Life Insurance, Health Insurance & Investments planning you need

What aspects of life you need to plan ?

- Save Tax. You may end up paying 10% to 25% of your total yearly earnings as Income Tax. Instead of paying taxes you can invest your money in schemes that will not only save your tax but also give you high returns. So double benefit. If you you do it every year then you will have lot of saving s.

- Life Insurance: As you are an important earning member of your family or will make a family, it is must for you to secure the future of your family in case of your Death or Disability. Earlier you plan, more you save. If you are interested in pure Insurance cover for yourself I suggest to go for Term Assurance & Whole Life Limited payment policies. I believe that you should have life insurance cover of at least 10 times your average Yearly Salary though 20 times is recommended as your salary will increase in future.

- Health care – is most important planning aspect because in India Health care problems are the highest along with highest risk of accidents. Secondly in India we have so many relatives and in case of difficulty it will be almost necessary for you to contribute lot of money for their health care. Listening things like my mother or close relative has major operation etc. is very common. Even if you take care of your health, others around you may not. It is necessary to invest in health care plans like Mediclaim for yourself, your wife, children as well as parents. Many such schemes now offer Cashless treatment, i.e. in case of problem just show the Health insurance card to the hospital staff and they will carry cashless treatment if the cost is less then the insured cost. In Rs.10-15k per annum you may be able to pay for the health insurance of your complete family.

Investment – Company invest on your behalf in PF already for you but this amount may not be significant. So you need to invest more specially to meet your future bulk money requirement. Once you grow you will need to pay large sums for Children education, Marriage, Foreign travel, Valuable item purchase or emergencies. Hence if you have some investments you may withdraw them in future to meet these needs. At present investment in Tax saving Mutual Funds and ELSS (also like mutual funds) is considered best investment option. Many people think that these are risky but overall they have very less risk but better returns. More then 95% of the people who have invested in Mutual funds have benefited. All long term investors are expected to always benefit.

Life Insurance planning in India

Life Insurance

In case of Term assurance policy (one type of policy) you can get a large amount of Insurance for next 15-20 years for a very low cost. The insurance claim can be made only in case of death/disability withing the next 15-20 yrs. After that the policy will expire. Though you do not get back any money but also the amount payable is very low compared ot any other policy.

Second useful policy is Whole life Limited payment. This policy is valid for whole life but premium payment may end at the time of your retirement. In this case the Insured amount will be received by your family/nominee after your Death. You can also have add ons in this policy like Disability rider etc. that will allow you to benefit in case of disability.

Other then these 2 schemes, other Life Insurance policies are (Investment + Life Insurance) policies. i.e. part of your premium is used for giving you Insurance and rest of the part is invested in markets (like mutual funds) to give you returns after maturity. By making different combinations Insurance companies create several hundred different confusing schemes.

For employees who earn below 20k per month, i suggest to consider combination schemes.
For employees who earn above 20k per month, i suggest to invest separately in the Life Insurance & Investment schemes. Do not mix them, as in future when your income grow your investment requirements will grow faster but your insurance requirements may not grow. It is easier to close a investment and start new one, combine investment but combining or reviewing Insurance policies is not possible. Also as India is growing new and new investment options are coming to the market and you may like to change your investment planning every few year.