How CIBIL Score impacts your loan application

 

When it comes to applying for a personal loan, your financial history is under scrutiny, and one key player in this assessment is your CIBIL Score. The Credit Information Bureau of India (CIBIL) assigns a score ranging from 300 to 900, reflecting your creditworthiness. This score holds significant sway over your loan application process.

Understanding CIBIL Score Dynamics:

·        >  Default Consequences: Defaulting on loan payments negatively impacts your CIBIL Score, potentially leading to rejection of your loan application.

·         > Score Range Significance: A lower score, such as 300, might result in rejection, while a higher score, say 750 or above, expedites processing and often comes with perks like lower interest rates.

·         > Improvement Strategies: Timely repayment of loan EMIs and ensuring minimum payments on your credit card are effective ways to improve your credit score.

Clarifying FAQs About Personal Loans:

1.     End Use Flexibility: Personal loans offer unparalleled flexibility; there are no restrictions on fund utilization, whether it’s for purchasing a new TV or a special diamond ring.

2.     Application Process: Start by exploring different banks for the best offers, interest rates, and EMI schemes. Be aware of eligibility criteria and required documents before applying.

3.     Loan Tenure: Personal loans typically have a short tenure, ranging from 1 to 5 years, allowing for quick repayment.

4.     Loan Amount: Your eligibility depends on factors like repayment ability. Banks prefer monthly installments not exceeding 30-40% of your net salary or 50% of your income as per tax returns.

5.     Fees and Charges: Besides interest rates, banks levy fees, notably processing fees (1-2% of the loan amount) and prepayment penalties (2-5% at closure). Negotiating these fees is possible.

6.     Interest Rates: Interest rates vary among banks, usually falling between 10% and 24%, contingent on your profile and chosen policies/schemes.

7.     Loan Disbursement: Banks typically disburse loans within seven working days. Having all documents, especially post-dated cheques (PDC), in order is crucial to avoid delays.

8.     Repayment Methods: At the loan application stage, banks may request post-dated cheques or sign-up for ECS (Electronic Clearing System) for monthly installments. Confirmation on the presentation date is advisable.

Understanding the intricacies of CIBIL Scores and the nuances of personal loans empowers individuals to navigate the borrowing landscape with confidence. Whether fortifying your creditworthiness or making informed decisions about loan terms, this knowledge ensures a smoother financial journey.

HUMAN LIFE VALUE - WHY THIS IS IMPORTANT TO CONSIDER BEFORE YOU PURCHASE LIFE INSURANCE

There are a few typical mistakes that people make while buying life insurance. People can make better decisions and steer clear of potential pitfalls by being aware of these serious mistakes. When buying life insurance, neglecting to calculate the human life value (HLV) might be a serious error. HLV calculation assists people in figuring out how much life insurance to buy in order to safeguard the financial security of their dependents in the case of their passing away.

 Human life value can be calculated using the human life value (HLV) technique, which takes into account their income, expenses, and future commitments. It is essential in figuring out how much life insurance is necessary to safeguard the dependents' financial security in the case of the policyholder's passing. In insurance, your age, income, future demands for money, and liabilities are all taken into account when calculating your Human Life Value. For example if you intend to work for an additional 20 years and earn Rs.5,00,000 per year, for instance, your Human Life Value may be Rs.1,00,00,000 (20 years x 5,00,000).

 Here's why ignoring HLV calculation can be a costly mistake:

 Inadequate Coverage: One of the primary purposes of life insurance is to replace the income of the insured individual in the event of their death. HLV calculation helps determine the amount of coverage needed to replace the income that the individual would have earned over their working years. In the absence of an HLV calculation, people can understate the amount of coverage they actually require, leaving their dependents insufficiently protected. Their loved ones can become financially vulnerable as a result and be unable to cover ongoing needs like a mortgage, schooling, and daily living expenses.

