When you decide to invest in Life Insurance Policies there are certain factors that you need to analyze prior to making the investment. The first is the policy you will invest in. When you visit Life Insurance Companies that offer you with a list of policies leaving you confused as to which one you should invest on. It is advised that you opt for the assistance of a Life Insurance Advisor to help you sort out a policy based on your needs, income and financial goals. Budget is also important. Depending on your income you choose an amount that you find affordable to pay as Life Insurance Premium. This payment is calculated on a yearly basis and is payable on a half-yearly to quarterly basis. All Life Insurance Companies demand that you pay your premiums on time. Failure to do so in the stipulated period will have the company confiscate you policy.

The Life Insurance Premium depends on the kind of policy that you choose to go in with. When you choose your policy you consider all essential factors that cover you and your family: i.e people who are financially dependant on you, so that in your absence they are financially secured. Such policies are referred to as Family Life Insurance. Life Insurance coverage is also to be taken care off. If you find the need to be covered through your entire life it is suggested that you opt for whole life insurance policies. In this case you will need to keep paying premiums through out your life. Once you decide to stop paying the premium and the policy the entire amount will be handed over to you. Incase of death the amount is handed over to the nominees. The other type of policy that one invests on is a term policy, where you pay the premium is paid for a certain term which is known as the Life Insurance Term. On the completion of the tenure the amount with the dividend (depending on market conditions) is handed over to the beneficiaries or the insured.

Another Major advantage of Life Insurance is that it acts as an excellent tax-saving instrument. Under 80c of the Indian Income Tax act any individual having an annual income of over Rs 1.5 lacs INR is liable to pay a certain percentage of his income as taxes. Having that amount invested in Life Insurance spares him from paying the tax. Not only that the dividend or interest that ends up at the end of the tenure of your policy is also tax saving. The Insurance sector has always been in demand since the financial regulation and economical boom that India experienced in the last decade. All major companies are coming out with plans to suit the need of individuals of all kinds right from the masses to the classes. The most prominent Life Insurance Companies in India as of now are 1)LIC, 2)ICICI Life Insurance, 3)Bharti-Axa Life Insurance, 4)SBI Life Insurance & 5) Aegon Religare Life Insurance.

Term Life Insurance as mentioned is a policy where in you keep paying your premium for a stipulated period of time. After the tenure is over the accumulated some is handed over to you. You could also opt to renew these policies once their term expires, by paying nominal revised premiums (higher in most cases). The two major diversification of this type of policy are Group Term Life Insurance and Level Term Life Insurance. Group term Life Insurance is usually taken by an employer for his employees, where in the employer pays on behalf of his employees by reducing that particular amount from their salary. For level term insurance the insured selects a particular period and pay premiums for the selected period. The policy automatically matures at the end of the selected period. Once you select the term say 5-10 or 15 years you cannot alter it. This type of insurance is ideal for those people who are not able to make long term financial plans.

Permanent Life Insurance is an expansive policy where the premiums are paid as long as you want to enforce the policy. In a permanent Life Insurance policy you pay premiums for an indefinite period irrespective of the fact they exceed the amount to be distributed to your dependents in case of death. The premium amount that is accumulated is deposited in a separate account. If the company performs well the deposit yields higher returns and a share is periodically dispatched to you. If the insurer decides to retain the profits made from your investment with him then you are not required to pay income tax for that amount. There is a possibility like, when you withdraw certain amount of money within the given limit you need not pay income tax for that amount. But when you deposit money in the bank you have to pay income tax irrespective of the fact you utilize it or not. So in a way it’s a tax saving instrument.

Other types of prominent insurance policies include Family Life Insurance, Whole Life Insurance & Joint Life Insurance. Family Life Insurance is a scheme that is similar to group life insurance. Here all the members of your family (mainly wife and unemployed/unmarried children) are covered. Whole Life Insurance is a type of permanent Life Insurance policy where the individual receives Life insurance coverage through out his Life. All he has got to do is to be prompt in making his premium payments. He has to pay till a certain age and be covered through out his life. Joint life insurance policies are policies that enables two individuals to be protected, but the full value of the policy is paid only once at the time of either insurer’s death. This is also referred to as the joint first to die clause. With most Insurance Companies coming up with schemes every now and then, the Insurance Sector is establishing itself as one of the most prosperous markets in modern times.

