Category Archives: Insurance

20 Jan

5 Things you should recognize about Term Insurance Plans

Finheal
Insurance
Tags: loan liability, sum assured, term insurance
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Term Life Insurance

I like to associate Term insurance with a Parachute – in simple words, it has your back. While it is not exactly avoidance calculate and cannot stop any event from occurrence, it does defend the financial prospect of your kith and kin. A few things you should stay in mind while considering a pure protection cover like a term plan.

1. Low Cost, but no Returns: It is considered and cost to offer a pay out in case of demise only. It is not prearranged to be an investment, or give you the returns. The upside – it is low cost. The downside – there is none, because if you don’t get a disburse out, it means you are alive and kicking!

2. Do you require it?: Like I have mentioned previously, it has your back. If you have a loan of any type and would not want the responsibility to fall on any family member in your absence, you absolutely require some form of term insurance. On the other hand, you may be earning an income that sustains your family / their lifestyle. You certainly don’t want them to negotiation on the same. Do them a good turn and get you some term cover?

3. How long should you stay paying for?: Start with covering yourself all the way through your earning years. So you just subtract your current age from your retirement age and take a term plan for that long. Also, if you are buying a term plan to cover you against a loan liability, you can obtain a reducing balance cover that reflects your loan schedule (it’s cheaper!).

4. Choose your Sum Assured and Pay the similar amount for many years: The beauty of human being protection covers is that they are planning to charge the same amount of premium through the term of the plan even though you grow older and your risks increase. Basically, if you start young and purchase for a long period you pay a level amount through the period. No age based surprises! You can reconsider your wants every 3-5 years and put in more cover as needed.

5. Very Simple: If you are one of those who set up sweating at the thought of crunching numbers or dealing with financial plans, you have not anything to fear. Unlike various insurance and investment options, there is not much rocket science when it comes to term plans. You know an amount you pay for say 15-20-25 years (as you decide) and you know a sum your family receives in the case of the life assured unlucky demise. It is simple to compare as well as long as you keep the total sum assured, age and term constant!

Term Insurance is the majority selfless investment you create for your family. It is a very essential step in your journey of financial planning. It is a good part to start. After all, it’s notably quoted ‘’we can’t plan life. All we can do is be obtainable from it.’’

20 Dec

Are Convertible Investment Plan feasible savings options?

A convertible investment is the type of financial tool that carries the option to convert into another financial tool. Most common convertible investments are Bonds and Preferred Stocks. The convertibility feature enables these to convert into Common Stocks of the issuing company at the prearranged terms and conditions.

Risk tolerance differs from one investor to another. Investment pattern is unfair by age, income, stage of life, disposable income, risk taking capabilities and so on. Based on the Risk-Return trade off, there are dissimilar kinds of instruments that propose investment key to the broad variety of investors. Between the risk free bonds in one end and totally risky equity on the other, different monetary instruments like the plans with convertible features are accessible that provide different investment choices for a lot of investors.

Following points talk about the pros and cons of these instruments that make these feasible options as saving tools.

Convertible Bonds

This fundamentally is a hybrid of debt and equity. A convertible bond can be exchanged into common shares at a fixed ratio as decided at the time of issuing.

Main features if Convertible Bonds are:

Conversion of bonds to common stocks is non-taxable, and it is self-governing of the fair market value of the stock during conversion.

Being fundamentally a bond, it has a lower volatility and higher safety than the corporate common stock.

At the same time, it gives a regular interest income, although its coupon rate is lower than regular corporate bonds.

Investors have the benefit of converting this to Common stock while the company’s stock price goes up

In case conversion alternative could not be executed, the investor still gets the usual cash flow from interest payment and the go back of principal upon maturity

In view of the above criteria, the investors who desire to invest long term and opt for a regular inflow of money from their investments with a brighter earning possible of conversion to high performing stocks find this instrument as a feasible saving option. This is a good compromise between risk and return.

Convertible Stocks

These are the favorite stocks that can be converted into common stocks as of a predetermined date at a specific ratio. Preferred stocks are usually pay after company’s brand and this also generate a regular dividend, but next in main concern after corporate bonds. Moreover, Proffered stocks obtain bonus out of a company’s profit but not from cash flow. So, to create the preferred shares more attractive to investors, convertibility characteristic is added. This gives the alternative to convert them into a particular number of ordinary shares, after a predetermined date.

Main features if Convertible Stocks are:

If the common shares rise in worth, this characteristic is attractive

If you want first low risk, but a higher return if company performance is improved than expected, then preferred stock is the alternative

Preferred stocks have an upper limit of stock price. But if it convertibility is supplementary, and then this limit will not be suitable. This will give benefit when the company’s stock goes up. In those circumstances, a good capital gain is likely for preferred stocks with convertibility.

Prudence for Convertible Preferred Stocks:

However, in case of liquidating or bankruptcy of the issuer, Convertible preferred stock ranks below convertible bonds. So there is more uncertainty of getting back money compared to convertible bonds.

Also, the information about preferred stocks (as well as convertible versions) is limited or busy at times in the market. This makes the buy of these difficult instruments.

10 Jun

Benefits of Life Insurance

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

An insurer, or banner page carrier, is a company selling the banner page the insured, or policyholder, is the person or entity buying the banner page policy. The amount of money to be charged for a certain amount of banner page coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

A person or company registered as an adviser on matters of insurance and as an arranger of insurance cover with an insurer on behalf of a client.

Life Insurance has many advantages. If a family class receiver or a spouse or child is designated as the beneficiary of the life insurance proceeds. The policy may not be liable from the capture by the creditors of the policy owner or the life insured.

The death benefit owed to a named receiver under a life insurance policy does not form part of the land of the life insured. Therefore, the life insurance profits are not subject to estate reduction costs, such as probate, authorized and executor’s fees, and creditor claims. In addition, life insurance profits owed to a named receiver will flow straight to that beneficiary without the common holdup concerned in the settling of an estate.

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