Monday, 14 July 2014

Endowment insurance

Till private insurance companies started operating in India, endowment insurance plans were the most popular form of life insurance. After the onslaught of private insurance companies unit linked insurance plans (Ulips) seem to have taken over.

Last year, of the new insurance policies sold by private insurance companies Ulips accounted for around 90% of the policies. This though is not the case with the Life Insurance Corporation of India, endowment policies still form a major part of the insurance policies it sells. Given this, there are certain things that individuals should understand about endowment policies.

This plan is apt for people of of all ages and social groups who wish to protect their families from a financial setback that may occur owing to their demise. This policy not only makes provisions for the family of the Life Assured in event of his early death but also assures a lump sum at a desired age.

Six things you must know about endowment plans

1. An endowment policy is a combination of insurance and investment: The life of the individual taking the policy is insured for a certain amount. This life cover is referred to as the sum assured.
A certain part of the premium gets allocated towards this sum assured. Some portion of the premium is allocated towards the administrative expenses of the insurance company selling the policy. The remaining portion of the premium gets invested.

2. An endowment policy may declare a bonus every year: The money that is invested generates a certain return every year. This return may be declared as a bonus. The bonus is typically generated as a certain proportion of sum assured or life cover as it is popularly known.

So if an individual taking the policy has a policy of sum assured Rs 10 lakh (Rs 1 million) and the company declares a bonus of Rs 50 per thousand of sum assured, then the bonus works out to be Rs 50,000.

3. The bonus declared is not payable immediately: Like is the case with a stock dividend or a mutual fund dividend which is payable immediately after it is declared, the bonus declared accumulates and is payable only when the policy matures or in case the policy holder dies.

4. The bonus declared does not compound it, only accumulates: Let us take the case of a 35 year old individual who takes a policy with a sum assured of Rs 10 lakh with a term of 20 years.

5. Since the bonus declared does not compound returns are low: Extending the example taken above, let us assume that the insurance company declares an average bonus of 5% every year. What this means is that every year on an average a bonus of Rs 50,000 is declared. So at the end of twenty years, the total accumulated bonus would amount to Rs 10 lakh (Rs 50,000 x 20).
Chances of an insurance company declaring an average bonus of more than 5% over a period of twenty years are very less. This is primarily because endowment policies largely invest in government securities and after taking into account the administrative expenses of the insurance companies, a greater bonus is highly unlikely.

6. Take a term insurance policy and invest in the public provident fund: A better way out for an individual is to take a term insurance policy. A term insurance policy is a pure insurance policy.
If the policy holder dies during the period of the policy, his nominee gets the amount of the sum assured. If he survives the period of the policy, he does not get anything. Given this, the premiums on a term insurance policy tend to be the least among all insurance policies and they provide an adequate life cover.

The remaining money i.e. the difference between what needs to be paid on taking an endowment policy of similar sum assured and the premium on the term policy, can be invested in the public provident fund (PPF). 

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Friday, 4 July 2014

Travel Insurance

We put a lot into planning the perfect vacation abroad. However, to make sure that our vacation is a complete success, travel insurance is an absolute necessity. Your trip abroad should be without hassles and worries, and a comprehensive travel insurance policy provides you with the same. Whether you lose your baggage or passport, or even need some medical support on your trip, overseas travel insurance will make sure you get what you need. Go on your vacation without any worries in the back of your mind, buy a travel insurance policy. 

Before setting off on a trip, you take painstaking efforts to make sure everything goes exactly the way you plan. Too bad, even circumspect travelers become callous when it comes to buying travel insurance. But buying a travel cover is imperative; it is after all your safety net against unforeseen circumstances and crippling costs following them.

Types of Travel Insurance Coverage:
There are different types of coverage available, and you can compare travel insurance and choose the one that suits best for your specific needs.

Domestic travel insurance
Domestic travel insurance provides coverage for medical emergencies, permanent disability and death, checked-in lost/stolen baggage, travel delay and personal liability.

International travel insurance
International travel insurance gives a comprehensive coverage for medical expenses overseas, hijack, baggage and travel delays, repatriations/evacuation to India, and loss of travel documents/passport besides the usual coverage.