It is important that you include Life Insurance policy in your investment portfolio. When you opt to invest in Life Insurance you not only invest for your future, but you invest considering your families necessities. Individuals who depend on you for a living could be deprived of an income in your absence (read demise). Hence it is suggested that you analyze every pros and cons before you opt for your Life Insurance Policy. Ideally a policy that you could afford to pay the premiums for in the longer run is recommended. Chalk out your monthly expenses and then settle in for an amount that you could afford on a periodical basis. Failure to pay the premium in stipulated time will result in the policy being confiscated by the insurer (Life Insurance Company). Also important is the coverage you get from the policy. Life Insurance Coverage determines the period for which you are actually insured. They could vary. In whole Life Insurance you keep paying the premium through out the term of the policy, where as in term life policy you pay the premium till a certain time, after which an amount (depending on market conditions) is returned to you.

There are different types of Life Insurance Policies that are offered to you by the Life Insurance Company, the most prominent amongst those are Family Life Insurance, Whole Life Insurance, Premium Life Insurance and Term Life Insurance. When you opt to go in for Family Life Insurance, all your eligible family members get covered. This generally includes your spouse and children. Usually dependent children must be unmarried and fewer than 22-23 years of age, incapable of self support. The payment is simple. Usually if you are employed the employer deducts a fixed amount from your salary and hands it over to the insurer. This amount keeps being deducted and accumulated in your policy account until you retire or leave the company. After that it is returned to you. Premium life insurance is a type of term life insurance with return of premiums paid throughout the policy term. Like other forms of life insurance, if you die during the term of the policy, your family will receive the accumulated sum benefit of the policy.

Whole Life Insurance is a sub-part of permanent life insurance where the person is eligible to obtain protection through out his life. Here the Premium rates are constant through out; hence it is advised to invest in these policies at a very early stage in life. Life Insurance where the Life Insurance Premium is paid for a stipulated period of time (5-10-15 years) is called term Life Insurance. The premium rates here are bit on a higher scale compared to a Permanent Life Insurance. A major advantage of Life Insurance is that it serves as a major tax saving instrument. Under section 80CCC of the income tax ordinance amount invested in Life Insurance Policies is subjected to tax-exemptions. If an average investor has an annual income of more than the tax limit then the amount he will invest (till one lac) in Life Insurance will be deducted from his yearly income. This facility makes it much more appealing in terms of an investment module. With recession hitting the jobs market hard, the insurance industry is possible the only sector that hasn’t been affected, simple because of the genre it dwells in. The sooner you opt for Life Insurance, the sooner you start valuing your Life.

“Alas!!! Had I invested in life insurance, today I wouldn’t have fallen into this dump”. This is the statement that most people over the world have been making after facing current downturn in the economy, that’s being termed as “recession”. The average investor even though aware of the tenure that the recession lasts through fail to get themselves insured against life, most of them considering this module only to be a tax-saving instrument. Other then avoiding the current financial crisis Insurance does prove to be a source of income when you are actually out of one. You could be retired/ fired from work/ bankrupt, moreover on your demise it is the money that invest in Life Insurance Policies that takes care of your family. Fortunately in recent times there has been tremendous growth in the number of Life insurance companies, each of them coming up with their effective and convenient schemes that will ultimately benefit the investors.

When the term investment is concerned, people genuinely think of investing in various investment markets like Shares, Stocks, Bonds, Forex, Mutual funds and many more financial markets. The very first thing that an investor does is to pay some amount of money to start on with the investment. And after that he has to keep on worrying about it. In this scenario an investor is not assured that he will earn the positive earning. And incase if the economy in undergoing with downturn, then what can be worst thing for an investor. He can just fall from top to bottom and nothing left in his hand. That’s the situation the people are facing over the world today. An intelligent investor is a person who makes investments in the market but prior to that he is better concerned about his financial securities as well. He thinks of gaining huge capital returns but in a safety way that it doesn’t harm his economy. So he will preferably opt for life insurance as a source of security for himself and his families. It is very important to know about the importance of life insurance because when the things in life are going well and smooth doesn’t matters but if uncertainties arise, he will be equally insured and makes themselves safe from being infected. So investing in life insurance is not at all a bad idea for an ideal person.

