Life on r/IndiaInvestments Wiki

Life Insurance: What it is exactly?

Mon, 01 Jan 0001 00:00:00 +0000

Life Insurance: What it is exactly?

Life Insurance is basically a Death Insurance and better term is Income Replacement Insurance. It is a transfer of risk of your death, in terms of financial liability, from you to the insurance company. Like a car insurance, if something happens to the car, the insurance company will pay for the repairing work / or pay an amount according to the value assigned in case it gets stolen. Similarly, a life insurance is a contract between you and the insurance company, in which the company takes money (=premium) to ensure that it will provide money (=life cover value) in case of death of the insured person (like Stolen car analogy).

How to Evaluate Life Insurance Needs

Mon, 01 Jan 0001 00:00:00 +0000

How to Evaluate Life Insurance Needs

Things to ponder over

Apparently, most people tend to be under-insured. That’s because what generally happens is that they get approached by some Life Insurance agent who works on a commission basis that throws around some jargon(despite what the advertisements say, this still happens), shows you an amount that looks ‘big enough’ on maturity or death. You ask how much premium is required, you take a cursory look at your monthly savings and wonder if you can go for it, you arrive at a plan that you think is affordable and boom, you pat yourself for being a responsible adult. More often than not, it is NOT GOOD ENOUGH.

ULIP - Unit Linked Insurance Plan

Mon, 01 Jan 0001 00:00:00 +0000

ULIP - Unit Linked Insurance Plan

BASIC DEFINITION

This is a single instrument / vehicle which gives Insurance and Investments. It uses the income tax laws to provide tax-free returns(most of them do, but changing laws sometimes changes the status of such plans – so always do check the actual laws and the relevance of the particular Ulip).

In other words, Ulip is a type of mutual fund (in the sense that they get your money, convert them into units and professionally manage the money while charging you a management fee) which uses the tax laws to make the entire instrument tax free or as tax-friendly as possible.

Some FAQs on Life Insurance

Mon, 01 Jan 0001 00:00:00 +0000

Some FAQs on Life Insurance

Q1. What happens if the company I have bought insurance from goes bust? Is there any mechanism to protect customers like Deposit insurance corporation?

A1. The IRDA regulations mandate that the solvency ratio (mainly indicates the assets versus liability adequacy) of the insurance company should have a decent margin of safety. Check this Link for more details. Currently, all the companies have decent solvency ratios. Hence, we do not need Deposit Insurance corp or any other such fallback for that.

Links to Answers related to Life Insurance

Mon, 01 Jan 0001 00:00:00 +0000

Life on r/IndiaInvestments Wiki

Life Insurance: What it is exactly?

Life Insurance: What it is exactly?

How to Evaluate Life Insurance Needs

How to Evaluate Life Insurance Needs

ULIP - Unit Linked Insurance Plan

ULIP - Unit Linked Insurance Plan

BASIC DEFINITION

Some FAQs on Life Insurance

Some FAQs on Life Insurance

Links to Answers related to Life Insurance

Links to Answers related to Life Insurance

1. Short Primer on Life Insurance as a comment: Link