limited premium payment: You will have to pay premiums only till your child reaches the age of 20. The policy is considered developed when your child reaches 25 years.
• Survival Benefits: Your child gets to profit rare survival benefits during the past five strategy development term. This benefit sum depends on the choice of advantages made at the time of the beginning of the policy.
• Maturity benefits: This plan provides basic reversionary rewards all through the policy maturity term as well as the last bonus at the time of maturity. Additionally, there is a demise benefit where the nominee of the policy is given a basic sum assured amount plus the bonuses.

The 4 options to secure the maturity benefits:

1. Option 1: If you opt for “No survival benefit” you will get 100% of Sum Assured + Bonus on Maturity.
2. Option 2: If you opt for “5% of Sum Assured every year for the last 5 years” you will get 75% of Sum Assured + Bonus on Maturity.
3. Option 3: If you opt for “10% of Sum Assured every year for the last 5 years” you will get 50% of Sum Assured + Bonus on Maturity.
4. Option 4: If you opt for “15% of Sum Assured every year for the last 5 years” you will get 25% of Sum Assured + Bonus on Maturity.

Benefits of LIC Jeevan Tarun:

• The plan offers long term bonuses along with survival and development benefits.
• If the premium payer dies, then there is no need to pay any more premiums for the rest of the period of the policy. However, the policy will still cover the candidate till the maturity and after maturity, the basic sum assured and the bonuses will be given to the candidate.
• The risk coverage in LIC Jeevan Tarun starts from when the child is 8 years old, or 2 years from the plan’s start date.
• If the event of the death of the insured person, the sum assured along with the incurred bonuses, that will be around 10 times that of the premium or 125% of the sum assured will be paid. This amount will be at least 105% of the total premium paid to that date.
• Waiver Benefit Rider can be opted along with this plan.

Thus LIC’s Jeevan Tarun policy is your best option that will help you to secure your children’s future; that covers their education as well as marriage expenses. It is vital to be systematic, consistent and continue investing until you reach the goal. Invest in LIC Jeevan Tarun today to meet the growing educational expenses.

 

All about life insurance policy and tips to choose the best one

• by Dinesh Randive

One of the financial decisions that you will have to make is buying a life insurance policy. This is not a choice and you have to buy a life insurance cover for yourself if you are the breadwinner of the family. A right life insurance coverage goes a long way in helping your loved ones maintain the standard of living, meet all financial needs such as children’s education and marriage and even your spouse’s old age requirements even after your demise.

In this article, we will see what a life insurance policy is and how to pick the right one that will fit your needs.

Life insurance policy

A life insurance policy is a contract where the insurer pays the insured an Assured sum in the event of his/ her death or on the maturity of a policy. This contract also mentions that the insured pays all the premiums for the policy as per the contract.

Basic advantages of life insurance policy

• Financial freedom and security to your family
• Source of income for your family in the event of your demise
• Retirement security for you and your spouse
• Helps to pay debts
• Children’s Education and marriage
• For your short-term and long-term financial goals

How to pick the best life insurance policy?

There are a few basic things to consider before you buy a life insurance policy. Each individual’s needs are different and so the policy that is suitable for your friend need not be right for you. So, consider the factors given below to pick the right insurance policy.

1) Insurance cover

The key factor to consider before buying an insurance policy is the expected amount of insurance cover or the amount of money that is required. This amount should be able to secure your family’s financial needs and maintain the standard of living. You should take into account the number of dependents and the important financial needs of each member to arrive at the right number. Always remember to include inflation while calculating the long term requirements.

2) Age

The cost of most insurance policies is dependent on the age of the insured. The earlier you buy, the lesser you pay. So, the next point to consider while buying an insurance policy is your age. It is recommended that you buy the right policy as early as possible and when you have less number of dependents.

3) Retirement and financial goals

Life insurance policies are not just to protect your loved ones when you are no more. They can also be helpful to you during your retirement. Pick the right kind of policy will help you to build that needed retirement corpus along with the added advantage of securing your family’s financial needs when you are not around. This will help you to live a peaceful retirement life.

Life insurance policy can also help you achieve your short term and long term financial goals including your children’s education and marriage.

4) Individual requirements

To pick the right life insurance policy one has to choose the vital requirement for which the insurance policy is bought. If you are the breadwinner of a family with many financially dependent individuals, then buying the right life insurance is very important.

5) Smokers

If you are a smoker, then keep in mind that you will be paying higher premiums as compared to non-smokers.

