Life Insurance: Smart Returns, Tax Savings

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Life Insurance Smart Returns, Tax Savings
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• As a well-aware, net savvy professional, you must
  be conscious of the need of the life insurance
  coverage you require to secure your family's
  financial life. Today, the provisions of the
  Income Tax Act offer you provisions under which
  you can buy life insurance coverage, generate
  returns and save on tax too.
• A large number of people today research for
  insurance plans online and zero-in on a life
  insurance plan which is providing best returns,
  at present. Is that the right approach? Well, it
  is okay to research and come to know about the
  best possible life insurance plan.
• But, here is the trap. Many people just put all
  of the insurance money into one single policy.
  Some insurance agents can urge you to do this.
  They can show you an online account of one of
  their clients who has generated returns to the
  tune of Rs 25-40 per cent in a year. Beware -
  these are mostly fake accounts which are used to
  dupe customers. Unfortunately, many insurance
  buyers fall into this trap.

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• People buy life insurance policies with a premium
  amount of as much as Rs 1 -1.5 lakh and then
  expect that this will bring great returns to
  them.
• It is not advisable at all. You must spread your
  risks and get different types of policies. Since
  section 80C of the Income Tax Act provides for
  tax deductions of up to Rs 1.5 lakh, you can
  easily buy multiple policies. Here are some
  useful tips to diversify your insurance
  investments.
• Get a mix of public and private sector insurance
  companies Public sector insurance companies are
  known for their good claim settlement ratios. At
  the same time, they have a notorious image of
  producing very low rates of returns. Do not be
  surprised if an LIC policy gets less than 4-5 per
  cent returns in a year. Assuming that you are a
  young professional in the age between 25-40
  years, you can buy a policy of not more than 25
  per cent of your total insurance corpus.

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• Select your funds carefully If you have decided
  to invest in ULIPs, good. But that is half job
  done. Under ULIPs, you have to select funds. An
  insurance company can suggest you default
  allocation of funds but you can always apply your
  mind to it.
• Broadly, insurance companies have funds which
  invest in equity markets and debt instruments.
  Within these two categories, you have several
  options. Equity based funds generally have blue
  chip funds, mid cap funds, so on and so forth.
  Debt funds invest in bonds and government
  securities, which offer very low returns but do
  not carry any risks.
• There is also a Balanced Fund under which you
  funds are equally invested in equity and debt
  markets. Thus, you have three different options
  to optimise your insurance portfolio returns.
• If you have a traditional life insurance policy
  from a public sector undertaking, you must prefer
  minimum allocation to bond funds. You can
  allocate some 5 per cent in bonds and rest in
  equity based funds.
• You can go for a mix of blue chip and mid cap
  funds. This strategy automatically balances your
  risks and generates superior returns in the long
  run.
• Buy the policy online Today, most life insurance
  companies offer online buying option. What is the
  advantage? There are several advantages. First,
  if you buy online insurance, the insurance
  company does not have to pay commission to sales
  agent. Thus, you will have an indirect saving
  since the life insurance company will be able to
  invest this amount on your behalf.

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• In the long run, you will realise that your
  friends who bought the same policy from an
  insurance agent is generating lesser returns than
  the one you bought online. Yes, do not be
  surprised. It is a market reality.
• There are thousands of such cases where insurance
  companies have to shell out commissions in the
  range of 10-40 per cent. Naturally, this
  commission is paid out from the premium you pay.
  The returns are bound to be low in this case
  because the insurance company will invest less
  amount and allocate more funds in the name of
  expenditure.
• and also helps u to Tax Saving Investments
  plan.
• Therefore, you must buy life insurance online. If
  you are facing any issues or have any queries
  with regards to the plan, you can consult their
  customer care centers through a telephonic call
  or online chat.
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• Even in the worst case situation, there is a
  free-look period of around 15 days you receive
  the policy. If you are not satisfied with any of
  the features, you can return the policy to the
  company.
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• Article Source http//EzineArticles.com/8965595

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