WHY YOU SHOULD NOT FOLLOW THE SUCCESSFUL INVESTORS BLINDLY ?

Ram has many followers who follow him blindly and so has Krishna. People follow them for
their ideologies and their way of leading their lives by an example. People follow them for their noble deeds, their elimination of evils and bringing back the peace to their state and for their people. Now let me ask you something!
“Have you ever seen any Ram follower actually going to the forest, away from family for 14 years? ”
The answer will be NO and that’s true also. People in their daily life follow someone, believe
someone because of their ideologies and the teachings they gave but it’s very sad to say that
when it comes to their trading life, what they do is merely copy someone. They not only follow them but copy them.
Some names like Rakesh Jhunjhunwala, Radhakishan Damani are widely celebrated and
applauded for their investment strategies. They have blind followers who even copy the stocks where they are investing. This is a failed practice. Never follow the Stocks where they are investing, instead learn from how they choose a particular stock to invest. If you just blindly copy them, it may cost you a big money.
Radhakishan Dhamani, in his early career days, lost a lot of money in short sale strategy, Those who copied him also lost and gave up the market because they didn’t have big capital like him but those who learned from him that how he chose this stock to invest, survived. They learned and used it and are still using to make money.
So, even if you copy, your eyes should be open. Though the people whom I have named here
from stock market are like Lord for some but they need to remember that even God’s do
mistakes and they are no exception. This is share market and no one, I repeat no one has the
key to the guaranteed success in this market. I also follow Mr. Jhunjhunwala and few other
investors but to analyze why they are interested in a particular stock and then if I find that it’s a good selection, I go with it else I reject it.
No one understands the worth of your hard earned money than you. So, don’t copy today so that you can blame him tomorrow for your loss. If you want to gain some, you have got to lose some, here that thing is your time that you need to lose on analyzing stocks, their fundamentals, and other aspects.
You don’t have any backup plans if your stock falls down but these Lords have diversified
investments in their portfolio, So if they lose 5% at some place, they gain 9% on another and this way they make up the equilibrium but what about investors like us. What if we copied his stock and it was the one to get 5% loss. What are we left with now?
If you want to learn something from them then learn how patient they have been throughout
their journey in share market. How much they trusted in the stocks they bought. How Mr. Dhamani didn’t give up even when he was losing money continuously at one time. How far
sighted these gems of Indian Stock Market have been. And one last thing that we always need
to remember that if this market has given us some real gems like the one mentioned in this blog then this very market has also taken from us many other investors like Devendra Kulkarni , Ranbeer Mehta, Sureshbhai, Ranjan Day etc. You haven’t heard these names because they could not make it big. Their choice of stock was wrong and so they are still strangers to us.
So, when you are coming in the market come with the knowledge of both things, what right did people like Mr. Jhunjhunwala and Mr. Dhamani did and what wrong did people Mr. Das and Mr.Mehta did. And then always remember, ALWAYS LEARN FROM SOMEONE THAN COPYING. Source : Finnovationz

What is the difference between stock market investing and mutual fund ?

"Someone’s sitting in the shade today because someone planted a tree a long time ago.” ~ Warren Buffett.

If you are new to investing and stock markets then, terms such as stocks, bonds, yield, P/E ratio, mutual funds may overwhelm you in the beginning. That’s understandable and it’s fine. Some people jump in to stock markets by listening to some success stories but fail to realize that investing is an art and it can be mastered with proper understanding and education of the markets. Usually, with dedication, one can get mastery over the art of investing in stocks, however for some it may take years to understand, but you’re not alone.

To start investing you must gather as many facts and details apart from knowledge of stock markets. One should also learn to deal with the fact that you may not know everything. As Buffett, rightly said “Risk comes from not knowing what you are doing.”

Investing is another means to earn money other than doing a 9-5 job. In simple terms, investing is putting your money to use to generate additional income on the same. Investing is neither gambling nor speculation. Gambling is the activity of risking money on an uncertain outcome hoping to make money. Speculation involves trading a financial instrument involving high risk, in expectation of significant returns. The motive is to take maximum advantage from fluctuations in the market.

Investing is necessary so that after your retirement, you can live off funds earned from these investments. It shields you against rising inflation and provides a sense of financial security to fall back on.

There are various investment vehicles for the investors to choose from. But for today let’s just stick to mutual funds and stocks and understand how they differ from each other, even though they both relate to investing in company stocks.

Mutual Funds:

So where have you heard the word “Mutual Funds” before?

“Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.”