6) Debts

If you have any current debts, then you should choose an insurance plan that provides a higher loan facility.

7) Risk appetite

If you are comfortable taking high risks to get good returns, then opt for unit-linked life insurance plans. These serve as high return investments apart from providing life insurance cover.

8) Riders

Riders are supplementary items, which the insurance company gives to the insured. They can get these items by paying extra premiums. Riders help in enhancing the insurance policy coverage. Some of the popular riders available are:

• Accidental Death Benefit Rider
• Accidental Total and Permanent Disability Benefit Rider
• Waiver of premium
• Surgical Care
• Hospital Cash
• Critical Illness Rider

Not all riders are provided by all insurance companies. You should check on what riders the company offers before you pick your insurance plan with that company.

Tips to Choose the Best Life Insurance Policy

Other than the points discussed above, there are other items that you have to look into while picking your life insurance.

• Evaluate your long-term and short-term financial goals and needs.
• If the sole purpose of the insurance plan is to only provide financial security to your loved ones, then it is better to choose a term insurance plan as it gives a higher sum assured at a lower cost.
• Do sufficient research and compare various policies offered by different providers.
• Read the details of the protection designs. Check the inclusions and exclusions of the policy.
• There are some providers that give riders included as a part of the plan. Check if such plans fit your needs as it will save money.
• It is better to go with annual premium payment as it is offered at good discounts.
• Depending on the financial needs of your family, you can choose the final payout plan.

It is always a good idea to seek help from professional insurance agents who can come up with the best policy based on customer’s needs.

 

Did you know that LIC offers 4 different bonuses??

• by Dinesh Randive

Unlike other insurance companies that offer only one or two bonuses to their customers, LIC offers 4 different types of bonuses. Many of the LIC plans come with more than one type of bonus; however, the bonus is paid to the policyholder only when the policy matures or if a death claim is made. Let us see what these 4 different bonuses that LIC offers are.

• Simple Reversionary Bonus

Simple Reversionary Bonus is also known as just ‘Bonus’. It is the amount that is declared for every thousand rupees of the Sum Assured for every year. This bonus then becomes a portion of the assured benefit of the policy. If the policy is surrendered before the completion of the entire policy term, then the insured person will not be paid the entire bonus amount as this bonus is calculated for the full term.

Sample calculation

Let us say that the Simple Reversionary Bonus for the current year is Rs. 50/ thousand rupees of the Sum Assured.

Sum assured is Rs 1,00,000.

Then Bonus for the current year is

50 x (100,000/1000)

Which will be, Rs. 5000

• Final Additional Bonus (FAB)

The FAB or Final Additional Bonus is given as a token of gratitude to the customer for selected policies that are for long durations. FAB is computed only once when the policy matures or when death claim is made. FAB is calculated based on the number of years that the policy has been running and the Sum Assured.

Sample calculation

Say, the time duration of the policy is 20 years

Sum Assured is Rs 100,000.

Say the FAB rate is Rs. 100/ thousand rupees of the Sum Assured.

Then the FAB bonus amount will be

100 x (100000/1000)

FAB = Rs 10,000

• Loyalty Additions (LA)

The Loyalty Additions bonus is given to customers as a gesture of appreciation as they have been loyal customers to LIC for a long time. LA is computed usually at the end of the policy term. However, there are some policies for which LA is computed every year after the completion of a specified number of years. This is not an assured bonus and it is dependent on how LIC has performed that year.

Sample calculation

For example, a policy has existed for 20 years.

The LA rate that is announced is say, Rs. 40/ thousand rupees of the Sum Assured.

Sum Assured is Rs 1,00,000.

Then the LA bonus amount will be

40 x (100000/1000)

LA = Rs 4000

• Guaranteed Additions (GA)

The guaranteed additions bonus is announced at the time of providing a policy to customers. Though this bonus is announced at the time of purchasing the policy, the bonus amount is paid only when the policy matures or when death claim is made. If guaranteed additions bonus is announced for a policy, then usually other bonuses are not offered.

Sample calculation

Say, the GA rate is Rs. 100/ thousand rupees of the Sum Assured

Sum Assured is Rs 100,000.

Then the GA bonus amount will be

100 x (1,00,000/1000)

GA = Rs. 10000

Options to Fund your Child’s Education

 

Option 1 – Invest now earn interest and returns when your child needs it

 

Option 2 – Borrow money and pay huge interest

 

Option 3 – Use your retirement funds and depend on somebody for retirement

 

Which one would you like to choose?

We can help you with Option 1