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15 Things to consider before buying Online Term Plan

Shitanshu Kapadia
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2
15 Things to consider before buying Online Term Plan

In today’s digital age, purchasing insurance has become as easy as ordering your favorite pizza online. But unlike a quick snack, buying an online term plan is a major financial decision—one that secures your family’s future. So, how do you know you’re making the right choice? Don’t worry; we’ve got you covered. Here are 15 crucial things to consider before clicking that “Buy Now” button.

online term insurance plan

15 Things to consider before buying an online term plan

1. Understand What a Term Plan Is

Let’s start with the basics. A term plan is a pure life insurance product that provides financial protection to your family in case of your untimely demise. Unlike traditional life insurance policies, there’s no maturity benefit. It’s like renting a house—you pay for protection but don’t get the premium back unless you choose additional features.

2. Assess Your Coverage Needs

How much coverage is enough? A good rule of thumb is to have a sum assured that’s at least 10-15 times your annual income. Factor in liabilities like loans, children’s education, and future expenses to determine an amount that secures your loved ones comfortably.

3. Consider Your Budget

While term plans are the most affordable life insurance products, it’s important to pick a premium you can consistently pay without stressing your finances. Online platforms offer tools to compare premiums—use them wisely.

4. Check the Insurer’s Claim Settlement Ratio (CSR)

A higher claim settlement ratio indicates a higher likelihood that your insurer will honor your family’s claim. Ideally, pick an insurer with a CSR above 95%. It’s like checking a restaurant’s reviews before you eat there—better safe than sorry!

5. Evaluate Policy Duration

The term of your policy matters. Ideally, your plan should cover you until you’re at least 60-65 years old, or until your financial liabilities reduce substantially. Buying short-term coverage might leave your family vulnerable.

6. Look for Riders and Add-ons

Riders are like the toppings on a pizza—they’re optional but add extra value. Popular riders include:

  • Accidental Death Benefit: Extra payout in case of accidental death.
  • Critical Illness Rider: Covers major illnesses like cancer or heart disease.
  • Waiver of Premium: Premiums are waived if you’re unable to pay due to disability.

7. Understand Premium Payment Options

Term plans offer multiple payment options—regular, limited, or single premiums.

  • Regular: Pay annually or monthly until the policy term ends.
  • Limited: Pay for a few years, but enjoy coverage for the full term.
  • Single: Pay a lump sum upfront. Choose an option that aligns with your financial plans.

8. Analyze Tax Benefits

One of the biggest perks of buying a term plan is the tax benefit. Under Section 80C of the Income Tax Act, premiums are eligible for a deduction of up to ₹1.5 lakh annually. Plus, the death benefit is tax-free under Section 10(10D). It’s a win-win!

9. Don’t Overlook Inflation

The ₹1 crore sum assured that sounds huge today might not be enough 20 years later. Inflation erodes purchasing power, so opt for increasing term insurance plans. These policies automatically raise your sum assured over time to keep up with inflation.

10. Opt for a Trusted Insurance Provider

The credibility of the insurer is as important as the policy itself. Look for established companies with a strong track record, excellent customer service, and user-friendly digital platforms.

11. Read the Fine Print

Before signing on the dotted line (or clicking “I Agree”), read the policy document carefully. Pay close attention to exclusions, terms, and conditions. For instance, deaths caused by suicide within the first year are usually not covered.

12. Check the Flexibility of the Policy

Life changes—your term plan should be flexible enough to adapt. Look for policies that allow you to increase your coverage as your financial responsibilities grow. For example, you might want higher coverage after marriage or the birth of a child.

13. Buy Early to Save on Premiums

The earlier you buy a term plan, the lower your premium will be. Age and health play a big role in determining the cost. It’s like booking flight tickets—the sooner you act, the cheaper it gets!

14. Ensure Proper Disclosure of Information

Be honest when sharing your medical history, lifestyle habits (like smoking or drinking), and personal details. Any mismatch or omission can lead to a rejected claim, leaving your family in distress.

15. Leverage Online Comparison Tools

Online platforms make comparing term plans quick and easy. Use comparison tools to evaluate multiple policies based on premiums, features, CSR, and add-ons. You can also read customer reviews to gauge service quality.

Buying an online term plan isn’t rocket science, but it’s certainly not something to rush into. By taking the time to understand your needs, comparing options, and choosing a credible insurer, you’ll ensure your family’s financial future remains secure. Remember, a term plan is more than just insurance; it’s peace of mind wrapped in a policy. So, do your homework, and invest in a plan that truly fits your life.

Simple Principal of Investment – Invest 30%

Shitanshu Kapadia
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0
Simple Principal of Investment – Invest 30%

Investment

When it comes to personal finance people often seek help from friends, relatives or financial planners. For majority of people handling finance is complex job. They often seek answer of questions such as How to invest wisely? Am I secure against financial risk? What Principal of investment I should follow?

Principal of Investment

So to help you out all these people I am here with Simple Principal of Investment. I call this principle as 30% rule of personal finance. Divide your income in to four part. First 30% of income for Investing. Second 30% income for spending and third 30% for EMI. Rest 10% of income can be used for risk coverage.

investment

This means that if you are earning 10000 Rs/- as take home salary than 3000 Rs/- must be kept for saving and investment. You can keep maximum 3000 Rs/- for expense and 3000 Rs/- for EMI. Rest 1000 Rs/- can be used for life insurance and other insurance need.

Invest 30% first:-

First thing you need to take care is develop concept of paying yourself first. Invest 30% of your income for your financial goals. You can increase or decrease this ratio based on your situation. Set automatic mechanism for investment or be punctual in terms of investing money.

Before investing make emergency fund. Emergency fund should be at least 6 month of your household expense.

