Friday, December 26, 2014

New Year: Target with Insurance

We all are in festive mood. Five more days to come to welcome New Year 2015. Usually we make promise for the new year. Let this year we promise about adequate insurance coverage to each and everyone life. For every one of us we need at least adequate Life Insurance and adequate Health insurance. In this regard, other insurances like car, home etc. insurances are also important. For the time being, we concentrate about the life and health insurance.

For an individual, the adequate life insurance cover shall be ten times of yearly income. Suppose, one person is earning 10 lakhs rupees per year, so he or she should take an insurance coverage of at least 1 crore rupees per year. To take one crore rupees insurance one has to spend maximum 10,000 rupees only. This amount of 10,000 rupees is very less amount comparative to the income. Most of the time we are ending with costly life insurance cover which has other benefits like maturity value etc. My suggestion to prospective buyers is that please don’t go by the conventional insurance policy or the endowment policy. Please take a term insurance of adequate coverage which was mentioned earlier in this article. 

You can take the following example from my experience:
When I started my carrier and a new earner I did not know much about personal finance. By the influence of one of my relative I have taken a Jeevan Saral Policy which has sum assured of 5 lakhs rupees and the yearly premium is Rs 24020 for 20 years period. After a few years when I come to know something about insurance I have realized that I have made a mistake.Let us say for the insurance coverage of 5 lakhs rupees you have to spend 500 rupees per year. The rest of the amount you can invest in a mutual fund which can return about 12-15 % interest which can return you more than 5 lakhs rupees. As an example if you invest 23000 rupees per year in a diversified equity mutual fund you will get approximately 1600000 rupees. Moreover if you invest this amount in tax saving fund you can tax benefit of the whole amount.

Next insurance which we need to take is the health insurance for total family. Now a days Health Care costs are rising day by day like anything. Even if you have the cover from existing employer please do not forget to take a health insurance because of the transition period of one job to another job and for the members of the family who are not covered under the insurance. If you have dependents like spouse and children take a family floater cover and if you have dependents like your parents means aged person prefer individual cover for them. For a principal insurer of aged 26 years and family of 4 persons including spouse and two children, the 3 lakhs medical insurance costs around Rs 6000.

So let’s begin this year with securing the adequate life and health insurance.


Wishing all of you a very very happy and prosperous new year 2015.

Thursday, November 20, 2014

Decision on Purchase

Last month I have bought a DSLR camera. I was supposed to get a performance bonus. Instead of saving the amount for uncertain future I was tempted how to spend the money. Then I was explore the option of buying Nikon D3100 costs around Rs 21000 from Amazon. Amazon was giving an offer that time which was inncreased my interest to buy the camera. Since, the camera came to my hand I have not used that like DSLR. It is serving the purpose of point and shoot camera. The same purpose can be served with Rs10000. That means I have lost Rs 11000. When I analysed my decision I found I have made a mistake buying the costly camera. So when buying someconsumrr electronic goods such as camera, mobile, LED tvs etc. please don't go by the flow, analyse the requirement and then go for buying. Ifyou don't do that you are actually losing the savings for your uncertain future.

Wednesday, November 5, 2014

EMI Vs SIP

Now a days young generation of our country is more interested in EMI i.e. Equated Monthly Installment over SIP (Systematic Investment Plan) or regular savings. This tendency has been increased due to E commerce portal. Credit card has added fuel to this tendency. In a office floor with a capacity of 500 persons you can easily see at least 50 new mobiles or some other electronic items are coming from Flipkart, amazon etc. They are more interested to buy it on offer even if they don't require it. 

In addition to the above, home loan, consumer durable loans and personal loans are adding burdens to the youth for their status war with their peers.

One should spend as per their requirement. Don' t go by the offer and try saving at least ten percent of your net income in the regular savings scheme like equity SIP or recurring deposit.