Still not striking a chord? More often than not this disclaimer is heard or seen on television, radios, hoardings, billboards, etc. The advertisements are engaging and eye-catching with their slogans like “Aim to achieve long term goals”, “Looking for long term investment?”, “Invest and enjoy the benefits of tax free dividend”.

However the disclaimer is promptly ignored before it is completely read or heard. As per the Securities and Exchange Board of India rules, this disclaimer is a must for every mutual fund scheme advertisement and is basically intended to communicate the risks that mutual fund schemes are usually exposed to.

Meaning:

A mutual fund is nothing more than a collection of stocks and/or bonds. It can also be understood as a pool of money from various investors who wish to save or make money just like you by investing their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

Each fund’s investments are chosen and monitored by qualified professionals who use this money to create a portfolio. That portfolio could consist of stocks, bonds, money market instruments or a combination of the above. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios.

Types of Mutual Funds:

The mutual funds industry of India is continuously evolving. The mutual funds are categorized in order to enable the investors to choose a scheme based on the risk they are willing to take, the invest able amount, their goals, the investment term, etc.

On the basis of maturity period of investment, mutual fund schemes can be classified into three categories as shown below.

Source: Smart moneygoal

Let us look into some of the pros and cons of investing in mutual funds :

Pros:

    Mutual Funds are managed by professional fund managers, responsible for making wise investments according to market movements and trend analysis. The role of the fund manager and his approach plays a crucial role along with market risks as the key issue is how a fund manager mitigates these risks without significantly impacting the performance of the scheme of a fund.

    Mutual Funds allow you to invest your savings across a variety of securities and diversify your assets according to your objectives and risk tolerance. Buying a widely diversified basket of stocks can be difficult for all but the wealthiest investor. Small investors are better off buying a quality stock mutual fund. Diversification is not putting all the eggs in one basket but spreading them over a number of baskets thereby reducing the possibility of losing an egg for any reason possible.

    Mutual funds enable you to make transactions on a much larger scale for comparatively less money. This can also be called as economies of scale. When you purchase more than one unit of a product, the manufacturer is able to cover his costs by producing more goods that too at a lesser rate. For example, when the service provider for a telephone line has to cater to only one customer, his costs incurred on setting up the infrastructure will not be covered by the fees paid by the only customer. Hence he may charge higher than usual. However when the number of customers increase he is able to cover the same cost by reducing the fees charged per customer. The fees payable by the consumers gets divided thus reducing the cost.

Cons:

    Over-diversification can also be a danger. It occurs when investors acquire many funds that are highly related and as a result, end up losing the benefit of reduction in the risk.

According to Warren Buffett, “Wide diversification is only required when investors do not understand what they are doing.” Basically, if you diversify too much, you may not lose much, but neither will you gain much.

    Costs are the major drawback of mutual funds. These costs may eat up your returns and cause sub-par performance of the funds. Fees can be broken down into two categories :

    Ongoing yearly fees to keep you invested in the fund.

    Transaction fees paid when you buy or sell shares in a fund.

Stocks/Shares:

Apart from mutual funds, there are various other financial instruments for the investors to choose from like Stocks, Debt Funds, Fixed Deposits, Exchange Traded Fund.

The stock market in India consists of the NSE and BSE. The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are the two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges.

Stock market is defined as the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets.

In order to begin investing in the stock market, you must have the following :

    Pan Card

    Broker

    Demat and Trading Account

    Buying and Selling

Types of stocks:

There are two main types of stocks:

    Common Stock

    Preferred Stock

Source: Investopedia

Let us take a look at some of the merits and the demerits of investing in the stock market:

Merits:

    Returns:

The stock market is a volatile market and a company’s share price fluctuates very frequently all within a day. The risk factor in investing in stocks is high as one moment, the prices are high, the other moment they may fall. However, greater the risk taken, greater are the chances of earning exceedingly good returns in a short time. Along with the returns that you earn, some stocks do provide income in the form of dividends.

    Stock Market Knowledge:

Mutual Funds, are professionally managed by fund managers who are well versed with the market conditions at all times. Hence, the need for an investor to personally monitor the stocks is almost eliminated and this is a major drawback as the investor will not be much aware with the terms like stock analysis, valuation, EPS, intrinsic value calculation.

    Legal liabilities are restricted :

Since you are a passive holder of common stocks, your liability to a company is limited. Any problems that arise beyond a stockholder’s financial investment, will not affect you.

