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Safeguard the financial security of those who shall be dependent on you in the future by availing life insurance today…
We all know the benefit of investing early - a longer investment term combined with the practice of reinvesting your investment income speeds up the wealth creation process. This principle of investing early also holds true for buying insurance, traditional as well as unit linked…

How? Read on to know the answer…

Getting life insurance at a young age is beneficial in many ways such as:

Getting An Easy Approval: For young applicants of life insurance, the approval process is often simple and easy. This is because conventionally the young are often less prone to health risks compared to the old. In most cases, you may be granted life insurance without going through any medical checkups.

Lower Cost: Insurance premiums are calculated on the basis of the underlying risk. In case of life insurance, the risk covered is related to death or severe physical disability. With average life expectancy at more than 60 years, life insurance companies foresee an unlikely chance of the underlying risk materialising in the near time in case of the young. Hence, keeping all other aspects same, a younger applicant will have to pay a lower premium vis-à-vis an older applicant.

‘Right’ benchmark for the correct picture

Is your investment a performer or an under-performer? Compare its performance with its benchmark to know the answer…

Taking investment decisions is not easy. It involves a lot of comparison, analysis and interpretation. When comparing the past performance of two investment products, it is very important to compare apples with apples and oranges with oranges. For instance, it is incorrect to compare the performance of a balanced mutual fund with an equity diversified fund or a mid cap fund with a large cap fund.

A valid comparison is one between products with similar features and risk profiles. Another simpler way of comparing investment avenues is simply comparing products with their respective benchmarks.

What is a benchmark?

As per Investopedia, a benchmark is ‘a standard against which the performance of a security, mutual fund or investment manager can be measured’. Thus a benchmark can be an index, a combination of an index or even a price of a commodity in the spot (i.e. cash) market. For instance, indices such as the BSE Sensex, BSE Midcap and CRISIL Balanced Fund Index or the spot price of gold can be used as effective benchmarks for an index fund, midcap fund, balanced fund and gold ETF, respectively.

How does benchmarking help?

Many a times, considering the standalone performance of an investment avenue may be misleading. For instance, an investment which may have given a 1-year return of 20 percent may seem to be a performer. However, that would be true only if its benchmark has delivered a lower return than that. But, if the return from the benchmark is higher, then, it can be safely concluded that the performance is not at par.

 

Remember…

Generally,  every  investment plans  has  its  own  pre-defined  benchmark.Investors also can create their own benchmarks for comparison as long as they have similar features and risk profiles as the investment option. There might be occasions where investment firms use inappropriate benchmarks for comparison just to highlight their performance. In such a situation, investors can compare them with the correct benchmark or with the category average. This will help investors to get a clear picture about the investment’s relative performance with the benchmark.

Buy the right insurance policy after knowing the charges involved

When you purchase an insurance policy, are you aware of the various charges? If not, then read on to ensure you buy the right plan with your eyes wide open …

Irrespective of the type of insurance that you purchase, although the premium that you pay appears to be a single amount, it is a combination of different charges. While some are levied across all policy types, some are applicable to market linked policies, where fund management is involved. Still other charges are levied when you opt for additional services within a given basic policy…. Here’s a quick look at the various charges involved -

Mortality charge: The insurance company uses part of the premium that you pay to provide for the sum assured. This could be in the form of death or maturity benefit, as the case may be. Factors that have any impact on this charge include your age, desired sum assured, health, occupation, lifestyle, etc.

Fund management charge: This charge is applicable when a part of the premium amount is invested in different types of capital market funds, as is the case with Ulip plans.

Policy administration charge: An insurance company’s administrative expenses - such as documentation, etc. - are met through this charge. This charge may either be a fixed amount or a certain percentage of the premium amount or sum assured. However, it is over and above the basic policy premium. In case of ULIPs, it is collected by cancelling certain allocated units per month.

Rider premium charge: Riders are optional benefits that you can add to your existing policy to enjoy a higher coverage. For these additional benefits, you are charged an amount over and above the basic policy premium.