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There are hosts of insurance products available to meet such needs. Equally important is the amount of sum assured. Unlike developed countries, most Indians don't pay much attention to having an adequate insurance cover.

Individuals need insurance to protect them against the risk of dying early, risk of living long, risk of surviving a dreaded disease, risk of living with total and permanent disability, risk of high medical expenses, so on and so forth. There are hosts of insurance products available to meet such needs. Equally important is the amount of sum assured. Unlike developed countries, most Indian don't pay much attention to having an adequate insurance cover.

As per the available public data, life insurance accounts for only 19 per cent of total household savings. Further, life insurance penetration in India is merely 2.72 per cent as compared to 3.74 per cent in Asia and 3.99 per cent in Europe. Globally, the average rate of life insurance penetration is 3.47 per cent. Insurance density (premium per capita) is another measure of insurance purchased in a country. Life insurance premium per capita for India stood at $46.5 as against $229.5 for Asia and $961.9 for Europe.

World's average insurance density stood at $353, which is about 7.5 times the life insurance density of India. This clearly reveals that we as a community are underinsured. More needs to be done to increase awareness about life Insurance.

In case you are thinking that the under-insurance is because of the rise in the rates of insurance premium, then you are wrong. Industry estimates show that in the last four years, the rates of premium have increased by a mere 3-to-4 per cent with a CAGR of 2.79 per cent for sum insured of Rs.2-3 lakh and 3.29 per cent for Rs.5-10 lakh. So, what is the actual reason?

The main reason behind the insufficient amount of cover is that people haven't revised their health cover or term insurance that they have bought. And in case of coverage sponsored by employers, it has stagnated. Industry estimates show that Indians who are full-time employees in a company are of the notion that the coverage that they receive under the company's group scheme is sufficient. Because of this, they have ended up paying hefty medical bills whenever they have experienced a medical emergency.

While the statistics show that 22 per cent of India's population is insured, it is majorly because of different government schemes. The harsh reality is that only five per cent Indians are insured.

Out of which, two-thirds are under-insured. In recent times, the minimum expense of a major medical procedure is Rs.3 lakh in private hospitals and if the hospital is a corporate one, the cost will only rise higher because of cross-referrals and multi-disciplinary treatments. The same study also shows that in coming times, the healthcare costs are bound to catch up with other developed foreign countries. It also shows that the percentage of the claims reimbursed or paid vis-a-vis the amount of the medical bills is falling, especially when it is above Rs.3 lakh.

Life Insurance perhaps is the best way to protect your loved ones. It is not only a financial choice but is also an emotional decision. There are many compelling reasons to buy life insurance:

  • People buy life insurance as a tool to protects their spouse and children from potentially devastating financial losses that may occur in case of one's demise
  • Life insurance protects and provides financial relief for those who need to carry on without the person who's moved on to other realm "Life insurance is an expression of love and care for your family "   
  • By protecting the financial future, an insured enables his / her loved ones to maintain a certain lifestyle, in case of a grave eventuality
  • Life insurance provides the deceased's family a range of options that aids them repay loans, meet EMIs and meet other ongoing expenses


Is Life Insurance from your employer sufficient? It is noteworthy that about half of the working population is self-employed and there is about one third of working population who are casual / contractual workers. Such self-employed and contractual/casual workers may not necessarily have any formal insurance and therefore are likely to be significantly under-insured.  

Most employers generally provide life insurance and Mediclaim coverage to their employees. The need of insurance for everyone may be different and the group insurance coverage may not be sufficient to protect a family against the financial stress in case of the bread earner's demise. In event of unfortunate death of the breadwinner of the family, money is needed to:

  • Repay debts, such as car loans, home loans, personal loans, educations loans, Credit Card dues, etc.
  • Meet ongoing expenses of the family, such as day-to-day expenses, educational expenses, housing expenses, medical /hospitalization costs
  • Under employer-employee Group Life Insurance, most employers provide an insurance coverage of roughly equal to one-time annual salary. A few employers provide higher coverage, say up to three times the annual salary or some other graded sum assureds


How much Insurance should one take? Every individual has a different family status and financial responsibilities, which impact their insurance needs. The rule of thumb is to take insurance coverage, which is sufficient to repay all your liabilities and debts. You should have enough cover to secure future costs that your family will need to incur. Be mindful to include inflation over the next 15-20 years. You may also want to take into consideration existing wealth (without any lien) that you have built, which if required, may be disposed of by family. It may not be appropriate to consider your home as wealth, because the family will require it to stay.

The employer-employee coverage is available till the time you are in employment. The cover will expire as soon you cease to be in employment. Therefore, it is important to take additional coverage in form of independent individual life insurance policy for appropriate sum assured. You may like to check with the same life insurance company, which has covered you for the group employer-employee cover.

Source: http://www.businesstoday.in

Here are a few points to consider for speedy settlement of life insurance claims.

Nominees must go through a cumbersome claim process when material facts are not disclosed in the proposal form. You, therefore, need to be careful while filling a proposal form as any error might deny a death benefit to your family when they need it the most. Here are a few points to consider for speedy settlement of life insurance claims. 

Proposal Form
This is the most important and basic document that you need to fill in while applying for insurance. It is filled to capture important information like name, age, address,etc. Hence, ensure that you fill in the details correctly in the proposal form

Correct Documents
Any irregularity later can trouble a beneficiary at the time of claim settlement. Therefore, make sure that you submit correct age proof and medical details. The claim is likely to get denied if it is revealed later that wrong documents were submitted at the time of buying a policy.

