Insure? Sure!

Once you get married, you will have to take a lot of joint decisions relating to your personal and family finances. The last time, we took a look at the modalities of opening a joint banking account with your spouse. We will now discuss insurance and some schemes relating to coverage of life, home, medical and children.

For over for decades after nationalisation, the Life Insurance Corporation of India was the only organisation that could sell life insurance in India. This has changed now, with the Government allowing private insurers to sell both life and non-life insurance policies. Many private sector players-typically in association with foreign insurers-have jumped into the fray, sensing a huge opportunity in the market. But it is early days yet for private insurers; they have been in operation for just about a year now. Despite the phenomenal success of the LIC-much of which can be attributed to its vast network of its ubiquitous agents, much remains to be done to educate the general public about insurance. There is inadequate understanding of the benefits of insulate and why it should form an essential part of financial planning. For married couples, an insurance policy is seen as a sine qua non. Concerns about the safety of one or more spouse and the future of the family, in the event of an unfortunate occurance, usually begin to take root around this time. As with much in life, it is always desirable to bring a certain amount of balance into your overall financial planning; there are a number of things that need to be covered-life, home, children and medical-but the amount of money available to cover all these will typically be limited. For married couples, LIC offers Jeevan Saathi and Jeevan Saritha. The former is a double cover Joint Life Endowment Assurance Plan with profit. Under this scheme, both husband and wife are covered for the full sum assured. A significant feature of the scheme is that the premium payable ceases, in the event of death of either of the life assured.

Jeevan Saritha on the other hand, is tailored differently. It is a Joint Life Last Survival Annuity-cum-assurance plan for husband and wife. What this simply means is that in the event of death of either of the assured, the survivor gets the claim amount, partly in the form of a lump sum payment and partly as an annuity. The balance sum assured is payable in the death of the survivor. What should you keep in mind before you take our an insurance policy.

1)Life Insurance is not an investment: Insurance represents an outgo of resources that you could otherwise have invested elsewhere for better returns. No, we are not for a moment saying that taking our a life insurance policy is bad. Certainly no other instrument can provide the kind of safety net for the family that insurance provides in the event of death of an earning member. However, you must also remember that life expectancy rates have risen dramatically owing to better hygiene and health care in the ;last few decades. Therefore, it becomes important to be able to judge the quantum insurance to take.

2) Buy insurance early enough! If you have decided to buy insurance, do it now! In general, the earlier you buy the"lesser" premium you pay. This is because the premiums are divided over a greater number of years and your "cost" comes down, as your income also increases with each subsequent year.

3)I can save taxes with my life insurance premium: Fair enough.Premiums paid by you quality for a rebate. However, do not put at all your investment eggs in the insurance basket. There are people we came across who fork out tens of thousands u weary of premium alone every year, but had little or no other investments. This is not good strategy; there may be other investment options that offer better returns in addition to helping you save on taxes.

4) I can get a home loan with my insurance policy; one of the bigger myths! many people buy an insurance policy just because they have heard that they can get a loan for buying a home. No true! Having as LIC policy is no guarantee of getting a housing loan from them; at best, it may five you an edge overt someone else because LIC may be willing to treat the policy as collateral.

5) I don't understand all this, so I'll just go by what my agent tells me Ignorance is not bliss! Make it point to try and understand what you are buying; you-and you alone-are the best judge of your financial goals.

Many agents will often recommend that you go in for a "with profits" policy or a "money back" policy. The fact is that these policies come at a higher price; you end up paying as higher premium for them. Similarly, keep an eye on all the paperwork; many people leave it to the agent to fill up their personal details on the forms and sign only where they are asked to! In the event that you file a claim later and the details are not found to be correct, you claim may even be rejected. Insurance, but be sure, is what we have to recommend!