Someone, once famously, suggested a simple rule for utilization of money. The rule is as follows
- You should spend only one third of the money you earn per month for your living expenses like house rent, conveyance, food etc.
- The other one third should be saved for future requirements like higher study, building home.
- The Rest of the amount (i.e 33% of total earning) is to be invested which will give profits or opportunity which earn you money like Stocks, Bonds, Mutual Funds, Fixed Deposits.
So far, so good. But what about the money that will be with our loved ones when we won’t be around. As per the holy Geetha, Krishna said this to Arjun “Death is the last truth of life”. We all know that, but have you noticed anyone enjoying talks about the inevitability of death ?? I am sure none. But I think we should discuss about it because it’s the matter of peace of mind for our loved ones. Today I got hold of some very well-written insurance related information in Business Today magazine and I would like to share it with you.
- Experts recommend you should be insured at least for four times your annual income. We can get it at a very low price by term insurance. For example if you are 30 years old and earn about 50000 Rs. a month,you can buy this peace of mind for about 4250 Rs per year which is lesser than a cup of coffee a day.
- The term of the insurance plan is crucial : Go for the maximum term offered by the plan but it’s not useful to pay for an insurance cover well after you have stopped earning because always remember, the objective is to replace the insured person’s income ,not gain from the death.
- Do not expect returns.When we have mindset that ‘how much will i get back from this policy?’ we always pay a higher premium than a basic plan and get only the principal premium back without any interest.A plain term cover without the frills is better.
- Don’t be obsessed with LIC : There are so many online term plan started in November 2009 by different company like Aegon Religare Life Insurance Company ,those are cheaper than those bought through agents.