What is Insurance?

Life Insurance is the key to good financial planning. On one hand, it safeguards your money and on the other, ensures its growth, thus providing you with complete financial well being. Life Insurance can be termed as an agreement between the policy owner and the insurer, where the insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness, critical illness or maturity of the policy.

Life insurance plans, unlike mutual funds, are beneficial when you look at them as a long term avenue of investment which also offers protection through life cover. Life insurance policies are broadly categorized into 2 types; Traditional Plans and Unit Linked Insurance Plans (ULIPs).

Traditional policies offer in-built guarantees and define maturity benefits through variety of products such as guaranteed maturity value. The investment risk in traditional life insurance policies is borne by life insurance companies. Additionally, the investment decisions are regulated to a large extent by IRDAI rules and regulations, ensuring stable returns with minimal risk. Investment income is distributed amongst the policy holders through annual bonus. These policies are ideal for policy holders who are not market savvy and do not wish to take investment risks.

ULIPs, on the other hand provide a combination of risk cover and investment. More importantly they offer a flexibility to decide your risk taking profile.

Here's a list of the Life Insurance plans you can benefit from:

Endowment Plans are an ideal choice for the risk-averse customer. Endowments are long-term, regular savings plans with a built-in life cover.

Provided you have paid all your premiums, at the end of the term the policyholder receives the sum assured plus accrued / guaranteed bonuses that have been declared over the years, as a lump sum. In case of the unfortunate death during the term of your plan, the sum assured, will be paid out as a lump sum with the bonuses that the policy is entitled to.

The benefits of Endowment Plans are as follows:
  • Available as money back plans also.
  • Option to avail a host of additional rider benefits.
  • Cover your life for a longer period of time.
  • Loan facility can be availed against most of the plans.

Whole Life Insurance plans provide cover throughout your lifetime. The premium could be paid for as long as a lifetime or for a limited period Unlike endowment plans they do not carry a maturity value and pay the sum assured to the family in case of the unfortunate death of the policyholder. A Whole Life Insurance plan assures that your family is protected against financial loss that could occur your death.

Term Insurance helps the customers in safeguarding their families from financial worries that arise due to unfortunate circumstances. Term plans are pure risk cover plans with or without maturity benefits. These pure risk plans cover your life at a nominal cost Term plans also let you avail the benefit to cover your outstanding debts like mortgage, home loan etc. In case of something happens to you, the financial burden is borne by the insurance company and not your loved ones.

Term Plan offers you the following benefits:
  • High insurance Cover at lower costs.
  • Financial security against loans and mortgages.
  • Single premium payment option available.
  • Available with host of Additional rider benefits.

The purpose of health insurance is to help you overcome unforeseen emergencies without compromising on any other financial goal. Health insurance helps you pay for all your medical expenses. A health insurance policy also gives you the benefit of covering your loved ones under one plan to avoid any financial constraints arising on account of a medical emergency.

The benefits:
  • Cashless hospitalization in all major hospitals pan India.
  • Coverage of pre and post hospitalization expense.
  • Coverage of all major day care treatments.

Group insurance covers a group of people, usually members of societies, employees of a common employer, or professionals. All employees or members are included under one 'master policy' owned by the employer /nodal agency. Group Insurance covers both life and savings products along with options like Superannuation and Health.

Retirement Plans make sure that you have support in the twilight years of your life. The savings you set aside today become your wealth and support in the years to come.

Retirement plans are of two types:
  • a. Immediate Annuity Plans
        These plans allow you to convert a sum of money into a guaranteed series of payments for a definite period or for life.
  • b. Deferred Annuity Plans
        This plan allows you to save regular amounts of money for a peaceful retirement. This type of annuity has two main phases, the
        accumulation phase which allows you to invest and save money into your account, and the payout phase in which the plan is
        converted into regular annuity installments and payments are received.
Retirement Plans offer you benefits such as:
  • An alternative to superannuation's and provident fund;
  • Compulsary Saving
  • Saving Tax
  • Choice of Open Market Option, i.e., you have the option to purchase an immediate annuity from your current insurer or from any other life insurer as recognized by IRDAI.

Insurance today offers a very simple assurance in terms of monetary support to a child and family incase of death or disability of parent and helps ensure that the shortage of fund never hampers dreams or aspirations of your child. In short, Children's Plans ensure a secured financial future for your child.

As parents, make sure you keep the following factors in mind before choosing a child insurance plan:
  • Should cover your child throughout even if something happens to the parent.
  • The payout should be at a age when the child requires it the most, i.e. when he wants to enter his dream college or needs to start his career.
  • Should provide a regular source of income so that child doesn't have to compromise on his dreams and aspirations.
  • Flexibility to move from one investment fund to other by the way of switching of funds
  • Your child should not be forced to pay the premiums of the policy.

Wealth plans invest the premium in to the equity, debt and cash markets by allocating units, which like any other mutual fund have a NAV. You are free to switch between one fund to another depending on the risk factor you wishes to bear. They offer better returns than traditional endowment plans and offer a great deal of flexibility along with great returns making them the finest product offering.

The benefits:
  • Availability in single premium and regular premiums options
  • Investment funds ranging from index funds to mid-cap funds and debt market linked funds.
  • Option to choose from a host of additional rider benefits
  • Tax Benefits as per existing tax laws
  • Flexibility to move from one investment fund to other by the way of switching of funds
  • Option to infuse additional capital by the way of Top Ups to give your investments a boost.
Variable Insurance Products are of two types:
  • a. Variable Linked Insurance Products
  • b. Variable Non-Linked Insurance Products
Variable Linked Insurance Products shall be offered in any of the following manner:
  • Linked Individual Non-participating
  • Linked Fund based Group Non-participating.
Variable Non-Linked Insurance Products shall be offered in any of the following manner:
  • Individual Non-participating
  • Group Savings Non-participating
  • Fund based Group Non-participating
  • Individual participating
  • Group Saving participating
  • Fund Based Group participating

ULIPs offer a complete selection of high, medium and low risk investment options under the same policy. You can choose an appropriate policy according to your risk taking appetite, coupled with the opportunity to switch between fund options without any additional expense for specified number of switches. ULIPs provide the flexibility to choose the sum assured and investment ratio in the annual targeted premium. It also offers the flexibility of one time increase in investment portfolio, through top-ups to avail investment opportunity offered by external environment or own income flows.