There are various life insurance policies that match the requirement as per the investors needs. For e.g. Future Confident is a policy that is suitable, if the objective is long term targeted say about 15-20 years, either for children’s future or for investors own retirement and simultaneously granting protection to the investor’s family for uncertainties in life. Other then those mentioned there are various other life insurance services provided by the life insurance company. Investing in life insurance always incur tax benefits. So according to good investors perception investing in life insurance has always proved beneficiary. That is way investing in life insurance is the safest investment among the investments.

Life Insurance should definitely be an integral part of an investor’s portfolio irrespective of the tax-benefits derived from it. The basic purpose to invest in insurance is to ensure that you are financially secured through out. It could be when you retire; you are bankrupt or running out of a genuine source of income. People generally tend to consider it as a tax saving module, thereby overlooking the prime objective of this investment scheme. When you invest in Life Insurance Policies or Life Insurance plans it is imperative that you choose the ones that suit your needs in the longer run. By paying the Life Insurance Premium initially you should reconsider the amount its mode & tenure that you will have to pay the premium. Failure to do so on a consistent basis will only have your policy confiscated by the Life Insurance Company. Hence, the decision to buy insurance should be solely based on the individual’s needs for protection; the tax benefits must be treated as incidental.

Waiting till the end of the financial year and then making hasty decisions isn’t a good idea. As a matter of fact it should be procured as and when needed and not only to save on taxes. This practice deprives investors of the opportunity to conduct a thorough evaluation of the available options. By opting for the wrong policy, one runs the risk of being under insured. Another major mistake that is quite prominent in the insurance industry is mis-selling. Over the years, several insurance advisers have been guilty of selling products that were right for them (helped them earn higher commission income), rather than the investor. Basically ULIP’s (Unit Linked Insurance Plans) are the most mis-sold instruments. Hence it is necessary that you are involved with an ace insurance advisor prior to making your investment. The investor should also conduct a through analysis prior before zeroing in on any product.

So when you decide to invest in Life Insurance Policies, you got to consider to important options: a) First, decide how much insurance is required and 2) Decide the type of insurance product that can help meet the requirement. Term plans and Endowment plans are the most common sought after Life Insurance Plans. Term plans provide insurance cover. In other words, if the policy holder survives the policy term (i.e. the period for which the policy offers him insurance cover), then he gets nothing i.e. there is no maturity benefit. They have the lowest premium structure. Endowment plans unlike term plans, these plans provide maturity benefits under both scenarios – death or survival. Since endowment plans provide maturity benefits in both the scenarios, their premium tends to be higher than the premium on term plans. ULIP’s are innovative products combining both insurance and investments. They are market-linked i.e. they invest in equity/debt markets. With their rapid growth Life Insurance Companies are launching new policies practically every now and then. The insurance advisor can play an important role in reviewing the portfolio and recommending which policies should find place therein. Hence it makes sense to be associated with an advisor for whom insurance is the core activity.

Initially all types of Life Insurance Policies were term Life Insurance. However as term life insurance only pays a claim upon death within the stated term, most term insurance policy holders became upset over the idea that they could be paying premiums for 20 or 30 years and then terminate the premium and have nothing to show for it. This gave birth to the concept of Whole Life Insurance, which proved to be beneficial to both the insured and the Life Insurance Company. By guaranteeing the death benefit and the cash value, the policy owner was assured that insurance coverage would be in force when the insured died. The Life Insurance Company benefited because with every premium payment made, the net amount at risk, and thus the cost of insurance, was reduced In case of a Whole Life Insurance policy the premium rates are constant through out. It is advisable to invest in these kinds of policies though primarily for two reasons. Firstly the financial strain will be minimal for a person of that age. Secondly when a person invests early he won’t find it difficult to pay the same amount even after he gets old because of two factors namely the rise in his income and the uniform rate of premium.