 Overpaying for Coverage: On the other hand, if people decide to buy more insurance than they really need, they will end up paying more than is necessary. Paying too much for insurance can put a strain on your finances and take money away from other financial objectives like investments and savings. Based on the HLV computation, one must accept the insurance coverage they genuinely need.

 Covering Debts and Expenses: Life insurance policies can also be used to pay off debts that have not been paid off, including credit card obligations, mortgages, loans, and burial costs. These monetary commitments are taken into consideration during the HLV calculation to make sure there is adequate coverage to settle them without placing a financial strain on the remaining family members.

 Future Financial requirements and Goals: The HLV computation takes into account future financial requirements and goals, such as keeping up the family's standard of living, saving for retirement, and paying for children's education. The right level of life insurance coverage can be chosen by projecting these future costs, ensuring that these objectives can still be met even in the event that the insured person's income is lost.

Inflation and projected Investment Returns: To guarantee that the life insurance coverage amount stays adequate over time, the HLV calculation takes into consideration variables like inflation and projected investment returns. The coverage amount can be modified to retain its purchasing power and keep up with the growing cost of living by accounting for these factors.

 Providing Financial Security: The dependents of the insured individual receive financial security and peace of mind from life insurance coverage based on the HLV calculation. It guarantees them sufficient protection and the ability to continue living at their current level even in the event of the insured person's passing.

 How to calculate human life value manually : Calculating human life value manually involves estimating the economic value of an individual's life based on various factors such as their age, income, future earning potential, expenses, and other financial considerations. Here's a simplified approach to calculating human life value: --

Determine the individual's current annual income. This can include salary, bonuses, investment income, etc., in addition estimate the individual's potential future income growth based on factors like career progression, inflation, and market trends. Estimate the number of years the individual is expected to work until retirement. Multiply their annual income by the number of working years to calculate the total income over their career. From the arrived amount deduct taxes and living expenses from the total income to account for what the individual would actually retain. Consider additional financial factors such as debts, savings, investments, and future financial obligations like education expenses for children or retirement savings. Since future income is worth less in today's terms due to inflation and the time value of money, discount the future earnings to present value using an appropriate discount rate. Sum up the present value of future earnings, adjusted for taxes, expenses, and other financial considerations. This represents the estimated economic value of the individual's life.

It is important to remember that determining the value of a human life is a complex process that requires many assumptions and approximations. Depending on the unique circumstances, inclinations, and preferences of individuals or financial professionals, many approaches and considerations may be applied. In the context of insurance planning, human life value computations are also frequently utilized to establish the right coverage amounts for life insurance plans.

 

Dr. Sanjay Mittal

PhD (Business Administration)

Senior Banker

 8146624667

Shsanjay.mittal@gmail.com

 

 

 

  

PENSION SCHEMES UNDERSTANDING PENSION SCHEMES: A COMPREHENSIVE OVERVIEW

 Pension schemes play a crucial role in securing financial stability and peace of mind for individuals after their employment years. Let's delve into the intricate details of pension schemes, their various benefits, and how they function.

Pension Schemes: An Introduction

A pension scheme is a structured financial plan that ensures regular income to individuals after their retirement. It serves as a financial cushion, maintaining their quality of life during non-earning years. Two main types of pension schemes are prevalent: employer-sponsored schemes and government-funded schemes.

Types of Pension

Member's Pension: Once an individual reaches the retirement age and has completed a certain number of years in service, they become eligible for a regular pension.

Family Pension (on Member's Death): If a member passes away, the pension is extended to their spouse and dependent children below 25 years of age.

Leaving Service Before Eligibility:

If an individual leaves employment before being eligible for a monthly member's pension (usually based on a minimum service period and age), they can either receive a withdrawal benefit or opt for a scheme certificate.

 Scheme Certificate:

Issued if the member leaves before 58 and applies for it.

The certificate carries service and family details.

It can be surrendered when joining a new establishment to consolidate service.

After 50, members can apply for pension by surrendering this certificate.

