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Life insurancewelcome to the world of term Insurance. It is a simple product: you buy a term cover and your dependents will be compensated if something happens to you during the term of the cover. If you outlive the policy, well, good for you. But the insurance company won't give you any cash prize for that. ! Buy peace of mind with term insurance! Matter of Life & Death. Don't shun pure life cover just because you won't get your money back. It's the best gift you can get to your dear ones. Pure term insurance offers high insurance cover at the least cost. Buy the right tenure and adequate cover by calculating the Human Life Value. Enhance your cover with the help of additional Riders .Pay premium on time to keep the policy live.
How much cover should you have?
Here is one way to calculate it - first, write down the amount of your outstanding loans. Second, write down your annual salary. Your sum assured should earn your annual salary after paying for your loans if invested at the rate of 6% per annum. Bit complex, isn't it?Let us put some numbers to it. You have a home loan of Rs 12 lakh to be paid. Your salary is Rs 10 lakh per year. Multiply your yearly salary (Rs 10 lakh) by 100. You will get Rs 10 crore. Now divide that figure by 6. You get Rs 1.67 crore. Add Rs 12 lakh (your outstanding loan). You arrive at a sum of Rs 1.79 crore or Rs 1.8 crore. So, you should insure yourself for Rs 1.8 crore. 1. Human Life Value (HLV)The key role of life insurance is to provide protection for the family of the insured, should the insured die unexpectedly. It does this by paying out the sum insured under the policy, should the worst happen. But how much should this sum insured be? How much is the insured's life worth? What is Human Life Value?* [also look at the separate write up, shown with illustration]Ask a person how much their life is worth and without a second thought they will say that human life is priceless and no amount of money can compensate for the value of a human being. But insurance companies and their agents will differ. To arrive at the amount of insurance cover that a person should take out they need to assign a monetary value to human life. This is called Human Life Value (HLV). Like real estate, equities/shares or commodities, a human being is also an asset and has the potential to generate income. Through Human Life Value (HLV) the insurance company tries to measure the economic value of a person or how much the person is worth in monetary terms. In life insurance, HLV is used as a yardstick to determine how much life insurance cover a person should have. The correct cover will ensure that if the person dies today, there will be no economic loss to their family. Of course, emotional loss cannot be compensated for. The lump sum amount that the person's family will get from the insurance company will compensate for the future income of the life insured; the income they would have earned had they survived. How much life insurance should one have?
What many people often do not realise is that, in spite of having a number of Insurance policies, if the amount of cover provided by the individual policies is small they can be grossly underinsured. So what then is the correct amount of life insurance cover that a person should have? We can answer this by looking at the different ways of arriving at Human Life Value (HLV). The amount of life insurance cover that a person should have should be equal to their HLV.
Income Replacement MethodThis method takes into consideration the future income earning potential of a person during the remaining years of their working life, so that in the event of their untimely death their family will not suffer financial loss.This is a two-step process Step 1: Calculate the total future income; you'll earning potential during the remaining working years. Step 2:calculate the present value of this amount (arrived at step 1) as at today. This is persons HLV. The life cover should be equal to HLV. In the event of death, this method captures the future potential income he should have earned, if survived. In summary, this method equates human life value to the present value of future earnings. Choose the Right Insurance Advisor: The major problem plaguing the insurance industry is mis-selling. You should be able to spot the HONEST & COMPETENT ADVISOR to give the right product for your need. For further info, you can feel free to mail us
info@growmoneyfincorp.com your need; we shall be able to help you.
Review your needs frequently:As you go through your life, your circumstances change. Your marital status changes, your income will vary, you will need to take care for your spouse and kids. So the life cover you have started with may not be enough to provide security for you and your dependents. Hence it is essential for you to conduct a regular review of your situation and decide if your present insurance cover is enough for your circumstances.The Right Cover:Insurance is a very crucial component of every investor's financial plan. Absence or inadequate insurance can throw the investor's financial plan out of gear. But at the same time, taking very high over will mean you end up paying more for the cover you don't need. Hence, it is important to take right insurance cover for you. This can be done by establishing your needs, deciding the amount of sum assured, and reviewing your insurance requirements regularly.What we can offer:
We'll help you to arrive at the right cover, with the data if given to us. We'll suggest a right product /plan. Our advice could be worth to you & your family. For any other query Or if you have questions ,
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