The two main categories of traditional whole Life Insurance are a) Ordinary whole life insurance policies & b) Limited pay whole life policies. Ordinary whole life insurance policies require the policy holder to pay a fixed sum of money up to an old age. This is done to ensure that when the policy matures that the insured gets money whose value equals death benefit. But in practical cases the insured fails to keep the premium carrying on as they either die during the payment tenure or surrender the policy to get the maximum value. For Limited pay whole life policies the insured is required to pay premiums at a uniform rate. Here the period for which the policy is taken is less compared to ordinary whole life insurance policies; hence the insured is required to pay a higher amount of premium. Limited pay whole policies are further categorized into A) Interest Sensitive Whole Life Policies – This policy does not pay returns to the insured. However the amount earned by investing the insured’s investment is accounted and paid to the insured, B) Universal Whole Life Insurance Policies – A very flexible type of insurance policy, which allows for a change in death benefits every year & C) Variable Life Insurance Policies – Here the insured will be able to earn a higher amount when compared with the other policies. At the same time the insured will not be able to claim other insurance benefits like loan.

Major benefit of this kind of policy is the availability of loans. The amount of such loans will be decided on the basis of his policy amount and premiums. But in such cases the amount or refund that they will receive after the expiry of policy will be less. Whole Life Policies are for people guarantees returns on investments; hence it is best suited for people who are looking for something more then protection. If the investment (premium), that you make is invested in stocks then expected returns aren’t assured, but if they are invested in other financial instruments like banks or trading sectors then the returns are ensured.

Let’s take a quick look at the major events that occurred last year and compelled us to re-consider our strategies for our daily life styles. A couple of incidents namely the 26/11 terror attacks and the huge slump in the financial markets has made the citizens of India to redo their overall planning. The worst part of it was that these incidents occurred in the latter part of the financial year (Nov, Dec 2008). Promotions and hikes stopped, major conglomerates like Lehman brothers and Meryll Lynch and lately our very own Satyam Computers all bit the dust and millions went unemployed. Then we have the terror attacks in Mumbai that rocked the country and left all dazed. As of now a common man isn’t sure that if he/she could return home safely after work. All these factors have definitely boosted the sales of the Life Insurance Companies, as their prime objective is to render financial security. Investments as of now are being made on all fronts, whether it is finance or life, both aspects needs security.

Let us consider an insurance investment that primarily emphasizes on the life of your family members in your absence (read death). When you opt to go in for such an investment for the first time the Life Insurance Company will floor you with terms and products could catch you off-guard. Some important terms that you would come up against is Life Insurance Quotes, Life Insurance Policies, Life Insurance Term, Life Insurance Plan and Life Insurance Premium. Life Insurance Policy is the terms & condition that you accept when you opt to invest in Life Insurance. These includes the Life Insurance Plan (policy planning), Life Insurance Premium (an annual, half yearly, quarterly, or monthly amount that is to be paid to enforce the policy), Life Insurance Term (the period through out which the premium is to be paid) and Life Insurance Quotes (the rates at which the policy is sold). Generally a common investor could opt for a policy where he will have to chalk out a premium, which again would depend on his annual income, to be paid for a period of 20 years. This policy could be live for another 20 years after the premium has been stopped, and then the total sum assured is returned to the beneficiary, nominee or insured. In case of untimely death, the amount is immediately given to the family of the insured. This amount depends of the Life Insurance Cover derived out of the policy and premium paid.