Withdrawal Benefit:

If not eligible for pension, the member can withdraw the accumulated amount in their pension account.

Calculated based on average salary and service period.

Employers and the government contribute to the pension fund.

EPFO guarantees pension to members, even if the employer hasn't contributed.

 Pension Benefits on Death:

Death When Not in Service:

Valid scheme certificate holder not yet 58 years old.

For unmarried members, 10 years of service required for nominee/dependent parent pension.

Death After Commencement of Pension:

If a member dies after pension payments start, the pension may continue for the spouse or nominee.

Death While in Service:

Minimum one month's service required.

Pension to unmarried members' nominee/dependent parent without conditions.

 Family Pension:

A. For a Member With Family:

Pension payable to the spouse.

If the member has dependent children below 25 years of age, they receive pension.

Disabled children can receive pension for life.

Only two children can receive pension simultaneously.

B. For a Member Without Family:

Pension to a single nominated person.

If no nomination, first to the father, then the mother.

Family pension until widow or widower remarries or for life.

If no widow pension, orphan pension can be paid.

Government Employees Pension:

Calculated using specific formulas.

Commutation option allows lump-sum payment.

Tax treatment depends on the nature of pension (periodical or commuted).

Contributions and Responsibilities:

Employers maintain contribution cards for pension fund members.

Employers send details of eligible employees to the Commissioner.

Employers prepare returns for employees joining or leaving service.

Central Board may issue directions to employers for scheme implementation.

Tax Implications:

Tax treatment varies based on periodic (fully taxable) or commuted (partly taxable) pension.

Exemptions are available for government employees, statutory corporations, and local authorities.

Family pension is taxable with a standard deduction.

Conclusion:

Understanding pension schemes is vital for securing financial stability during retirement. It's advisable to carefully consider options like scheme certificates, withdrawal benefits, and commutation, keeping in mind taxation and other implications. By planning strategically, individuals can ensure a comfortable post-retirement life.

Financial literacy for Women

 वित्तीय साक्षरता का सरल भाषा में मतलब है , विभिन्न वित्तीय उत्पादों का ज्ञान और समझ का

होना । यह ज्ञान हमें हमारे पैसे, व्यक्तिगत वित्त, निवेश और कर योजना का प्रबंधन करने में

मदद करता है। इसका प्राथमिक उद्देश्य हमें वित्तीय धोखाधड़ी और घोटालों से बचाना है।

आर्थिक ज्ञान से साक्षर होने का मतलब यह जानना है कि अपने पैसे का प्रबंधन कैसे करें।

इसका मतलब यह है कि अपने बिलों का भुगतान कैसे करें, कैसे उधार लें और जिम्मेदारी से

पैसा बचाएं, और कैसे और क्यों निवेश करें और विभिन्न वित्तीय लक्ष्यों के लिए योजना बनाएं।

पुरुषों की तरह महिलाओं के लिए भी वित्तीय साक्षरता बहुत जरूरी है। हालांकि, शोध से पता

चलता है कि 62 प्रतिशत भारतीय महिलाओं का या तो बैंक खाता नहीं है या बैंकिंग सेवाओं

तक सीमित पहुंच है। वित्तीय साक्षरता महिलाओं को स्वतंत्र निर्णय लेने में सक्षम बनाती है।

आपात स्थिति या अप्रत्याशित परिस्थितियों के दौरान, यदि वह आर्थिक रूप से साक्षर है तो वे

सही कदम उठा सकती हैं। हालांकि, एक सर्वेक्षण से पता चला है कि केवल कुछ प्रतिशत

महिलाएं ही अपने मौजूदा धन को बनाने और बढ़ाने में सक्षम हैं।

5 बातें जो हर महिला को अपने वित्त के बारे में पता होनी चाहिए : -

अपने परिवार के सभी आय स्रोतों के बारे में जागरूक होना चाहिए :- एक महिला को उन सभी