Corporate travel insurance
Under corporate travel insurance India, employees of an organization can get coverage for both international and domestic trips.

Student travel insurance
There is minimum paperwork involved in student plans. The coverage is comprehensive and provides for expenses incurred on medical treatment, passport loss, and study interruptions. 

Senior citizen travel insurance
Senior citizen insurance is for people who belong to the age group 61-70. It includes coverage for dental treatments and cashless hospitalization besides the usual benefits associated with travel insurance. 

Family travel insurance
Family travel insurance covers hospitalization, baggage loss, and other incidental expenses. The claim disbursement is easy with minimal paperwork involved.

Individual travel insurance
Through individual insurance, you can get coverage against cancellation of trip, home burglary and trip curtailment.

Key Features of Travel Insurance 

Online travel insurance is all about providing travelers an ideal cover against emergency / unforeseen situations right at the comfort of home. There are certain key features which one should look out for while zeroing on a plan.

• Coverage for in / out patient hospitalization along with daily allowance. 

• Personal accident cover in case of permanent disability/death. 

• Coverage for contingencies related to personal possession. 

• Coverage for loss of baggage and passport. 

• Coverage for expenses related to trip delays. 

Benefits of Travel Insurance
The usual qualms of frequent travelers include lost passports, stolen bags, trip delay and cancelled flights. Such mishaps can derail perfectly laid out plans instantly. Do not let inevitable events ruin the entire getaway. Travel insurance is your friend in need when emergencies strike, whether in your native country or in unknown territories. n a foreign land. Get enough compensation to return home or cover untimely expenses as and when they occur! 

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Wednesday, 2 July 2014

Why is Health Insurance important?

Health insurance policies insure you against several illnesses and guarantee you stay financially secure should you ever require treatment. They safeguard your peace of mind, eliminate all worries about treatment expenses, and allow you to focus your energy on more important things, like getting better. Let's learn more about the various types of health insurance available, and what the best policy for you might be.

Health insurance in India typically pays for only inpatient hospitalization and for treatment at hospitals in India. Outpatient services were not payable under health policies in India. The first health policies in India were Mediclaim Policies. In 2000 government of India liberalized insurance and allowed private players into the insurance sector. The advent of private insurers in India saw the introduction of many innovative products like family floater plans, top-up plans, critical illness plans, hospital cash and top up policies. Broadly we can divide the health insurance plans in India today can be classified into two categories:

Hospitalization plans: 
Hospitalization plans are indemnity plans that pay cost of hospitalization and medical costs of the insured subject to the sum insured. The sum insured can be applied on a per member basis in case of individual health policies or on a floater basis in case of family floater policies. In case of floater policies the sum insured can be utilized by any of the members insured under the plan. These policies do not normally pay any cash benefit. In addition to hospitalization benefits, specific policies may offer a number of additional benefits like maternity and newborn coverate, day care procedures for specific procedures, pre-and post-hospitalization care, domiciliary benefits where patients cannot be moved to a hospital, daily cash, and convalescence.
There is another type of hospitalization policy called a top-up policy. Top up policies have a high deductible typically set a level of existing cover. This policy is targeted at people who have some amount of insurance from their employer. If the employer provided cover is not enough people can supplement their cover with the top-up policy.

Hospital daily cash benefit plans:
Daily cash benefits is a defined benefit policy that pays a defined sum of money for every day of hospitalization. The payments for a defined number of days in the policy year and may be subject to a deductible of few days. 

Critical illness plans:
These policies pay out a lump sum in event that the insured is a diagnosed with one of the illnesses specified in the policy. Some of the policies require a survival period for the payout to take affect.
Five Important tips for Health Insurace
1. Define your requirements of health coverage

2. Decide which members of your family need to be part of the health insurance policy you might find splitting policies to be beneficial.

3. Decide the total amount of health coverage needed.

4. Read through the list of exclusions of the health insurance policy - both permanent and first year.

5. Check the network coverage of the Third Party Administrator (TPA) being employed by the

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