Demerits:

    Volatile Investments :

On one hand this may be seen as benefit, as investors do not mind volatility upside however downward volatility can result in a severe loss. The market is uncertain and constant monitoring is required in order to minimize the losses.

    Bankruptcy:

This is probably the major demerit of investing in stock market. If a company files for bankruptcy, you will not be paid till those who rank high on the priority ladder aren’t paid. The company has to cover the costs that come up as a part of bankruptcy. The law firm, the accountants, the auction services and other services involved in winding up the company are payable followed by creditors.

    High Brokerage costs:

Buying and selling stocks costs money in the form of brokerage commissions and many brokerage firms charge account maintenance fees as well. This might end up using all your profits earned in the stock market.

Conclusion:

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From the above, we can conclude the following:

  No investment is risk-free. There is not just a single risk involved but various like market risk, inflation risk, credit risk, interest rate risk, exchange risk, etc.

    Where on one hand, mutual funds have a lower risk, they also have relatively lower returns in proportion to the stocks which possess high risk.

    Investing in stock market includes both investing in stocks/shares as well as investing in equity mutual funds. We have always heard that investing in company stocks is risky, but so is investing in mutual funds as they are just a basket of company stocks.

However this is where the difference arises because the characteristics of investing in mutual funds differ widely from the characteristics of investing in shares.

 The investors with limited time, money or expertise may find mutual funds a suitable investment vehicle. It provides the benefit of diversification which involves mixing of investments within a portfolio and is used to manage risk.

    Stocks are not the magic answer to instant wealth with no risk. The key to protecting yourself in the stock market is to understand where you are putting your money. You can lose all of your investment with stocks if you don’t do a detailed analysis and invest blindly on the basis of the rumours or unverified information or tips. #Source Finnovationz.com

What is the significance of women's day?

Elsewhere in Europe, on or around 8 March of the following year, women held rallies either to protest the war or to express solidarity with other activists. ... The MDGs have played an important role in galvanizing attention on and resources for gender equality and women's empowerment.

Why do we celebrate Women's Day on March 8?

International Women's Day. International Women's Day is annually held on March 8 to celebrate women's achievements throughout history and across nations. It is also known as the United Nations (UN) Day for Women's Rights and International Peace.

Why is it important to know about women's rights? 

Women vote today because of the woman suffrage movement, a courageous and persistent political campaign which lasted over 72 years, involved tens of thousands of women and men, and resulted in enfranchising one-half of the citizens of the United States. 

What does it mean to you to be a woman?

Being a woman means being strong, because you'll find that your womanhood will need that strength, and when you let it, sometimes that strength will even find you. When you're a woman, you take responsibility for your life and for what you want from that life.

What is the meaning of women's day?

International Women's Day (March 8) is a global day celebrating the social, economic, cultural and political achievements of women.

What happened in women's day?

1956 Women's March. On 9 August 1956, more than 20,000 South African women of all races staged a march on the Union Buildings in protest against the proposed amendments to the Urban Areas Act of 1950, commonly referred to as the "pass laws". ... (Now you have touched the women, you have struck a rock.).   

How to Revive Lapsed LIC Insurance Policy Online

As eventuality and mishap can occur to anyone at any point of life, having a life insurance plan is must to have to deal with the uncertainties of life. A life insurance policy is the best way to secure the financial future of your loved ones even in your absence. As purchasing a life insurance policy is very important similarly renewing your policy time to time and revival of lapsed policy is equally crucial.  We can define revival as “to bring back to life”.

The revival of life insurance policy is required when the insured fails to pay the premium within the grace period and the coverage of the policy lapses. The inclusion of revival of policy is must to have as it provides on option to the insured person to renew the policy and continue with the coverage of the plan. The renewal of the lapsed policy can be done anytime within 5 years from the date of unpaid premium.

Revival of the LIC policy

The revival of the LIC policy can be done under the following 5 different schemes:-

1.  Ordinary Revival- under this revival policy the insurance holder can revive his/her lapsed life insurance policy by paying all the unpaid premiums including the interests at one go. However, the policy holder can be asked for the declaration of good health and medical report under form no-680.

2.  Special Revival- under this scheme the date of commencement of the insurance holder can be shifted and the insured person can pay only one due premium according to his/her age during revival. Special revival scheme can be availed if the insured person is unable to pay the premium in lump sum. Under special revival scheme the insured can be asked for medical report and declaration of good health under form no-680. There are certain conditions that need to be fulfilled if the insured wants to revive the policy under special revival scheme. These conditions are as followed.