संसाधनों के बारे में पता होना चाहिए जिनसे उसके परिवार को मासिक आधार पर आय हो रही

है। यदि वह सभी आय संसाधनों के बारे में जागरूक है तो वह अपने परिवार के खर्च और बचत

बजट को बेहतर तरीके से तैयार कर पाएगी।

बजट और बचत योजना: आमतौर पर महिलाएं अपने घर में पहले खर्च का बजट तैयार करती हैं

और खर्च करने के बाद अगर कुछ बचता है तो बचत की योजना बनाती हैं , लेकिन निवेश गुरु

वॉरेन बफेट ने कहा है कि पहले आपको बचत की योजना बनानी चाहिए और खर्च करना दूसरा

कदम होना चाहिए। बचत विकल्पों की योजना बनाने और व्यय बजट तैयार करने के लिए

वित्तीय साक्षरता बहुत महत्वपूर्ण है।

आपकी क्रेडिट रिपोर्ट और स्कोर मायने रखता है: - किसी आपात स्थिति या किसी अन्य ज़रूरत

के मामले में जैसे कि यदि आप अपना घर, अपना वाहन खरीदना चाहते हैं, तो आपको किसी

वित्तीय संस्थान से ऋण लेने की योजना बनाने की आवश्यकता हो सकती है। अपने क्रेडिट

इतिहास और क्रेडिट स्कोर (सिबिल) की जाँच करने से आपको अपनी वर्तमान क्रेडिट स्थिति को

बेहतर ढंग से समझने में मदद मिल सकती है। नियमित रूप से अपनी क्रेडिट रिपोर्ट की जाँच

करने से आपको इस बात की अधिक जानकारी हो सकती है कि ऋणदाता क्या देख सकते हैं।

अपनी क्रेडिट रिपोर्ट की जाँच करने से आपको किसी गलत या अधूरी जानकारी का पता लगाने

में भी मदद मिल सकती है। क़र्ज़ लेने की स्तिथि में आपको किसी किस्म की दिकत का सामना

नहीं करना पड़ेगा।

वित्तीय साक्षरता का पहला नियम :-

पहले खुद को भुगतान करें - बिलों और अन्य वित्तीय दायित्वों का भुगतान करने से पहले,

दीर्घकालिक लक्ष्यों (लॉन्ग टर्म गोल्स ) जैसे की बच्चों की पढाई , शादी और अप्रत्याशित आपात

स्थितियों (इमरजेंसी) के लिए बनाये गए खातों में हर महीने एक उचित राशि अलग रखें।

दीर्घकालिक लक्ष्यों के लिए समय और योजना की आवश्यकता होती है। वे कुछ ऐसे नहीं हैं जो

आप इस सप्ताह या इस वर्ष भी कर सकते हैं, इसलिए इन लक्ष्यों के लिए एक निश्चित ढंग से

प्लानिंग और निवेश करें।

वित्तीय साक्षरता कैसे प्राप्त करें: - आपको वित्तीय समाचारों पर विशेष ध्यान देने के साथ दैनिक

आधार पर समाचार पत्र पढ़ना शुरू करना चाहिए। आपको टेलीविजन पर वित्तीय समाचार देखने

के लिए दैनिक आधार पर कुछ समय देना भी शुरू कर देना चाहिए। कुछ वित्तीय जागरूकता

शिविरों में भाग लेना शुरू करें। आपको वित्तीय साक्षरता वेबिनार, ई-लर्निंग कार्यक्रमों में भाग

लेना शुरू कर देना चाहिए और व्यक्तिगत निर्देशों में भाग लेना चाहिए। ऐसी कई वेबसाइटें और

मोबाइल एप्लिकेशन हैं जो विशेषज्ञ मार्गदर्शन (एक्सपर्ट गाइडेंस ) प्रदान करते हैं और आपकी

वित्तीय साक्षरता बढ़ाने में आपकी सहायता करते हैं। इस दिशा में कुछ प्रयास करना सार्थक हो