Incase of financial fronts, investing in insurance is extremely profitable as it helps you to save tax-payments. Under section 80C all citizens of India are liable to income tax deductions if the yearly income is above 1.5 lacs/annum INR. These deductions are again categorized in to various slabs where different groups will be paying a certain percentage depending on their income. If you have an income of 3lacs/annum, it means that you will be paying a tax of [10% (3,00,000-1,50,000)] = 15,000/. Now if you decide to invest 50,000/ into an insurance policy or some ULIP’s (Unit Link Insurance Plan), then your tax would be [10% (3, 00,000-50,000-1, 50,000)] = 10,000/. Moreover the interest or dividend that you get out of the insurance is completely tax-free. It is also highly advisable that people into the higher tax-paying brackets go in for higher investments. People who are on the verge of retiring should consider investing in pension plans. These plans are also tax-free, but investors should take into account a couple of important factors prior to making the investment 1) Age of the investor shouldn’t be higher then 65 & 2) Minimum time that the policy and premium is to be maintained is 10 years. As the fiscal year is coming to an end, most of the tax-payers have already made investments. But for those who are yet to, considering the above points opting for Life Insurance Polices of plans from the following Life Insurance Companies could prove fruitful as it would offer modules that could just suit your needs. 1) LIC (Life Insurance Corporation), 2) SBI Life Insurance, 3) Bharti-Axa Life Insurance, 4) ICICI Life Insurance, 5) Reliance General Insurance.

Kindly note that the investments for pension plans are tax-free, but the returns aren’t. One third of your return is tax-free, where as the other two thirds are subjected to tax-deduction.

One primary reason that a salaried class individual in India would want to invest in a Life Insurance Policy is because it’s a major part of tax deduction component. Let us consider the case of an individual whose annual income is taxable and amounts to around 6 lacs/annum. He opts to invest in a policy, where he would be paying a Life Insurance Premium of 50,000/ annum. This amount is directly deducted from his gross salary and the remaining part is entitled to be taxed, until and unless he/she has some other financial commitments such as home loans, Mutual Fund Investments (ELSS) etc, which under the norms of Finance Ministry of India is also subjected to tax-deduction under section 80 C and 80 CCC. This premium amount is paid till a certain period, which we call the Life Insurance Term, and with the completion of the Life Insurance Policy (35-40 years), the sum that was deposited is repaid to the insured along with a certain rate of interest, which depends on the market conditions.

When the payment for the first premium is made, a whole lot of charges is implied on it and deducted from the investment. These charges mostly include Admin charges, service tax charged by the company, processing charges, mortality charges, rider charges and the fund manager charges. The maximum deduction is done in the first year itself where the insurer (Life Insurance Company), charges you around 25-30% of your premium. From the next year onwards the charges are reduced to a great extent with only 2-5% being charged of your premium. This continues till the term you pay the premium. The charges that are made on your premium is a source of income for the insurer, and the income tax is paid through them. So logically speaking the income tax isn’t completely deducted, but paid by the insurance company. On a safer side a individual who has opted for a Life Insurance Policy or a simple Life Insurance Plan (ULIP’s in most cases), could terminate the policy and have the sum returned, though this is possible only after 3 years of the start of the policy. The following illustration will provide hindsight as to how your premium adds up before it is paid to you, or what you get when you opt to close the policy and get back your investment.

Considering that an individual paying a premium of 50,000/ annum and the policy he has opted for is of 35 years (approx). As per charges made by the company 15,000/ at 30% is deducted towards company costs and 35,000/ will be the amount invested. Second year onwards 2500/ @ 5% will be deducted and 47,500 will be deposited. If the rate of interest paid on your premium is 10%, then after the completion of 2 years you will have an amount of, [35,000/ + (10%) of 35,000] = 38,500/ + [47,500 + (10%) of 47,500] = 90,750/, for the third year this will be [90,750 + 47,500+ 10% of 47,500] = 1,43,000/. A customer who would want to stop the policy might consider this return to be a loss, but technically speaking this is a gain as the tax that would have been levied on the 50,000/ that he opted to invest would have been greater than the amount that was deducted. Hence it is advisable that even if you are stopping your policy and taking back your investments, do so after 5 years as it would prove to be beneficial. With numerous Life Insurance Companies launching some schemes or the other in the market every other day, the advent of Life Insurance has really helped set up good financial regulations.

