Why Buy Life Insurance?

May 2005 Why buy Life Insurance?

 What is Life Assurance?
 A plan that alleviates the effect of death,
disability and old age.

 The only financial vehicle that pays a lump sum

on death, disability, hospitalisation, critical
illnesses.

 Provides peace of mind

 An effective tool for Personal Financial Planning

May 2005 Why buy Life Insurance?

 Why Buy Life Insurance?
 Provides financial security for the family. Acts as a tool for
PROTECTION.

 Mitigate financial risks associated with Total /Partial

Disability; Critical Illness; Hospitalisation Expenses; Old
Age; Death.

 The tearing of the Joint Family fabric, makes insurance

attractive for financial independence of the nuclear family.

 Is a SAVINGS vehicle. Enjoys Tax benefits (Front End

Benefits of Section 80C, 80(D); Back end 10(10)D -
Maturity/Withdrawal Benefits are Tax Free)

May 2005 Why buy Life Insurance?

POSITIVES Single Start Buy House Retirement
Family
Planned Retirement
Education Better job Marriage Children Wealth Creation

18

NEGATIVES
Premature Accident & Unplanned
Loss of job Critical Illness
Death Disability Retirement

Life Insurance mitigates the financial risks of Negative

Events while boosting the prospects for Positive events
of Life!
May 2005 Why buy Life Insurance?
 Why Buy Life Insurance?

May 2005 Why buy Life Insurance?

Why Buy Life Insurance?
 What do people save for?
 Buying house/asset creation
 Children’s education
 Children’s marriage
 Holidays
 Loan repayment
 Retirement

 Threats to income/savings!
 Premature Death
 Accidents
 Disability
 Old Age

May 2005 Why buy Life Insurance?

 Money Machine
If you had a money
Machine that provides
you with a regular
income to pay for your
daily expenses…Would
you insure and maintain
this valuable machine?

May 2005 Why buy Life Insurance?

 Money Machine
For your family you are this
machine.

Do you have sufficient Life

insurance coverage ?

May 2005 Why buy Life Insurance?

 Advantages of Life Insurance: if we live
 Encourages systematic saving

 eliminates personal selection of investments

 provides a safe investment

 is good property

May 2005 Why buy Life Insurance?

Advantages of Life Insurance – If we Die!
 Creates an immediate Estate, in a convenient
way

 Worth the Face Value – Sum Assured

May 2005 Why buy Life Insurance?

Life Insurance Products essentially serve 3 different needs…

Single Premium / UL
Plans Finally, life insurance
Very importantly, life
3 is a safe, long-term
insurance makes sure Investment investment
you save and gives you
financial strength to Money Back Plan
achieve your most 2 Saving
important life goals. Indicative Age Group : > 35 years
Whole Life/
Endowment Plan

Term Plan Protection

Accident Rider The first reason to
Indicative Age Group : Upto 35 have life insurance is
years 1 to secure your
Disability Rider
family’s financial
future.

May 2005 Why buy Life Insurance?

 Insurance Solutions for Age 25-35
 Major Events are Marriage/Family.

 Aspirations are High (Cars, Holidays, Consumer

Durables).

 Recommended Insurance Products are:

 Whole of life /Unit Linked
 Term products for covering assets purchased on loan.
 Regular premium payment to inculcate savings habits
 Risk takers can be recommended unit linked products

May 2005 Why buy Life Insurance?

 Insurance Solutions for Ages 35-50
 Major Events are Children, Children’s Education,
Children’s Wedding

 Aspirations are High.

 Recommended Insurance Products are:

 Unit Linked/Childrens’ Plan for specific planned events like
children’s education, children’s marriage, travel, etc.
 Endowment/Unit Linked for aspirations like Car, House etc.
 Start retirement planning with deferred annuity products.

May 2005 Why buy Life Insurance?

 Insurance Solutions for Age 50-60
 Major Event is Retirement

 Aspirations are Low (Lifestyle Maintenance).

 Recommended Insurance Products are:

 Retirement planning with deferred annuity products.
 Immediate Annuities
 Endowment policies to build up capital to purchase
annuities

May 2005 Why buy Life Insurance?

How much of Life Insurance to buy?
 Proceeds from Life Insurance should be
sufficient to take care of the following without
requiring the family to liquidate any immovable
asset:
 Continuation of existing lifestyle
 Take care of all future expenses including Children's
Education and Marriage
 Repayment of any outstanding loans
 Ideally, the regular savings through life
insurance should also be a part of the overall
retirement plan of the individual.
The rule of thumb is to have life insurance
coverage of
8-10 times the gross annual income
May 2005 Why buy Life Insurance?
How much of Life Insurance to buy?
 Most insurance companies provide a life insurance need
assessment calculator that works out insurance
requirements based on the present value of future
liabilities and current assets.

 It is advisable to calculate your exact requirement with

such a calculator.

 Life Insurance requirement changes with time,

depending on increasing or decreasing liabilities. You
must keep checking your need every 4-5 years.

May 2005 Why buy Life Insurance?

Everyone pays for Life Insurance….
either you pay for it now
or your family pays for it later!!!!”

Thank You

May 2005 Why buy Life Insurance?