• Special revival scheme can be used only on in the entire tenure of the policy.
• The insured person can do special revival only within 3 years of the policy lapsation.
• Any surrender value should not be acquired under the policy. Thus, the special revival option can be implemented within the 3 years of the commencement date of the policy.

3.  Instalment Revival- In case if the insured person fails to pay the due premium in lump sum and special revival, he/she can use instalment revival scheme to revive their policy. Under instalment revival scheme the policy can be revived by paying the amount in following ways.

• In yearly premium mode the policy holder needs to pay half of the yearly premium.
• In half-yearly mode of premium payment, the policyholder needs to pay one half of the yearly premium.
• In quarterly premium payment mode, 2 quarterly payments are required to be paid by the insured person.
• The insurance holder can pay a regular 6 monthly premium under the monthly mode of premium payment.

Rest of the due premium is to be paid by the insured in equal installments within 2 years along with the regular premium as per the tenure of the policy.

4.  Survival Benefits Cum-Revival Scheme- Survival benefit scheme can be used to revive the money back policies. If, the survival benefit due date comes earlier than the in line for renewal date then the insured person can avail survival benefit to revive the policy. However, the policy holder will have to pay the excess amount in case the revival amount is more than survival benefit. In the same way if the revival amount is less than the survival benefit then the rest of the remaining amount is paid back to the insured person.

5.  Loan Cum Revival Scheme – the insured person can also revive the policy by taking the policy loan if on the date of revival the policy acquires a surrender value. The insured person will have to pay the additional amount in case there is any deficit in the revival amount. If the loan amount is more than the revival amount than the extra amount will be paid to the insured person.

Why Revival of Lapsed LIC Insurance Policy is Important?

 Suppose if the policy holder who owns a life insurance policy suffers any critical illness just before the expiry of the policy. In cases like this, if the policy of the insured person is not revived then he/she may face a lot of difficulties to buy any new insurance policy. Moreover, they won’t be able to avail the benefits of the pre-existing policy as the benefits of the policy will lapse.

The revival of your life insurance policy provides an option to extend the coverage, as the insurers cannot decline the revival of your life insurance policy because the option of revival of lapsed policy is always present in the original policy document.

As revival of LIC insurance policy is not a prolonged process, one can easily revive the policy online in a quick, simple and hassle free-way.

The Tax Saving Plan That Most Agents Will Hide From You

There is a tax-saving plan that your agent has been hiding from you. Read on to discover it!
New Year is just around the corner and as expected, we start receiving reminders about collating and submitting our investment proofs to avoid huge deductions from our January-February-March pay. We go through our investments to realise exactly how much we owe as taxes. If a tax deduction is discovered, we desperately search for solutions - anything that can help shave off that looming tax deduction and save money! We absolutely love to pay as little tax as possible.
In such desperate times, we blindly accept what is offered to us by our agents. Agents apart from charging you a good amount as consultation fee would usually pile you up with products from which they earn a good commissions like Postal Savings Certificates - NSC / KVP or Tax Saving Mutual Funds. They suggest Bank Fixed Deposits as the very last resort since they do not get any commission on these. They will ask you to make a lump-sum investment to cut down your tax liability. The primary motive being they want you to come back to them every year and they can continue to add commission based products in your portfolio.
Today, we are going to look at one product that offers a big bang for every rupee that you spend on it.
You guessed it right, “Term Insurance”! It offers you 4 X benefits against every rupee that you spend in it. However, your agent may be knowingly or unknowingly hiding this master blaster from you. It is high time you know more about it.

Benefit 1: Protection:

Life is a happy journey meant to be spend with your loved ones, enjoying every new development. However, it can turn into a struggle in the absence of the sole bread winner of the family. As inflation goes up, the already difficult journey of your family members in making the ends meet can turn into a dreaded nightmare for your family. Here, the protection offered by term plans in the form of Life Cover comes to the rescue of your loved ones. Believe it or not, a Term Insurance Plan, provides you a huge life cover which is cheaper than your everyday evening tea and snack. For example, a 30 year old male non-smoker can get term insurance protection of Rs. 1 Crore for a period of 50 years i.e. until the age of 80 years for a premium of Rs. 730 per month only i.e. around Rs. 25 per day.