सकता है।

डॉ संजय मित्तल

सीनियर बैंकर एंड

डॉक्टर ऑफ़ मैनेजमेंट

1119 , मॉडल टाउन , फेज 3

बठिंडा (पंजाब) – 151001

Mobile 95928 00921

Shsanjay.mittal@gmail.com

Keep liquid funds handy to invest if and when market falls

The stock market is expected to remain volatile in the coming months as the world grapples with uncertainty around recession, geopolitical tensions and covid resurgence. Any sharp sell off will be an opportunity for agile investors to buy at attractive prices. But the window may open for a short period only. Once any negativies are known and priced in, the market may quickly shift to risk on mode. The 2020 sell off and ensuing rebound are good examples of how quickly the tide can turn. 

Here is what you can do :- identify pockets of surplus now that you can deploy when the time comes. Even a part of your existing portfolio can be liquidated to give you the necessary ammo when required. If falling short on liquidity, some of your debt funds or fixed income assets can provide the cash flow. But don't stray too far from your desired asset allocation. 

Once you identify the surplus, earmark portion of it for straggered deployment at evey market fall. For instance, it the market declines 20℅ , move 20℅ of the earmarked amount into equities. At every fall, deploy similar percentage of earmarked funds into equities. This is the only an indicative plan and investors may identify their own thresholds and triggers. 

Make yourself Recession Proof

किसी भी गिरावट के लिए खुद को तैयार रखें

अगले साल आने वाली वैश्विक मंदी के बारे में कुछ खबरें घूम रही हैं। हालांकि घरेलू तस्वीर अच्छी है और चिंता की कोई बात नहीं है , लेकिन फिर भी अगर वैश्विक बाजारों में ऐसी कोई मंदी होती है, तो भारतीय बाजारों पर भी कुछ प्रभाव पड़ सकता है। अगर हम 2008 की  मंदी, कोविड 2019 का लॉकडाउन और उसके दौरान और उसके बाद गिरावट को याद करते हैं, तो हमें याद आता है , जनता को नौकरी के नुकसान, भारी व्यापार नुकसान, बचत पोर्टफोलियो का घटना या ख़तम होना , व्यापार को बचाए रखने के लिए संघर्ष, चिकित्सा उपचार पर भारी खर्च और कई अपने छोटे या बड़े व्यवसाय को चलाये रखने के लिए पैदा हुए  संघर्षों इतियादी । लेकिन हमें पिछले अनुभवों से सीख लेनी चाहिए और किसी भी संभावित घटना या मंदी के लिए तैयार रहने के लिए कुछ सुरक्षा उपाय करने चाहिए। यहाँ कुछ सरल उपाय सुझाए गए हैं: -

एक आपातकालीन निधि स्थापित करें: - नौकरी छूटने, वेतन में कटौती या किसी भी प्रकार के व्यवसाय में नुकसान की अवधि के दौरान एक आपातकालीन निधि की आवश्यकता होती है। कम से कम छह से नौ महीने के खर्च के बराबर फंड को इमरजेंसी फंड के तौर पर रखना जरूरी है। आपको इन फंडों को एक प्रतिष्ठित बैंक में फिक्स्ड डिपाजिट या एक प्रतिष्ठित म्यूचुअल फंड कंपनी के लिक्विड म्यूचुअल फंड में रखना चाहिए।

कर्ज की देनदारी कम करें:- मंदी उन सभी पर भारी पड़ सकती है जिन पर कर्ज का बोझ है। अपने ऋण पोर्टफोलियो की जांच करें और अपने दीर्घकालिक लक्ष्यों के अनुसार उन्हें प्राथमिकता दें। अल्पावधि ऋणों का भुगतान करना शुरू करें जैसे शून्य प्रतिशत ईएमआई पर लिया गया उपभोक्ता ऋण या कोई क्रेडिट कार्ड ऋण आदि । पहले उच्च लागत वाले ऋण से निपटें। सभी अनावश्यक खर्चों में कटौती करें और इस धन को उच्च लागत वाले ऋणों का भुगतान करने के लिए उपयोग करें। गृह ऋण जैसे दीर्घकालिक ऋण का भुगतान नियमित रूप से करते रहें।