Limit Expense Up to 30%

Make monthly budget with categories. Try to limit your expense up to 30% of your income.

One very good method to control expense is to divide your expense in to discretionary and mandatory. Now whenever you spend money ask simple question to self that whether this expense is really required.

Limit your EMI to 30% 

It is not advisable to take loan but in today with limited income it becomes compulsion to take loan to meet lifestyle expense.

Limit your EMI at 30% of your income. This limit is for all loans like Home loan, personal loan, auto loan etc. If you have already taken excessive loan try to make repayment of expensive loans.

Keep 10% for Insurance

Insurance is vital need today. Keep 10% money for insurance. This limit includes all insurance premium for all family members including health and life insurance.

If your insurance expense is very high than you might have purchased expensive polices or you may be over protected.

Use this simple Principal for Investment for financial success.

Hope you find above principal of investment useful.

Real Estate and Business key source of wealth for super rich

Shitanshu Kapadia
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0
Real Estate and Business key source of wealth for super rich

super rich

Super rich is mouth-watering word. Today everyone wants to be super rich but very few knows how super rich generate wealth, where they invest and how they spend. We are herewith quick report on super rich.

Risk and reward are adjacent to each other. Super rich understand this fact very well. Super rich have strong preference for investing in to riskier asset class.  Real estate and equity are key source of wealth for super rich says Kotak Wealth Management Report 2014.

Real Estate:-

Real estate is most favored investment asset class for super rich. The tangible nature and lots of opportunities associated with real estate in terms of sale and rental attracts people to this asset class.

source wealth

Two-thirds of the total distribution of wealth super rich comes from primary business and real estate. Among super rich, Professionals lay higher emphasis on premium real estate, whilst Entrepreneurs and Inheritors lay higher emphasis on their primary business. Real estate is trusted option for investment and it is not likely to lose its sheen in near future.

Equity:-

Equity is another asset class where all super rich invest their money. Even with formation of new government expectation in equity market is rising. Report indicates Allocation to equity has increased from 35% in 2012 to 38% in 2013 with a consequential reduction in debt investment to 24%.

Asset Allocation

Equity market was under performing since 2008 but now as market is picking up majority of investor will get attracted towards equity.

Super rich Style of Investing:-

Super rich have different styles of investing and decision making. Entrepreneurs tend to be more speculative in their investment styles of investing become more disciplined as we move from Entrepreneurs to Inheritors and Professionals.

Professionals rely on self-analysis for investment decision making. Entrepreneurs and Inheritors tend to consult family and friends more than Professionals when making decisions regarding investments. Our survey results show that 28% of Inheritors and 19% of Entrepreneurs rely on family and friends as compared to 13% of Professionals in their investment decisions.

Content credit –  Kotak Wealth Report

10 Best Short Term Investment Options

Shitanshu Kapadia
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1
10 Best Short Term Investment Options

My friend Shyam has excessive money and he is in search of a short-term investment option. He wants to get a quick return. Do you have excessive money? Do you want to invest this money for the short term?  If yes you are at the correct place today we will be discussing about 10 best short-term investment options.

Short term Investment need

A short-term investment option is required when we have excessive money and there is a pressing expense expected shortly. Expenses could be anything but investment in good short-term investment would definitely increase the value of money.

short term investment options

Short-Term Investment Options

Fixed Deposit

Fixed deposit is the most popular investment option. FD is available with different tenures, starting from 7 days to 5 years. The interest rate varies of FD varies from 7% to 9.25%. Nationalized banks, Cooperative banks, and corporate FDs are a few lucrative investment options.

Saving Bank Account

Saving a bank account is a safe and very good short-term investment option. You must be thinking that savings banks will provide less interest 4% only but today you can earn up to 7% interest by placing your money in the savings bank. Few banks also offer higher interest on savings bank accounts.

Auto Sweep Account

Auto sweep provides the combined benefit of saving bank accounts and fixed deposits. An auto sweep account is a very good short-term investment option. Auto sweep account automatically converts the surplus amount of your account into a fixed deposit. In some cases, the penalty is applicable if FD under the auto sweep account is broken before 1 year.

FMP 

A fixed maturity plan is a closed-ended debt scheme. FMP as the name suggests it has a fixed maturity date and fixed return. FMP is a low-risk risk high-return investment option. Investment in FMP also provides attractive tax benefits.

Liquid Funds

A liquid fund is a mutual fund that invests in money market instruments like term deposits, certificates of deposits, treasury bills, etc. You can liquidate money from a mutual fund in 24 hours.

Ultra Short-Term Funds

Ultra short-term funds invest in fixed-income instruments with short-term maturities. Ultra short-term funds provide good protection against interest rate risk. Some Good ultra-short-term investment funds are ICICI Prudential Ultra short-term plan and HDFC Ultra Short-term Bond Fund.

Certificate of Deposit

A certificate of Deposit is usually sold by the bank. The bank gives you the guarantee of returning the bank principal amount with interest. Premature withdrawal is not allowed in this option.

Equity Market Investment

Investment in the stock market is a risky affair, but it is a very good investment option for hungry investors. In the short term, you can gain good profit but sometimes you can end up making a loss also.

Mutual Funds 

Mutual funds are also one of the risky investment options for the short term.  If your investment horizon is for 1 year then you can invest in a good blue chip large cap oriented fund to get a good return.

Gold ETF 

Yellow shining gold could be another option for short-term investment. As we know in recent past gold has given very good returns. Instead of investing in physical gold, you should invest in Gold ETF. Gold ETF investment provides good liquidity.

Before investing in any short-term investment option given above make sure you understand investment options in terms of associated risk and expected returns. Understand terms and conditions thoroughly before making investment.

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