8/6/2019 01-Why Buy Life Insurance

1/17

May 2005 Why buy Life Insurance?

Why Buy Life Insurance?Why Buy Life Insurance?

8/6/2019 01-Why Buy Life Insurance

2/17

May 2005 Why buy Life Insurance?

What is Life Assurance?What is Life Assurance?

A plan that alleviates the effect of death,disability and old age.

The only financial vehicle that pays a lump sum

on death, disability, hospitalisation, criticalillnesses.

Provides peace of mind

An effective tool for Personal Financial Planning

8/6/2019 01-Why Buy Life Insurance

3/17

May 2005 Why buy Life Insurance?

Why Buy Life Insurance?Why Buy Life Insurance?

Provides financial security for the family

. Acts as a toolfor PROTECTION.

Mitigate financial risks associated with Total /PartialDisability; Critical Illness; Hospitalisation Expenses; Old

Age; Death.

The tearing of the Joint Family fabric, makes insuranceattractive for financial independence of the nuclearfamily.

Is a SAVINGS vehicle. Enjoys Tax benefits (Front EndBenefits of Section 80C, 80(D); Back end 10(10)D -Maturity/Withdrawal Benefits are Tax Free)

8/6/2019 01-Why Buy Life Insurance

4/17

May 2005 Why buy Life Insurance?

NEGATIVES

Single Buy HouseStartFamily Retirement

POSITIVES

Education Better job Marriage Children Wealth CreationPlanned Retirement

PrematureDeath Loss of job

Accident &Disability

Critical IllnessUnp

lannedRetirement

Life Insurance mitigates the financial risks of NegativeEvents while boosting the prospects for Positive events

of Life!

1818

8/6/2019 01-Why Buy Life Insurance

5/17

May 2005 Why buy Life Insurance?

Why Buy Life Insurance?Why Buy Life Insurance?

INSTRUMENT

Safety of Capital

Preservation Liquidity

Post tax

returns Tax Efficiency Risk Cover*

Provident Fund High Low Good Good None

Shares Uncertain Good Uncertain Low None

Bonds Average Average Low Low NoneFixed Deposits High Average Low Low None

Mutual Funds Average High Uncertain Average None

Postal Savings Schemes High Low Average Average None

LIFE INSURANCE HIGH AVERAGE GOOD HIGH YES

8/6/2019 01-Why Buy Life Insurance

6/17

May 2005 Why buy Life Insurance?

What do people save for? Buying house/asset creation

Childrens education

Childrens marriage

Holidays

Loan repayment

Retirement

Threats to income/savings! Premature Death

Accidents Disability

Old Age

8/6/2019 01-Why Buy Life Insurance

7/17

May 2005 Why buy Life Insurance?

Money MachineMoney Machine

If you had a moneyMachine that providesyou with a regularincome to pay for yourdaily expensesWould

you insure and maintainthis valuable machine?

8/6/2019 01-Why Buy Life Insurance

8/17

May 2005 Why buy Life Insurance?

Money MachineMoney Machine

For your family you are thismachine.

Do you have sufficient Life

insurance coverage ?

8/6/2019 01-Why Buy Life Insurance

9/17

May 2005 Why buy Life Insurance?

Advantages of Life Insurance: if we liveAdvantages of Life Insurance: if we live

Encourages systematic saving

eliminates personal selection of investments

provides a safe investment

is good property

8/6/2019 01-Why Buy Life Insurance

10/17

May 2005 Why buy Life Insurance?

Advantages of Life InsuranceAdvantages of Life Insurance If we Die!If we Die!

Creates an immediate Estate, in a convenientway

Worth the Face Value Sum Assured

8/6/2019 01-Why Buy Life Insurance

11/17

May 2005 Why buy Life Insurance?

Life Insurance Products essentially serve 3 different needsLife Insurance Products essentially serve 3 different needs

Very importantly, lifeinsurance makes sureyou save and gives youfinancial strength toachieve your mostimportant life goals.

2

Investment

Saving

ProtectionThe first reason tohave life insurance is

to secure yourfamilys financialfuture.

Finally, life insuranceis a safe, long-terminvestment

Money Back Plan

Whole Life/

Endowment Plan

Accident Rider

Term Plan

Indicative Age Group : > 35 years

Indicative Age Group : Upto 35years

3

1Disability Rider

Single Premium / UL

Plans

8/6/2019 01-Why Buy Life Insurance

12/17

May 2005 Why buy Life Insurance?

Insurance Solutions for Age 25Insurance Solutions for Age 25--3535

Major Events are Marriage/Family.

Aspirations are High (Cars, Holidays, ConsumerDurables).

Recommended Insurance Products are: Whole of life /Unit Linked

Term products for covering assets purchased on loan.

Regular premium payment to inculcate savings habits Risk takers can be recommended unit linked products

8/6/2019 01-Why Buy Life Insurance

13/17

May 2005 Why buy Life Insurance?

Insurance Solutions for Ages 35Insurance Solutions for Ages 35--5050

Major Events are Children, Childrens Education,Childrens Wedding

Aspirations are High.

Recommended Insurance Products are: Unit Linked/Childrens Plan for specific planned events like

childrens education, childrens marriage, travel, etc.

Endowment/Unit Linked for aspirations like Car, House etc.

Start retirement planning with deferred annuity products.

8/6/2019 01-Why Buy Life Insurance

14/17

May 2005 Why buy Life Insurance?

Insurance Solutions for Age 50Insurance Solutions for Age 50--6060

Major Event is Retirement

Aspirations are Low (Lifestyle Maintenance).

Recommended Insurance Products are:

Retirement planning with deferred annuity products.

Immediate Annuities

Endowment policies to build up capital to purchaseannuities

8/6/2019 01-Why Buy Life Insurance

15/17

May 2005 Why buy Life Insurance?

How much of Life Insurance to buy?How much of Life Insurance to buy?

Proceeds from Life Insurance should besufficient to take care of the following withoutrequiring the family to liquidate any immovableasset: Continuation of existing lifestyle

Take care of all future expenses including Children'sEducation and Marriage

Repayment of any outstanding loans

Ideally, the regular savings through life

insurance should also be a part of the overallretirement plan of the individual.

The rule of thumb is to have life insurance coverage ofThe rule of thumb is to have life insurance coverage of

88--10 times the gross annual income10 times the gross annual income

8/6/2019 01-Why Buy Life Insurance

16/17

May 2005 Why buy Life Insurance?

How much of Life Insurance to buy?How much of Life Insurance to buy?

Most insurance companies provide a life insurance needassessment calculator that works out insurancerequirements based on the present value of futureliabilities and current assets.

It is advisable to calculate your exact requirement withsuch a calculator.

Life Insurance requirement changes with time,depending on increasing or decreasing liabilities. Youmust keep checking your need every 4-5 years.

8/6/2019 01-Why Buy Life Insurance

17/17

May 2005 Why buy Life Insurance?

Everyone pays for Life Insurance.Everyone pays for Life Insurance.either you pay for it noweither you pay for it now

or your family pays for it later!!!!or your family pays for it later!!!!

Thank You