सादा जीवन उच्च विचार :- किसी भी वित्तीय समस्या से बचने के लिए, मंदी के डर से या अन्यथा भी, सादा जीवन जीना शुरू करें और किसी भी अवांछित खर्च को कम करें। बाहर खाने के बजाय घर पर खाना शुरू करें, इससे न केवल पैसे बचाएं बल्कि अपनी रोग प्रतिरोधक क्षमता भी बनाएं। स्मार्ट फोन को अपग्रेड करने, विदेशी छुट्टियों या किसी अन्य बड़ी खरीदारी जैसी अवांछित वस्तुओं पर खर्च को टालें ।

अपने निवेश पोर्टफोलियो की जांच और पुनर्संतुलन करें: - मंदी की संभावना से आपको अपने निवेश पोर्टफोलियो की जांच करनी चाहिए। आपको अपनी जोखिम लेने की क्षमता को संशोधित करना चाहिए और सभी उच्च जोखिम वाले निवेशों से बाहर निकलना चाहिए। लेकिन आपको ये कदम अपने वित्तीय उद्देश्यों के अनुसार उठाने चाहिए। यदि आपके लक्ष्य दीर्घकालिक हैं और पर्याप्त समय सीमा है, तो आपको थोड़े से संतुलन के साथ निवेशित रहना चाहिए। यदि आपके लक्ष्य अल्पावधि हैं या आप अगले दो तीन वर्षों में लक्ष्यों के करीब पहुंच रहे हैं जैसे शीघ्र ही सेवानिवृत्त होना, बच्चों की शादी, शैक्षिक प्रवेश आदि, तो आपको सभी जोखिम भरे निवेशों को छोड़ देना चाहिए और डेट फंडों में स्विच करना चाहिए। डेट फंड के अलावा, फिक्स्ड डिपॉजिट की दरें भी अभी काफी आकर्षक हैं और मुद्रास्फीति की दर से ऊपर हैं। आपको अपने पोर्टफोलियो का एक अच्छा हिस्सा किसी प्रतिष्ठित बैंक की सावधि जमा में निवेश करना चाहिए। यदि आप नियमित आय प्राप्त करना चाहते हैं तो आप अपनी सावधि जमा से मासिक ब्याज प्राप्त करना भी चुन सकते हैं।

अपने स्वास्थ्य और जीवन बीमा की समीक्षा करें: - आपको जांच करनी चाहिए कि आपके पास पर्याप्त मात्रा में स्वास्थ्य बीमा है। यह भी जांचें कि आपके पास अस्पताल में भर्ती होने की स्थिति में दैनिक नकद भत्ता, गंभीर बीमारी कवर आदि जैसे आवश्यक जोड़ होने चाहिए। अपने पूरे परिवार के लिए स्वास्थ्य बीमा कवर प्राप्त करें। आपको अपने जीवन बीमा कवर की भी जांच करनी चाहिए। आदर्श रूप से आपके पास अपनी वार्षिक आय का 15/20 गुना तक का जीवन बीमा कवर होना चाहिए।

घबराएं नहीं :- भारतीय अर्थव्यवस्था बहुत मजबूत स्थिति में है और अन्य सभी प्रमुख देशों में भारत एक विकासशील देश है। अगर मंदी या ऐसा कुछ होता भी है तो भारत के इससे  प्रभावित होने की बहुत कम संभावना है। इसलिए घबराएं नहीं और जल्दबाजी में कोई फैसला न लें। शांत रहें और अपने वित्तीय सलाहकार से बात करें।

Term Life Insurance and Human Life Value

 

