Child life insurance policy

                                        

Marriage is bounded by love and every one will agree that kids are the proof of love. Getting a kid is a different feeling altogether where every father and mother wish to do everything to groom the kid and in every possible way to make it happy to see the world which is beautiful. Everybody is dependent on their parent until we start earning on our own. Indian’s differ from the west in this aspect of grooming their kid until they stand on their own. So the need for money to grow the kid from child to a man or woman is very much needed in our country. Now you can see the need for money and the reasons to choose or not choose these child insurance policies.

Child Insurance Policy

Most of the child insurance policy insures the life assured; the person who takes the policy for the child and the child itself. The minimum entry age is from 0 years and restricted mostly from 13 in all the insurance companies. The premium paying term may be for 7 years or more depending on the policy chosen. For selling the policies the most effective tool chosen is that the premium can be shown for tax rebate and it is for your kid. If someone says won’t you protect your child’s future with this beautiful policy, it will surely touch your emotion and you will give up your resistance in taking this policy. Have you analyzed the pros and cons in choosing this policy? A PPF account in the name of a kid and invested for 15 years will earn more than these policies.

Different case studies

Consider this example, Engineering at present may cost you 7, 00,000 and after 15 years including Inflation @ 7% the amount required may be 1655419 after adjusting for tax. For accumulating this amount you need to pay 6254 monthly. If you pay the same amount every month by opening a PPF account in the name of a kid it may generate 22.5 Lakhs more than what you get in your child insurance policy.

Monthly in PPF	No of years	Total Amt paid	Amt @ Maturity
6254	15	1125720	2253621

As future costs of education is bound to increase and if the child chooses different stream which may requires more money PPF may be the good option among these two examples. If the sole intention of these policies is to have some amount accumulated for your kid, then you can open Recurring deposits and Fixed deposits which will generate more returns.

Monthly in MF	No of years	Total Amt paid	Amt @ Maturity @ 12%
6254	15	1125720	2952000

Consider investing the same amount in mutual fund which has returns only at 12%, you will end up accumulating around 30Lakhs. Now which one will you choose among the three?

Are you Insured?

           

[imagesource : rising23.com] 

Insurance is In-assurance; the person who is insured will be assured of getting this money. Insurance has evolved over the years with different products with the combination of investment return options. To make the people insured insurance companies had started selling policies for 10 or 15 years with fewer sum assured through agents, after the end of the period the total maturity amount would have been lesser than fixed deposit amount. Do you know that roughly the insurance returns will work out to be around 5-6% and this cannot be considered as an investment. Insurance and investment are different and both should not be confused while choosing.

Risk Protection

Everyone should be insured to have a risk protection in their life. Just like wearing helmet for safety while riding the bike this is very much in need. Loss of a person can cause great grievance, but when they are insured that makes their family from getting not drowned in debt. Are you not risk averse? The daily bike ride, even if you drive safely there are times when you lose your life if hit by a car, bike or bus if you don’t wear helmets. Even if you eat safely you may get food poison or allergic once in a while, the reason for cancer is still unknown. Life is uncertain and at those uncertain times, insurance can give a helping hand.

                       

                                                           [imagesource : imagecarde.com]

Are you sufficiently Insured

Insurance should be taken considering the debt he\she has over the years and including monthly expense. For example, Sam draws a salary of 40k per month and has debts of around 15lakhs and till now he has taken insurance policy of 5lakhs for which he makes a premium of 30k per year. If he completes the full 20 years term he will be getting around 10lakhs, if he doesn’t survive his family will be getting only around 10lakhs. His family will not be able to close the debts and has he been the only earning member everything will turn upside down in his home now. Suppose if he has taken a 50lakh term policy, his family would have ended up 50lakh with which they would have closed all debts and would have been happy enough to lead a life in the society till someone starts earning.

Motor vehicle insurance policy

                                                                                      [Image source : policyboss.com]

What is Motor Insurance?

Motor Insurance the only type which everyone is forced to take while buying a bike, car etc. Even while driving the owner needs to keep the insurance papers with him to escape from the wrath of Traffic police. It has been made mandatory by The India motor vehicles act 1988. All the motor Insurance in India is governed by IRDA, Insurance Regulatory and Development Authority which has been given the status to foresee the matters related to this. The Act came into force in 1989.

Vehicle Insurance provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from the specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions.

History of vehicle Insurance

History goes back to First world war were constant damage to cars and other vehicles at that time which required constant repair. In United Kingdom during 1930 they had made vehicle insurance compulsory for the drivers or owners to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road. German followed United Kingdom and enacted similar legislation in 1939. After this, any country followed suit and enacted such laws to protect the insured and as well for the citizens who get damaged because of collisions.

Need for Vehicle insurance

Be Responsible:

The damage with car or any vehicle could be higher and if you had caused damage to a friend you will rush to help, the same logic has to be applied to all the strangers on the street. Vehicle insurance protects every one and if you had got into any collision you will also receive compensation on that day. Accident is just a probability and it may be caused by anybody driving outside by collision also, ca insurance is a risk protection and financial protection which will be barred by insurance companies.

Other benefits:

Apart from damage due to collisions it also protects the owner financially if it has been vandalized in riot, stolen by unknown, destroyed by fire etc. There are ranges of extra benefits which are being provided as add on benefits nowadays.

Renew your vehicle Insurance periodically and on time to get all the benefits.