Benefit 2:Tax Savings on Premiums Paid:

The magic words you had been waiting to read. Term Insurance Products offer you tax benefits under two primary heads i.e. Deduction Benefit and Exemption Benefit. The premium that you pay towards the Term Insurance product qualifies for deduction from your taxable income under Section 80C of the Income Tax Act, 1961. The maximum deduction that you can avail under this Section is of Rs. 1,50,000. You as an Individual and members of Hindu Undivided Family (HUF) can avail this benefit, the only condition being the Term Insurance policy has been issued in the name of:

• Yourself i.e. Individual
• His/her spouse
• His/her children

For example, you earn Rs 5 lakh annually and your total income tax deduction amounts to Rs 23,690. Now you can save Rs 1.5 lakh by paying term insurance premiums and claiming deductions under section 80 C. You can thus bring down your income tax liability to just Rs 10,000 - a 57.7% reduction. Imagine the amount of money saved, and as it is rightly said ‘Money Saved = Money Earned’!

Benefit 3: Tax Savings on Added Protection - Riders:

Term Insurance products allow you to attach a wide range of additional protection add-ons i.e. Riders to your base plan to get all round protection for yourself with riders like Critical Illness Rider, Surgical Care Rider, Hospital Care Rider, etc.
These health benefit riders qualify your rider premiums for deductions under Section 80D of the Income Tax Act, 1961. Individuals and members of HUF can avail this benefit for a maximum amount of Rs. 25,000. The policy again has to be in the name of the individual, spouse or dependent children.
Here, we can also take into account the health insurance or mediclaim plan offered by health insurance and general insurance companies to individuals. These plans are designed to protect your savings from unforeseen medical expenses. Health insurance and mediclaim plans reimburse the expenses incurred for treatment and hospitalization or offer cashless facility. The tax benefit availed for premiums paid towards such plans are eligible for deduction under Section 80D are as under:

• For yourself, spouse, and dependent children: Up to Rs.25,000
• For parents: An additional Rs.25,000
• For parents who are senior citizens: Rs.30,000

You are also allowed to make a deduction claim for payments on preventative health check-ups of Rs. 5,000 within the above prescribed overall limit.

Benefit 4: Tax Savings on Benefit Pay-outs:

The other benefit of exemption kicks in at the time you receive a payout from the term insurance policies you have been diligently paying premiums for. The entire proceeds of such payouts is exempted under section 10 (10D) of Income Tax Act, 1961. The term insurance plans offer payouts under the following heads:

• Death Benefit - In case of your unfortunate death, your loved ones will receive the life cover amount chosen by you along with the accumulated bonuses, if any, as the death benefit.
• Maturity Benefit - For term insurance plans with Return of Premium Options, the payout received by you on the completion of the defined policy term which includes the sum of all the premiums paid and any added percentage over and above is completely tax exempted.

An important point that needs to be noted here is that there is no cap on the maximum amount that is exempted under this section. So, the entire amount paid by the insurance company to you or your loved ones becomes tax-free in their hands. Say, you have a Term Insurance policy with a sum assured of Rs. 5 crore, after a period of 5 years down the line you meet with a tragic accident and pass away. Now the insurance company pays the death benefit of Rs. 5 Crore, this entire amount is tax free in the hands of your loved ones!
So, the bottom line is that it is high time you stopped trusting your agents blindly and invested in products suggested by them without a second thought. Get more value for every penny spent by you!
In this unpredictable journey of life, providing a protection and financial security for the future of your loved ones should be your first and utmost important priority. So, now you are well versed with the combined 4X benefits offered by term insurance plans of protection. To add to it, the saving of your hand earned money from the ‘tax axe’ is like an icing on the cake.
Don’t wait around because the New Year Bell is going to ring soon. If you still have doubts you can always take help from experts, it is readily available here at FundsDunia.