Last but not the least, the most crucial part of the claim procedure is the payment and release of the policy. After completing all the above mentioned formalities, the insurance company issues a discharge form, which is to be signed by the person entitled to receive policy money. Generally claim settlements unlike other monetary settlements don’t take up much time. If all documents are submitted properly then all claims are entitled to be settled within 7 working days. Understanding how to claim your life insurance policy is extremely important. A lot of hard earned money is involved. One shouldn’t let go off it, after all it was done in your interest by your dear ones.

When you decide to invest in Life Insurance, it is imperative that you understand your financial status, your future liabilities & commitments and then opt for a policy that would suit your needs in the longer run. Insurance is by and large regarded as one of the best savings cum investing scheme. Students who earn while studying and those who take up full time employment after their studies see insurance as a profitable scheme to regulate their savings. Important factors that an individual needs to understand prior to opting for Life Insurance Policies are 1) Requirements, term (duration) and premium to be paid 2) Nature and benefits of the policy in the longer run & 3) Coverage of the policy. The need and income of an individual helps him decide the amount of Life Insurance Premium. The insured should also think about the benefits that he and / or his nominee will receive before deciding to go for a particular policy. Life insurance covers the risks of loss due to the death of the insurer. Hence it is advisable that before you purchase the policy; take a look at the plan of the policy in detail. Most of the Life Insurance Companies would provide you with a ULIP (Unit Link Insurance Plan). Consulting an expert or your friends, & other reliable sources like the internet, that would provide accurate data helps. Analyzing the different categories of insurance, conducting a proper market research, checking your financial constraints where you ensure that you pay your Life Insurance Premium simultaneously is important.

Ideally all life insurance companies invest the insurance premium funds in the various types of projects meant for developments and attractive returns. This project varies from government funded bonds to private companies. As an investor and depending upon your risk tolerance you can divide your investment funds in various modes which can be Balance, Maximizer, and Minimizer. Balance fund manager will invest your fund equally in government sector bonds as well as in private sector. In Maximizer mode your complete fund is invested in private equity market, which completely depends on market conditions. This fund at times may give you unexpected results and at times may even ruin your principal amount. In the last type of investments the fund is completely engaged in government bonds, wherein risk is almost null with assured returns.

Like other investment modules Life Insurance also has advantages and disadvantages. The prime advantage is financial security for the obvious reasons. It helps facilitates economic movements. Life insurance companies collect premiums from multiple investors hence gathering large funds. This money is used to finance trade and other financial development activities. Last but not the least it helps in reduction of tax payments. Policy holders are entitled to claim income tax exemptions for paying the premiums. The amount and the extent to which they are allowed depends on other factors like the persons income and if the insurer is a private player or run by the state. Drawbacks include incompetent facilities as all Life Insurance Companies are not able to provide the exact kind of life insurance policy as desired by consumers. Moreover the services of insurance agents could sometimes do more bad than good. Some of them try to convince their clients to invest more or to choose certain policies which are not much beneficial to the clients. A person will find himself in trouble if he invests more than what is actually required. But as the number of advantages out numbers the disadvantages, investing in Life Insurance is always considered to be a good move.

Another important factor that needs attention during the framing of the policy is Life Insurance Quotes. Life Insurance quotes are the prices at which life insurance policies are proposed to be sold and vary from company to company or individual to individual, mainly depending on the term of the policy. Other important issues that address the quotes are age and income, the physical features and family details of the insurer. The time through which an insured pays the premium for the policy is called Life Insurance term. On a general basis, there are no standard premiums as far as term insurance is concerned. A person can decide the amount to be paid on the basis of his requirements in terms of coverage and affordability in terms of finance. As of now the top 5 life insurance companies in India are Reliance Life Insurance, HDFC standard Life insurance, Bharti-axa life insurance, ICICI Prudential life and off-course LIC India. The following companies were considered after being judged on parameters such as the insurance quotes, the term that the insured had to pay the premium for, the cover that the policy was covering, etc, etc. All in all getting an insurance done for yourself at the earliest, once you start earning is an excellent way to get your financial future secured.