Basic Guide for Buying an Online Life Insurance Plan

NUTAN GUPTA

05 Oct 2016

A lot of people keep thinking whether to buy life insurance or not. Then there are those who think that buying a small Rs. 5 lakh insurance policy will be enough. By the time they realize how wrong they were, it’s already too late. Either they are so old that premiums are very high, or they are already dead.

The reason most people delay in buying adequate insurance cover is due to the doubts they have. As an individual with family, it is one’s biggest financial responsibility to ensure that his dependents are taken care off in case of his death. Life Insurance is the simplest way to fulfill that responsibility.

A major cause of financial distress in life of dependents, after the death of a person is that the person was under-insured. So, the most important step in buying insurance is to calculate the right coverage amount. Your insurance plan should cover all outstanding liabilities, provide for future day-today expenses and major life goals. There are some thumb rules which will help to calculate the amount. Like the one that says to buy a policy with at least 10 times the annual income. However, one should give some thought to individual’s specific situation and needs and then decide what the right cover should be.

Choosing the right insurer is also very important Make sure you know about claim settlement ratios, solvency ratios etc. These ratios tell how likely it is that the claim filed by dependents, in case of your death to be settled. It also tells whether the insurance company is financially capable of providing claims or not. You don’t want to buy a big enough cover from a company, which has a lower chance of being settled by it.

So make sure that you get all your doubts cleared before it’s too late. If you still have any doubts, do not hesitate in getting in touch with a financial advisor.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Basic Guide for Buying an Online Life Insurance Plan

NUTAN GUPTA

05 Oct 2016

A lot of people keep thinking whether to buy life insurance or not. Then there are those who think that buying a small Rs. 5 lakh insurance policy will be enough. By the time they realize how wrong they were, it’s already too late. Either they are so old that premiums are very high, or they are already dead.

The reason most people delay in buying adequate insurance cover is due to the doubts they have. As an individual with family, it is one’s biggest financial responsibility to ensure that his dependents are taken care off in case of his death. Life Insurance is the simplest way to fulfill that responsibility.

A major cause of financial distress in life of dependents, after the death of a person is that the person was under-insured. So, the most important step in buying insurance is to calculate the right coverage amount. Your insurance plan should cover all outstanding liabilities, provide for future day-today expenses and major life goals. There are some thumb rules which will help to calculate the amount. Like the one that says to buy a policy with at least 10 times the annual income. However, one should give some thought to individual’s specific situation and needs and then decide what the right cover should be.

Choosing the right insurer is also very important Make sure you know about claim settlement ratios, solvency ratios etc. These ratios tell how likely it is that the claim filed by dependents, in case of your death to be settled. It also tells whether the insurance company is financially capable of providing claims or not. You don’t want to buy a big enough cover from a company, which has a lower chance of being settled by it.

So make sure that you get all your doubts cleared before it’s too late. If you still have any doubts, do not hesitate in getting in touch with a financial advisor.