Disclosures
If the claim occurs within three years from the date of risk, or from its revival, insurance companies normally classify it as an early death claim. In such cases insurance companies carry out a detailed investigation. Claims made within 3 years might get rejected on the grounds of non-disclosure and misrepresentation and additional documents may be called for to make certain that material facts were not suppressed at the time of proposal. Therefore, do not withhold any material information such as pre-existing medical conditions or other life insurance policies that you hold, as any mismatch in information can lead to denial of claim. Apart from pre-existing diseases you should also be truthful about your tobacco and alcohol consumption levels.

Pay Premium Regularly
It is very important to pay your premiums regularly to keep the policy in force. If a policyholder fails to pay a premium on a policy and the policy lapses, then the insurance company is not liable to pay the full sum insured. Such a lapsed policy, however, can be made a paid-up policy (in case of traditional plans). In a paid-up policy the sum insured is reduced to an amount based on the amount of premiums already paid.

Appoint a Nominee
It is not compulsory to fill nomination details. But having filled it saves you later from the exercise of running from pillar to post.  For example, insurance companies ask for a succession certificate in absence of nomination. The process for obtaining a succession certificate can be cumbersome and time consuming for a nominee. Moreover, the nominee should also be informed in advance about whereabouts of the policy documents.

Source: http://www.businesstoday.in

Child plan is insurance plan that financially secures your child's future and serves as an investing tool. Child Insurance Plan- a product to secure the future of the child, by insuring the life of a parent. Child plan is an insurance plan that financially secures your child's future and serves as an investing tool. It is an insurance plan that helps to build a corpus over time to protect the future of the child and their expenses and in case if the parents die. It is important to have a disciplined approach of investing and to create a safety net and not to lack in terms of money while providing platform for your child's higher education. For example, the management course from IIM which cost around Rs20 lakhs today will cost around Rs60 lakhs in next 20 years at 7% assumed inflation. Similarly, a post-graduation degree from a reputed foreign business school will cost around Rs50 lakh which will go up to 2 crores in next 20 years at 7% assumed inflation.

Features and benefits
  • A child plan comes with multiple benefits, along with the basic maturity benefit. The three main benefits of a child plan are death benefit, waiver of premium and maturity benefit
  • If the policy holder dies in middle of the term period, a sum assured as death benefit is paid by the company. The death benefit is provided either inform of school fees and family income or as a lumpsum amount by the company
  • Also in case if the policyholder dies in the middle of the policy term, the premium is waived off; the family or the surviving parent does not have pay for it. The insurance company pays the rest of the premiums and the policy continues uninterrupted till the end of the policy term and the child also receives the maturity benefit when the term ends
  • Tax benefit is applicable on the amount invested U/S 80C and the maturity earnings under U/S 10 10(D)

Type of Insurance Plans
  • The types of plans available in the market are endowment plan and ULIP. It depends upon the risk appetite of the insured, whether he wants to go for ULIP child insurance plans with market linked returns or endowment/guaranteed child insurance plans
  • For child's education, ULIP is the suitable choice because when staying invested for long-term ULIP's provide higher returns

Factors To Keep In Mind
  • While planning for a child's expenses it is necessary to make sure that education inflation is taken into the account
  • Both endowment and ULIP child insurance plan generally comes with age criteria, to ensure that pay out happens in a manner that is related to the child's education. It is imperative to decide the time when the fund will be required, which mostly is when the child attains 18 years
Source: http://www.businesstoday.in
As closing your credit card would reduce your total available credit limit, it might increase your credit utilization ratio. This in turn will reduce your credit score.

Financial products in India usually come with their own sets of myths and misconceptions. Credit cards are no exception. Some of these misconceptions stop people from applying for credit cards, others lead to wrong usage. Both can have adverse effects on your financial life. Here is a list of major credit card myths that need to be set straight.

Credit cards are not good for your financial health
Many refrain from applying for credit cards fearing increased spending and high interest rates on failing to repay credit card debt. While it might be true for those prone to impulsive spending or lacking financial discipline, credit cards can add great value to your financial health. As making payments through credit cards is equivalent to taking loans, they help build credit histories for those who have never availed loans. Secondly, they finance your regular expenses for free by offering interest free period on your credit card transactions for up to 50 days. Finally, they also save money for you by offering attractive discounts, cashback offers, reward points etc. on your card transactions.

Paying minimum due amount does not attract interest
Many cardholders believe that just paying the minimum due amount will save them from paying interest or finance charges. However, paying minimum due amount would only save you from late payment penalties. You will still be charged finance charges on the rest of the outstanding amount. Moreover, the interest-free grace period on your fresh transactions will stand revoked till the repayment of the entire outstanding bill amount.

Signing on the back of the credit card is not necessary
Most credit card holders ignore the rule of signing on the back of their credit card simply because merchants do not care to tally the signature on the credit card slip with that on the card. Card issuers clearly state that a card without authorized signature is an invalid card. Thus, the merchant has the right to refuse an unsigned card. Similarly, signing your credit card reduces the probability of its misuse on its theft or loss as it allows the merchant to cross-check signatures.

Credit limit increases should be best avoided
Although a higher credit limit may tempt you to increase your spend, it would also allow access to higher credit in case of financial emergencies. Also, a higher credit limit is beneficial for your credit score. That is because your credit utilization ratio, which is the proportion of the credit limit availed by you, is one of the key parameters while calculating your credit score. As lenders usually prefer applicants with credit utilization ratio of less than 30%, credit bureaus too score such people higher.

Closing unused credit card will improve credit score
While closing your unused credit card is always advisable, especially, since it unnecessarily drains your finances in the form of annual or renewal fee, doing so might reduce your credit score in the short term. As closing your credit card would reduce your total available credit limit, it might increase your credit utilization ratio. This in turn will reduce your credit score.

Source: http://www.financialexpress.com
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to webmaster@licsridhar.com.
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. licsridhar.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. licsridhar.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.