Personal Financial Planning

Course code 206

Topic – Insurance
 Personal Financial Planning
Course code 206
Insurance –meaning
• Insurance is a legal agreement between the insurance company (insurer)
and the individual (insured) to make good the losses of the insured on
happening of the insured contingency.
• Insurance is a way of protecting oneself and family from a financial loss
due to happening of the insured contingency .
• Life insurance premium of up to Rs1.50 lakh can be claimed as a tax-
saving deduction under Section 80C
• Medical insurance premium of up toRs 25,000 for own and family family
and Rs25,000 for parents can be claimed as a tax-saving deduction under 
Section 80D
 Personal Financial Planning
Course code 206
Insurance –Importance
1 , Financial security to individual
2. Business stability
3 . Distribution of risk
4. Normal expected profit
5. Easy to get loans
6. FDI in insurance sector
7. Hospitalization expenses
8. Tax benefits
 Personal Financial Planning
Course code 206
Insurance –Types

A ) General Insurance
i. Motor insurance
ii. Home insurance
iii. Health insurance
iv. Fire insurance
 Personal Financial Planning
Course code 206
Insurance –Types

B ) Life Insurance
i. Term policy
ii. Money-back policy
iii. ULIP ( Unit Linked Insurance Policy )
iv. Pension Plans
v. Child Insurance Plans
 Personal Financial Planning
Course code 206
Insurance –Types of life insurance policies
Type Important features

Term policy Cover for specific period

Nominee gets lump-sum amount in case of misshapen
Cheapest plan
Money back policy Certain amount is paid periodically
Balance amount is paid on maturity
Nominee gets sum assured in case of misshapen
ULIP ULIP = Insurance + Investment
Pension plan Ensures retirement funds building

Child insurance policy Ensures financial security of a child

 Personal Financial Planning
Course code 206
Insurance –
Points to remember
1. Insurance is not investment . It is a risk cover instrument .
2. Term plan is the cheapest plan
3. Insurance cover of an earning person is important than non-earning person
4. Term plan should be supported by mediclaim
5. Family plan of mediclaim is cheaper that individual plan .
6. IRDA –Insurance Regulatory & Development Authority of India governs
insurance business in India .
Thank You .