panorama       Insurance       A Unique Structured Product Covering All       Aspects of Financial Planning       “Most pe...
alternative investments  One cannot eliminate these risks but can surely manage       mize investment risks.them with Insu...
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Insurance iipm

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Insurance iipm

  1. 1. panorama Insurance A Unique Structured Product Covering All Aspects of Financial Planning “Most people don’t plan to fail but they just fail to plan, given they spend more time planning their vacations than doing their risk planning ” Kaushal Mandalia, Associate Financial Planner, Investment Planning, Kotak Mahindra old Mutual Life Insurance Ltd. L ife Insurance Industry is driven by the statement, “Insurance is sold, not bought”. There is an old joke which says, If I have Insurance, I don’t get money if I live, and to get money back, I have to die – Either way I lose”. Life Insurance is not only to get the money back. It is one of the safest tools to protect your income and help your family to fulfill their financial ob- jective irrespective of any uncertainty of life. Out of the plethora of structured products available, Life insurance is the only one that caters to all Financial Planning needs like risk planning, insurance planning, retirement planning, tax planning, investment planning and estate planning. Risk Management and Insurance Planning All human beings are exposed to three major risks – Death, Accident and Sickness. The loss due to these risks is signifi- cant and may severely affect a family’s wellbeing. Taking a home loan of Rs 20 Lacs without Increasing life insurance cover by 20 Lacs can have severe effects on one’s family in case of uncertainties like death, accident and sickness. 14 Need the Dough? January-April - 2009
  2. 2. alternative investments One cannot eliminate these risks but can surely manage mize investment risks.them with Insurance. Most people don’t plan to fail butthey just fail to plan, given they spend more time planning Retirement Planningtheir vacations than doing their risk planning. The economic survey 2005-06 released by Union Ministry of Finance indicates that by year 2026, the country’s popu-Investment Planning lation will touch 141 Crore. The total population from 2006Insurance Products in India come under two variants: to 2026 would go up by roughly 27%. For the same period,1) Traditional Plans: The premium amount is invested the number of people above the age of 65 will increase byas per the rules laid down by Insurance Regulatory and 123%. Assuming average life expectancy of 75-80 yrs, aDevelopment Authority (IRDA). The Investment Risk lies large part of the population will be dependent on its retire-with the Insurer who announces Bonus ever year. This ment income for a period of at least 10-20 yrs.bonus becomes Guarantee on Maturity or Death. Insurance products provide the efficient solution in this2) Unit Linked Plans: The premium amount is invested segment with their Superannuation and Deferred Annuityas per the customer’s choice. which is available in the form schemes.of a number of funds ranging from Pure Debt funds toPure Equity funds. These plans have multiple benefits like Tax Planningdiversification, free switching between funds and premium Most of the time, insurance is perceived as an instrumentallocation in multiple funds, which help customer to mini- for Tax Planning. Tax benefits are available under the fol- lowing sections. • Section 80C and 80CCC: Tax benefits are available up Risk Protecting your Estate GOALS and to Rs 1 Lac per annum Management Planning DREAMS against • Section 80 D: Medical Insurance schemes. amount up any uncertainityUncertainities Whole Life to Rs 30,000Covered Policies • Section 37 (1): Applicable for Keyman insurance, Part-•Pre-matured Death •MWP Act•Accident •Nomination nership insurance and Employer-Employee insurance.•Disability Insurance •Absolute • Section 10 10(D): Tax free maturity - except Pension•Sickness Assignment schemes. Choice of Asset Allocation (Debt, Estate Planning Equity, Market Apart fromt benefits, insurance products can also help aPension Schemes Linked Returns •Section 80C•Immediate with Capital •Section 80D person to do Estate planning•Deferred Protection) •Tax Free 1) Nomination: In case of a policyholder’s death, the•Super Annuation Maturity nominee gets the right to receive the money. Retirement Planning Tax 2) Assignment: If the policy is assigned in favor of a & Employee Benefits Planning beneficiary, then the beneficiary will get the right to re- ceive the money and therefore also gets the right to use the money. Unstable 3) Married Women Property Act: One’s investment in Equity/MF/Debt and Portfolio any asset class, physical or paper, can be dissolved if one Others is unable to serve one’s liabilities (personal or business). Married Women Property Act helps one to protect assets Equity Emergency Fund even if one is unable to meet one’s monetary obligation, Market be it personal or business. Mutual A friend in need is a friend indeed. Though insurance Fund Stable is avoided by the investor community, it is the only friend Debt Portfolio Insurance which remains with you in the time when your family needs Instrument it most. All the important responsibilities towards family, Emergency like child education planning, marriage, retirement planning, Fund You can be and income protection of family are infact exposed to three WORRY-FREE major risks – Death, Accident and Sickness. A smart investor Insurance/ Protection if your Portfolio not only plans the fulfillment of his responsibilities, but also is STABLE makes provisions for such risks. l January-April - 2009 Need the Dough? 15

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