Term Life Insurance plan or Endowment life insurance plan

The above question always comes up when ever we purchase any insurance product. Every time we baffled and select wrong product most of the time obviously such wrong choice sometimes hamper our future anticipation. Let’s understand both product then we compare.

Term Plan, as name suggested, it is for specific period of time i.e. 5/10/15/20/30 years. It is the purest and cheapest form of insurance. In case of unexpected death, dependents /nominee will receive cover amount. This policy do not give any maturity benefit however provide high cover at less premium.

Now a days online term plans are also available which you can take directly.

Endowment Plan are contracts designed to give two benefits sum assured in case of death or Maturity amount if policy holder survived the term.

After knowing both any one can choose Term plan over Endowment  plan. But insurance agent will always guide to buy endowment plan (In that case they are most precious blessing of God and they are our well wisher).

Then why every financial planner suggests Term Plan?

Sadly we are still not looking into bigger picture. Let’s understand it with a simple example:

Particulars	Mr. X	Mr. Y
Plan Choice	Term	Endowment
Age	30	30
Term	15	15
Sum Assured	1000000	1000000
Approx. Premium Yearly	2356	67000

Now as Mr. X is saving around 64644/- yearly on premium so he invested this excess in market (secured fund) and earns 9% return annually. While Mr. Y is relying on endowment plan savings.

After 15 Years
Particulars	Mr. X	Mr. Y
Plan Choice	Term	Endowment
Age	30	30
Term	15	15
Sum Assured	1000000	1000000
Sum for investment	64700	0
Return on investment	9%	SA + Bonus
Bonus	0%	30000/ year
Return	1946000	1450000

In above case Mr. X. earning better returns then Mr. Y. Now it’s very evident that in any case Term plan is far better choice then endowment plan.

Note : This calculation is done on the basis of consideration that the investment made by Mr.X earns him 9% pa returns.

I know you are enough smart to take a right decision.

About author : Article is written by Hitesh Paliwal , Risk analysis and insurance consultant with ARB financial consultants, You can reach him on 8551905999

ARB FinTip collection - August 2012

A collection for you of valuable tips in Personal financial management, Each tip is important to take you towards wealth creation.

ARB FinTip

 Medical reimbursement insurance and medical benefit insurance is different, Go through the details before buying one, medical reimbursement insurance is must. It helps you to protect your created wealth.

ARB FinTip

Retirement is a long term goal, take a calculated risk while planning to create a retirement nest. Long term debt may not be a good option.       

ARB FinTip
 A scientific and structured personal financial management has an ability to make your life stress free. 

ARB FinTip 
In the process of wealth creation it is important to have a knowledge of saving tax. Wealth creation process should start with Tax saving.

ARB FinTIp
Debt instruments are useful for short term goals and to keep reserves, at any given point of time you should have a allocation of some part of your wealth in Debt instrument.

ARB FinTip
Give each investment its own time to grow and give you a result, never expect results prematurely, it may result in mismanagement of investment portfolio.

ARB FinTip ( 6AUG2012)
 Taking direct control on your cash flows i.e. knowing your income and expenses is the first important step in money management, unfortunately most of the individuals Don't.

ARB FinTip - 8Aug 2012
 Create your own wealth so that you have to depend little on bad loans.

ARB FinTIp (10Aug2012)
 If you are not going to study on your own about financial market, Mutual funds are the better option to you for investment.

ARB FinTip (12Aug2012)
Bank FD and RD is a good option of investment if your goals are short term.( less than 3 years.), Stay away from equity market.

ARB FinTip (13Aug2012)
 Equity market is attractive now, Start long term SIP in Equity MF's, other wise you may have to regret after 5 years.

ARB FinTip (16Aug2012)
Keep 6 months expenses as an emergency fund in your savings a/c. This amount will protect you and your career.

ARBFinTip (17Aug2012)
Scheduling and tracking your expenses has a potential to save your 10% of expenses. Don't beleive me TRY it.

ARBFinTip (20Aug2012)
Consistency is an important attribute in wealth creation process.

ARB FinTip(22Aug2012) 

Free Personal financial management advice may be injurious to your financial health. Take care.

ARB FinTip(23Aug2012)

Before signing any application of financial products from the market pl take a time to look at features, Benefits and terms & conditions. If you are signing without reading you deserve to be cheated.

ARB FinTip (24Aug2012) 

 Medical benefit plan is not a replacement to Mediclaim . Mediclaim is must.

ARB FinTip(25Aug2012)

The best investment in this world is investing in self. You are the biggest asset for your self. know your true Value. 

ARB FinTip(25Aug2012)

The best investment in this world is investing in self. You are the biggest asset for your self. know your true Value. 

ARB FinTip (27Aug2012)

 If you want to become wealthy your investments overall percentage returns should be more then rate of inflation. If not your are not growing your asset it is reverse even if it is growing amount wise.

ARB FinTip(28 Aug2012)

 When it comes to pre-payment of the loans the loans with high interest rate should get a priority. this will result in reduction in Interest burden and optimization of cash flow.

  

ARB FinTip 

Negotiating in a skilled way is a art which you have nurture to be wealthy. This will save your cost and add to wealth creation :) 

ARB FinTip (30Aug2012)

Patience is a very important attribute in the process of wealth creation. You should know when and how  much to expect from the investments.

ARB FinTip (31Aug2012)

Hanging up with loss may keep you away from the wealth creation opportunities, so come out of loss and invest it in profit making opportunity.

About the author : Ashish Ramesh Bhave is a CERTIFIED FINANCIAL PLANNER, focused and specialized in financial planing for individuals and families. Can be reached at arbfinancials@gmail.com or Cell : 08793107044

Confused state of mind ?

Avery normal human psychological treat - we get confused when there are many options available and we have to choose one among them. for eg. We go to buy a shirt may be having some style colour in mind , showroom is full of different style and colours , latest arrivals .......We buy one and after reaching home it gives a sense that the one which you bought is not the one which you thought of but some thing else, Do this happens with you ?

Out of 100 I am sure most of you will agree to this.

The same is applicable when it comes to financial product selection. but the impact of the wrong selection of financial product is dangerous than that of a wrong selection of shirt, it has a life time effect and can hamper the optimization of the cash flows.So when you are in confused state of mind, Don't take decision. You can follow the following steps in such confused state of mind.

What you should do ?

The most important thing is that you should know what you are looking for i.e. benefits you are looking for .write down the benefits you are looking for and search in the market for the product which fulfills your all needs. This process will filter out some of the products for you and makes the selection process less complex for you.Don't go for any product which do not give you all the benefits you are looking for but gives some benefits which you had not thought for.When any two products are giving all your benefits then you can check the other offerings from the product.The other benefits you are getting should be checked against trade off value ( i.e. the cost you have to pay.)

If still it confuse you then you should go for professional help.

About the author : Ashish Ramesh Bhave is a CERTIFIED FINANCIAL PLANNER, focused and specialized in financial planing for individuals and families. Can be reached at arbfinancials@gmail.com or Cell : 08793107044,   www.arbfinancials.com