Term Life Insurance and Human Life Value

Life is very unpredictable, and we never know what will happen to us next. We can never predict the future, but we can prepare for it by being agile enough to constantly improve through proper planning and positioning ourselves to make quick, intelligent pivots before the time comes. Understanding life insurance can help you plan for your family's long-term financial needs in the event of your absence while planning for unpredictability. It can help your loved ones gain access to funds when they are in need. After you die, life insurance pays out money to your designated beneficiary, known as a death benefit. Purchasing life insurance protects your spouse and children from potentially devastating financial losses if something were to happen to you. It provides financial security, aids in debt repayment, aids in the payment of living expenses, and aids in the payment of any medical or final expenses.

We had read about the importance of having life insurance and had considered purchasing it at some point. However, there are far too many different types of life insurance policies on the market. Your friend may have told you about the maturity benefits of an endowment policy, but you later read that a term plan offers more coverage for a lower premium. And, in the midst of all the confusion, we frequently end up with the incorrect product. Despite the fact that there are many available life insurance products on the market, Pure Term Insurance is the best product to choose for getting your life insured.

A term insurance policy is a pure life insurance policy with a very simple structure. You pay a premium to an insurance company for a set number of years, and in exchange, the insurer promises to pay the sum assured to your family if you die prematurely. It provides no maturity advantage (apart from Term Plan with Return of Premium or TROP). When compared to other life insurance products, Term Life Insurance Plan provides more coverage for a lower premium. The maturity benefit of a Term Plan with Return of Premium is the total of all premiums paid. There is no interest paid on that.

How do I determine how much term insurance I require:-

To determine how much term insurance we require, we must first comprehend the concept of human life value.

Human Life Value :-

Human Life Value (HLV) or Ideal Life Coverage is a monetary value that represents the present value of future income expenses, liabilities, and investments. The HLV number is typically used to determine how much money is needed to secure the lives of your dependents with term insurance in the event that you are no longer alive. The monetary value of a person's life is known as human life value. It is determined by the total benefits that others relying on him/her can expect to receive from the person whose life is being valued. Evaluating human life in this manner is important, especially when there is a single breadwinner, because it determines how much insurance is required to cover both present and future expenses of the dependents.

 

Why is it necessary to calculate your Human Life Value :-

The Human Life Value is the total amount of insurance coverage provided by insurance companies. It is the maximum amount of insurance coverage that you may require based on your income, assets, liabilities, dependents, age, and other factors. So before you choose an insurance plan, you should be aware of the total amount of insurance coverage you should have.

How much life insurance coverage is required in total :-

Unlike any other non-living product, there is no accurate tool for calculating the value of a human life. The principle of indemnity in general insurance specifies how much money is required to replace the exact product. However, the principle of indemnity does not apply in the case of life insurance. A more theoretical approach is required in this case. To begin this analysis, you must first determine how much money you can earn for your family's sustenance, dreams and goals, and current lifestyle. All you need to do is calculate how much money your family would require in your absence. According to insurance experts, your term insurance coverage should be at least 15 to 20 times your current annual income. So, if your current annual income is Rs. 10 lakhs, it would be prudent to invest in a term plan worth Rs. 2 crores.

What is the best age to purchase term life insurance  :-

Term insurance is best purchased in your 30s. The premiums are lower, and it will financially protect the family. The best part is that your investment may qualify for tax breaks. It is recommended that you enrol in a plan as soon as possible in order to reap the most benefits. In general, the risk of health complications decreases with age and increases with age.

Tax Advantages: -

The premiums you pay for your term insurance plan can help you save money now as a tax advantage. Section 80C allows for deductions of up to Rs. 1.50 lakh. Benefit under Section 10 (10D) - The tax benefits are also extended to the nominee's getting death benefit.

 

Dr. Sanjay Mittal

Senior Banker & Doctor of Management

# 1119 , Model Town, Phase 3

Bathinda

 

9592800921

Shsanjay.mittal@gmail.com