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How to Choose Insurance Plan for Yourself and Your Loved Ones


An Investment insurance plan allows you to build a savings habit so that you enjoy life without any worry. Invest in the best investment plans and secure your financial goals. – PowerPoint PPT presentation

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Title: How to Choose Insurance Plan for Yourself and Your Loved Ones

Investment Insurance Plans
How to Choose Insurance Plan for Yourself and
Your Loved Ones
If you're new to the 'World of Insurances', you
may not know what insurances to purchase. Some
may buy it because the agent's is their friends
or relatives. It could also because they want to
help the agent's meeting his/her production
target rather than fulfilling their insurance
needs. Whatever the reasons are, it end up that
their first insurance plan may be differs from
their actual needs. Most established insurance
firms carry out needs analysis session of their
potential clients first before recommending any
relevant products. The analysis is to understand
the potential client's ASPIRATION, CONCERN and
FINANCIAL STATUS before an appropriate proposal
can be drafted to meet those needs. Only after
the relevant info has been collected, can an
insurance consultant work towards addressing the
client's needs.
Term Plan
This is the most basic plan for everyone. You can
have a higher coverage at the lowest possible
premium. Of course, the premium depends on your
age at inception of the policy and your medical
status. Generally, such plans only provide
coverage against death (regardless of the cause)
and total and permanent disability. (The
definition of total and permanent disability
varies from firm to firm.) This plan is also
known as 'pure' insurance - it only pays based
upon the Principle of Indemnity (paid only if
there is loss). As the name applies, "Term Plan"
has its expiry date, for example, 10, 15, 20, 25
or 30 years from the date of inception or it is
tag to the insured age till 60, 65 or 70 years
old. If the insured terminates the policy
earlier, the premium payment will stop, and so
does the coverage.
Whole Life Plan
Most working adults would like to have this plan.
If you plan to own one, start this plan at a
younger age as the premium is much lower. The
premium to this plan will be fixed throughout
your lifetime (except for addition of riders). It
gives you the basic protection against death and
total and permanent disability. Whole Life Plan
is usually a 'participating policy' which means
the amount of protection will grow (increase)
over the years as the Investment Insurance Plans
'invest' part of the premium and give it back to
the policyholders through dividends or an added
coverage. The amount of dividend paid will
fluctuate with the insurance company's investment
performance. Although this plan has a 'Cash
Value' - which is the amount to be paid out in
cash upon its termination, early termination may
result in losses and therefore not recommended.
As a 'Rule of Thumb', policies in force for more
than 20 years will have cash value higher than
the premium paid. Some of this plan also come
with limited payment term whereby the insured
only need to pay a certain period, say 15 or 20
years but yet having a lifetime coverage. 
Saving or Endowment Plan
As the name implies, this plan is more for those
who want to save for certain purposes such as
wedding, buying a house, further studies, etc.
One thing to note is for the plan 'to grow', it
requires time. Therefore, this plan works well if
your purpose is building fund for your child's
education, planning your own retirement or
anything whereby you need cash 18-25 years down
the road. Short term planning may not be
feasible. This is also a participating policy and
has cash value. Once the plan has reached its
maturity, the whole policy will pay out and your
coverage ceased. You cannot extend the period any
further. Therefore, you need to plan properly
before taking such policy.
Investment Plan
Insurance companies also promote investment plan
for its policyholders. If you're competent
investor in stock market yourself or other form
of investment, I is best you avoid such plan and
invest on your own. This is because Investment
Insurance Plans has more charges - insurance
charges and investment charges. Investment
charges include bid-offer spread, annual fund
fee, top-up fee (if any) and other distribution
charges. The insurance charge is deducted from
the units that you bought and is calculated on
monthly basis. Furthermore, you will be subjected
to the fluctuating unit prices. The only
difference is that should there be a claim on
death or total permanent disability, the amount
paid up will be the sum of insurance coverage and
the value of your underlying units.
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