This document discusses how life insurance can help with comprehensive financial planning by protecting against risks like death, accidents, sickness, and providing retirement income. It notes that people spend more time planning vacations than financial risks. Life insurance offers investment options, helps with retirement through annuities, and provides tax benefits. It can also help with estate planning through policies that pass funds to beneficiaries. Overall, life insurance is positioned as an important tool for holistic financial planning and protection from life's uncertainties.

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.
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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 but
they just fail to plan, given they spend more time planning Retirement Planning
their 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 2006
Insurance 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 by
as per the rules laid down by Insurance Regulatory and 123%. Assuming average life expectancy of 75-80 yrs, a
Development 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 this
2) Unit Linked Plans: The premium amount is invested segment with their Superannuation and Deferred Annuity
as per the customer’s choice. which is available in the form schemes.
of a number of funds ranging from Pure Debt funds to
Pure Equity funds. These plans have multiple benefits like Tax Planning
diversification, free switching between funds and premium Most of the time, insurance is perceived as an instrument
allocation 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 uncertainity
Uncertainities Whole Life to Rs 30,000
Covered 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 a
Pension 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
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