Abhishek Kurahatti

According to Business today's report, “Insurance penetration continues to be a challenge as it only marginally improved to 3.76 percent in 2019 from 2.71 percent in 2001, the Economic Survey 2020-21 shows.”    Insuring one’s life is the most important financial decision one has to make because regardless of income, what cannot be predicted is what the future holds. What can be more devastating than having to deal with the death of a loved one, more so if he or she is the primary caregiver for the family? The least an individual can do is to secure the family's financial future by investing in a life insurance endowment plan. An endowment plan is a type of life insurance policy that covers life as well as helps the policyholder generate regular savings over a specific period to receive a lump sum on maturity. What are your other options?   Term Life Insurance plan   Term insurance is simple- it provides death risk cover for a specified period. In case the life assured passes on during the policy period, the policy nominee receives the death benefit. It is a pure risk cover plan that offers high coverage at low premiums with the option of adding up riders to enhance coverage. There usually will be no payout if the life assured outlives the policy term.   Unit Linked Plans (ULIPs)   A unit-linked plan combines both insurance and investment wherein the premium paid towards a ULIP is partly used as a risk cover (insurance), and part is invested in funds. This way one can choose and invest in different funds offered by the insurance company depending on his or her risk-taking capabilities.   Endowment plan   An endowment plan is a combination of insurance and saving wherein a certain amount is used for life cover and the rest is invested by the life insurance company. In case the individual whose life is assured outlives the policy term, the insurance company offers the insurer maturity benefit with periodic bonuses. Usually, endowment plans are traditional life insurance plans with lower risk on the investment component as on the returns.   Whole Life Insurance   A whole life insurance policy covers the life assured for an entire life, or in some cases, up to 100 years. In this type of plan, the total sum assured or coverage is usually decided at the time of buying the policy purchase and gets paid to the nominee at the time of death along with bonuses if applicable. However, if the life assured outlives 100 years, the insurance company pays out this matured endowment coverage to the life insured.   Money-Back Life Insurance   The money-back plan is a little unique wherein a percentage of the sum assured is paid back to the insured at periodic intervals as a survival benefit. To help the policyholder meet short-term financial goals, companies also declare bonuses from time to time.   Further plans such as child plans and retirement plans are designed to help the individual prepare for the education of the child or plan for his/her retirement in the future. The widely popular endowment plan however helps an individual plan regular savings with minimal risk on the investment component.   At Shriram Life insurance, we encourage individuals between the ages of 30 and 55 to invest in our Assured income plan, which not only helps you secure your family financially but guarantees assured returns on maturity. By choosing a regular income option under this plan, you can claim your maturity amount as periodical payments when in need. What is more? You can also opt for additional coverage by paying a nominal amount for additional protection for events such as Accidental Death/Disability and Critical Illness.

