GIFT AND CHILDREN POLICY

Can I gift a policy?

Yes. By contacting the insurance company you can make an absolute assignment of the policy. The person to whom you assigned it, then becomes the owner. You should check with your tax advisor to find out if the gift makes you responsible for paying gift taxes

Should I buy life insurance on my children?

If you have extra money, and want to give them a base of life insurance to “start them off”, it is okay. Otherwise your life insurance can be better spent for adequate coverage on the person who brings in income to support the family.

How is cost determined?

How is cost determined?

The cost of life insurance is determined by the insurance company’s actuaries who take the following into consideration:

1. Mortality cost, or the cost of paying claims to the beneficiaries of insured people. Mortality costs for most insurance companies have declined in recent years because people in the United States have been living longer. This means there is a longer period to collect premiums and death claims are being paid out later than originally anticipated. Still companies must be careful to select new policyholders who are basically healthy, and they should charge rates which reflect the actual mortality risks of those people who have serious health problems or who engage in potentially dangerous activities. Otherwise, they might have higher than expected costs for death claims, which could cause financial difficulties for them.

2. Operations cost, the cost of operating the insurance company and selling its products. These costs includes marketing costs (commissions; costs of operating sales offices; advertising expenses; etc.), and non-marketing costs (the cost of constructing and maintaining company buildings; salaries of officers and staff; etc.).

3. The return on investments. Insurance companies invest money until they need it to pay claims or expenses. If they can earn good investment returns, this will help to pay some of their expenses and reduce the cost of insurance. They will then be able to sell policies at lower premiums and compete more effectively against other companies.

The overall effect of all these factors determines how much the company needs to charge in order to provide life coverage while making a profit and paying dividends to its policyholders, if it is a mutual insurance company. Several large mutual insurance companies have recently changed to stockholder owned companies through a process called demutualization. In stockholder owned companies, dividends are paid to the stockholders.

SOME FACTS

LIFE INSURANCE

Why do we need life insurance? Well, the fact is, we don’t all need it. But if you have a family or people who depend on your income, it is definitely something you should consider buying in order to protect your loved ones. Life insurance can be difficult to grasp due to the different types that are available.

Do I need life insurance?

You need life insurance if some person would experience a significant financial loss in the event of your death. A common example of this is the family breadwinner whose income totally or partially supports a family. The death of that person would result in loss of income and financial harm for the remaining family members. Other reasons are to put your kids through school, pay the car note, mortgage, or other debts you have left behind, and pay funeral expenses.

Why buy life insurance?

Some reasons to buy life insurance are:

1. Income Replacement

2. Funeral Expenses

3. Pay Off Debts

4. Pay Off Medical Bills

5. Mortgage life insurance

What are ULIPs

What are ULIPs?

Unit linked insurance plans (ULIPs) are insurance plans that combine the benefit of investment with insurance. They give the investor an option to put a part of their premium in various investment portfolios and the portfolio will then grow depending upon the performance of the assets that they hold. The important thing is that the benefits at the end of the plan depend upon the performance of the portfolio where the premium is invested.

How do you track them?

Just like you see the performance of mutual fund schemes by looking at their net asset value (NAV) and their growth, one has to look at how the NAV of the ULIP plans have moved and the returns they show. This will ensure that the investor knows how his investment is performing. Insurance companies now declare their NAV regularly with several schemes declaring it on a daily basis.

What does the movement depend on?

The movement of the NAV of the plan will depend upon the composition of the assets of the plan. This means that equity options or growth options in the ULIP plans will show a different movement as compared to a conservative option or a debt portfolio. The nature of the plan and the investment will determine the way in which the performance is witnessed. Investors can make their investment choice based upon the features of a plan as well their objectives and risk taking ability.

Switch options?

A choice is available for investors to switch between various options. By looking at the performance of their particular option they are able to make the right decision in an effective manner as they can balance the risk along with the kind of returns that they would like from their investments.

HDFC'S YOUNG STAR :
ALLOCATION: 40%
CHARGE : 60%

BIRLA'S FLEXI LIFE:
ALLOCATION: 35%
CHARGE : 65%

HDFC'S ENDOWMENT PLUS
ALLOCATION: 40%
CHARGE: 60%

ICICI'S LIFE TIME PLUS
ALLOCATION: 75%
1ST YEAR CHARGE: 25%
2ND YEAR CHARGE: 25%

Policy - ING LIFE PLUS

Allocation Rate

Year Allocation %
1 83%
2 88%
3 95%
4 95%
5 95%

6th onwards 100%

Top Up 99%

This is the policy from ING Vysya Life Insurance, You can compare it with all the ULIPs of all the companies.

Only 17% charges, amazing,

Thats why ING LIFE PLUS is best policy for customer,

Ulips: How IRDA is passing the buck

Ulips: How IRDA is passing the buck

Has the Insurance Regulatory and Development Authority of India finally woken up to all the mis-selling that is happening? Well, it would like us to believe it has. But the truth of the matter is that it hasn't.

IRDA has thought of a new way to prevent the mis-selling of Unit Linked Insurance Plans (Ulips).

From now on, individuals investing in a Ulip, will have to sign a one-page document. This document will say that the individual is satisfied with what the agent has communicated and that buying the Ulip has been an informed choice.