10 reasons you need to buy life insurance

Young people think life insurance is something you need to think about when you get old. But that is a big myth
Buying life insurance is one of the most important financial decisions, but believe it or not, only 10 per cent of Indians are insured. But why is it so important? Well, regardless of how much you earn, no one knows what the future holds. Lots of people die a prematurely every year from illness or accident and, if you happen to be the sole breadwinner in the family and you were to pass away, it could have devastating consequences for your loved ones-their ability to pay household expenses, debts and maintain their standard of living.
The least you can do, therefore, is to secure your family's financial future by buying a life insurance policy. Besides, do not overlook benefits of a life insurance during your lifetime, especially if you are young. We list 10 compelling reasons for buying a life insurance policy.
1. LOOKING AFTER YOUR LOVED ONES EVEN AFTER YOU'RE GONE: This is the most important aspect of life insurance that one needs to factor in. Your family is dependent on you even after you're gone and you certainly don't want to let them down. Whether it's for replacing lost income, paying for your child's education or making sure your spouse get the much-needed financial security, life insurance could save the day for your surviving dependents.
2. DEALING WITH DEBT: You don't want your family to deal with financial liabilities during a crisis. Any outstanding debt-a home loan, auto loan, personal loan, or a loan on credit cards-will be taken care of if you happen to buy the right life insurance policy.
3. HELPS ACHIEVE LONG-TERM GOALS: Since it is an instrument that keeps you invested for the long term, it would help you achieve your long-term goals such as buying a home or planning your retirement. It also provides you with diverse investment options that come along with different types of policies.
Some policies are tied to certain investment products that pay dividends based on their performance. If you are opting for an investment-linked policy, be sure to read the fine print to be fully aware of the potential risks and returns.
4. LIFE INSURANCE SUPPLEMENTS YOUR RETIREMENT GOALS: Who wouldn't like their retirement savings to last until they do? With a life insurance plan, you can ensure you have a regular stream of income every month. Putting money in an annuity is like a pension plan- put in some money regularly in a life insurance product and enjoy a steady income every month even after retirement.
5. BUYING INSURANCE IS CHEAPER WHEN YOU'RE YOUNGER: Not every millennial needs a life insurance policy. If you haven't created an emergency fund or you're still living off your parents' money, insurance shouldn't be a priority.
However, if you do have dependents or you have co-signed a loan with your parents (or any other member of your family or friend), whether it be a student loan or a home loan, you need to start considering buying a life insurance policy. Besides, coverage costs are much lower when you're single. Insurance agents may try to sell you a policy that you might not need.
Therefore, do your due diligence or approach a financial planner to determine how much insurance you need considering the other assets you may own. Even if you're single, there may be other dependents and you need to ensure they're taken care of. Pradeep Pandey, chief marketing officer, Future Generali Life Insurance, says, "The earlier the better. For instance, single people provide financial support for ageing parents or a sibling with special needs. Insurability is another reason to consider life insurance when you're single. If you're young, healthy and have a good family health history, your insurability is at its peak, and you can get the best rates on your life insurance policy."
6. YOUR BUSINESS IS ALSO TAKEN CARE OF: Life insurance isn't only for yourself and your family. Some insurance policies also take care of your business. If you own a business, then your business partner can purchase your portion of the business without hassle. Your business partner( s) will enter a buy-sell agreement and the payout would go to the deceased partner's nominees, but without giving them a stake in the company. There are two types of life insurance policies-a term insurance policy and a life insurance policy.
While we are all aware of the death benefits these insurance policies provide, we know little about the various options they lay out that could help strengthen your financial position.
A term insurance provides protection for a specified period of time (10, 20 or 30 years) and pays out the benefits only if you die during the term. The policy will expire and coverage will end if you outlive your policy. An investment-cum-protection plan on the other hand offers you a lump sum amount on the completion of the term of the policy. These plans also offer you protection but the cover is usually not as high as offered with term plans.
7. TAX-SAVING PURPOSES: You could save taxes with insurance policies irrespective of what plan you buy. The premium you pay on an insurance policy is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C, and for tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961.
8. A TOOL FOR FORCED SAVINGS: If you choose a traditional or unit-liked policy, you pay a premium each month, which is higher than what it costs to insure you. This bit of extra money is invested and it accrues cash value. This cash can then be borrowed against the policy or you can choose to sell it or draw income from it.
9. YOU MAY NOT BE QUALIFIED FOR IT LATER: Life insurance policies run on uncertainties. You may be healthy now and paying a premium for life insurance may seem to be an added financial burden, but if you suddenly fall ill, you may not be allowed to but a life insurance policy. Therefore, it is imperative to buy one early on in your life because it remains in force if your health deteriorates later on. Insurance companies allow you to attach certain riders or benefits to your existing or new policy.
These riders enhance the quality of your insurance. The accelerated death benefit rider, for instance, allows the policy owner to avail all or a part of the policy's death benefit if he or she has less time to live due to a critical illness, or wants to use the money for medical treatment or related expenses.
10. PEACE OF MIND: Death is unavoidable. In the face of tragedy, the least you can do for your family is to secure their financial future. Even if it is a small policy, you know that you've done all you can to help them tide over difficult times.
Pandey says, "Life insurance is a great tool for both protection as well as helping a consumer save in a disciplined manner, which leads to creation of a good corpus. The need for life insurance changes at different stages of your lifecycle depending on the financial obligations and dependencies."