Uncertainty is all around us, more so than today with the ongoing COVID 19 Pandemic. The consequences that it has brought with it have heightened insecurities in the mental health of a lot of us. The need to feel secure and exercise a stronger sense of control in our lives and well-being is higher than ever. How many of us would have considered investing in a life insurance plan or an endowment plan just in the past year?   Investing in a smart life insurance plan is one of the most secure means to protect you and your loved ones against various life uncertainties such as mishaps, accidents, loss of income, death of a breadwinner, etc. Today life insurance plans are also designed bearing in the mind the need of families to meet predictable short-term and long-term financial goals. They are packaged with a list of benefits to help policyholders and their dependents plan financial goals and overcome financial crises smartly.    However before one plans to invest in an insurance plan, it is would be advisable to understand and eliminate the myths and misconceptions around it. Knowing facts is that which can help one make an informed decision and reap all rewards a life insurance plan can offer.    Myth 1: Life Insurance can be used only after the death of the policyholder.    Reality: Endowment plan is a life insurance policy that provides the policyholder with a combination of both an insurance cover, as well as a savings plan. It helps save a specific amount systematically over a period of time to obtain a lump sum on policy maturity- provided the policyholder survives the term.   Myth 2: Life Insurance is a complex product; with technicalities receiving the benefit is difficult.   Reality: A term life insurance plan offers a pure life cover and promises to pay a sum assured if the policyholder dies within the policy period. If he or she outlives the term, there is no maturity benefit. An endowment plan offers a life cover as well as a savings option while ULIP splits the premium paid to provide for your life insurance cover as well as to invest in products such as bonds, stocks, or mutual funds.   Myth 3: The rates of return is low, then why invest in one as against other financial products?   Reality: With a life insurance plan, all of your premium payments are put toward as death benefit to your beneficiaries, which means you part with small premiums in exchange for a large death benefit. Now can there be a greater return than reassurance?   Myth 4: Life insurance can only be used after the policy holder's death.   Reality: Most life insurance plan these days provide options of regular monthly income, lump-sum benefits and additional coverage option through the tenure of the life insurance policy.    Myth 5: One doesn’t need to invest in life insurance at a young age.   Reality: Planning to invest in life insurance or an endowment plan right when an individual develops a steady footing in generating income, not only assures life cover but a much-needed guarantee to handle sudden unforeseen expenses.    Conclusion-  Investing in the right life insurance plan or an endowment plan is no more an option; it is a financial decision that will positively influence the quality of life for the individual and his loved ones.

An additional source of income is the much-needed backup for families, with rampant unemployment and business losses caused due to the ongoing pandemic. With no guarantees being given on continuity of employment, breadwinners have to move away from relying on one source of income for their livelihood. Above this, what about preparedness for sudden unforeseen expenses in the family? Expenses are guaranteed to mount as families grow; it would be wise to set up a reliable additional money inflow mechanism into the household. If you’ve already been thinking about building a new income stream, you can work on it by setting aside a tiny portion of your regular income towards the cause. This extra money can be diverted into “safe” constructive avenues that pay back a fixed monthly income. Even if you have retired, it is never too late to plan! This plan will slowly increase your monthly cash inflow, help you become financially independent, and safeguard your loved ones. Remind yourself about the following reasons for having an additional income; You can quickly pay off your debts, thus helping you considerably save on interest amounts which in turn can be reinvested. Once you start saving, you will notice that multiplying income is not so hard. You can set up financial goals and work towards them.Want a grand holiday? It might not pinch your pocket as much as it used to earlier. Paycheck to Paycheck lifestyle can be shown on the exit door. You can prepare for any eventuality with ease. Build a much-needed emergency fund. You can plan your retirement sooner.You decide whenever you want to get out of the rat race of constantly earning. Take charge of your income and begin exploring productive avenues of generating additional income. Do thorough market research, consult a financial adviser and commit to setting aside a portion of your income towards investment. A good option would be a guaranteed or assured income plan. Such plans are usually the non-participating monthly income scheme, where the investor pays an annual premium for a pre-decided duration. Upon policy maturity, a guaranteed payout as a lump sum can be obtained or taken away as a regular monthly income for a specified number of years. All of which will depend on the number of years for which insurance cover is chosen, premium paid, and the sum assured amount upon maturity. The policy term will also include the duration for which the premium is to be paid and the duration of receiving the payout. Most guaranteed income plans include the following; Tax exemptionfor the income received under the plan for the mentioned tenure. Some may offer additional tax benefits as well. Twice the guaranteed incomewherein for the first part the policyholder is assured monthly income and upon completion of the same- the monthly income is doubled. Payoutshappen soon after the tenure of premiums alone is done. Death benefitsas part of guaranteed protection- in case the policyholder dies during the tenure of the plan, then the person named as the nominee will be given returns as per terms and conditions. In case of emergencies, the option to receive returns as a lump sumcan be opted for. Most features of Assured or Guaranteed Income Plan suit investors looking for safety cover as well as benefits. Depending on the choice of plan and the brand, one can also customize options to ensure that maximum benefit is obtained from such plans. The bottom line, make the right choice of investment, now that the need of the hour has been seen- a guaranteed source of secondary income.