“The combination of Hard Work + Smart Work = Efficient Work!”
Although the money you earn is a symbol of your hard work, you can make it work more efficiently for you by using it smartly. Investing your money in life insurance is one of the smart moves, as it offers many incredible benefits along with safety! However, one might wonder how to "smartly" make use of it. So, to help you top your insurance game, check out the 5 Smart Insurance Tips!
Tip 1 - Pay Premiums Annually Instead of Monthly
Let’s take an example: Mr Raj, a 28 year old, healthy non-smoking male has bought a Future Generali Term with Return of Premium policy with a sum assured of ₹10 lakhs. The premium paying term and the policy term is 15 years. Let’s see how much premium he ends up paying monthly and annually:
Monthly Premium (including GST) = ₹ 585 = 585 x 12 = ₹ 7020
Annually Premium (including GST)= ₹ 6,625 = 6625 x 1 = ₹ 6625
Difference of ₹ 395
If your further multiply ₹ 395 with the premium paying term i.e., 15 years you end up paying ₹ 5,925 extra!
Tip 2 - Invest Longer - Allow Your Money to Compound
Here’s a real-life example of two Papas’- Smart Papa and Just Papa. Both invested in the same ULIP plan. Check out how their investments reap in the end.
| Just Papa | Smart Papa | |
|---|---|---|
|
45 years |
Age - when started investing |
25 years |
|
₹ 4,000 |
Money Invested - Monthly |
₹ 2,000 |
|
₹ 9,60,000 |
Total Money Invested |
₹ 9,60,000 |
|
20 years |
Tenure of Investment |
40 years |
|
₹23,56,000 |
Final Compounded Amount |
₹ 69,82,000 |
Do you see how, even though the total invested amount is the same (₹ 9,60,000), the gains that Smart Papa made are almost 3 TIMES the gains Just Papa made? This is the power of compounding. Even though Sachin invested half as much as Rahul, he invested steadily for 40 years, whereas Rahul invested for 20.
Tip 3 - Invest Young
Do you think long insurance terms mean more premiums? Let’s bust that myth. Here’s a useful insurance hack!
Say a 25 year old buys a term plan for a period 30 years - he has to pay a yearly premium of ₹ 3000 for next 30 years = ₹ 90,000
Whereas, a 35 year old buys a term plan for a period 15 years - he has to pay a yearly premium of ₹ 6000 for next 15 years = ₹ 90,000
When you start early and you can stay protected for long-term insurance and you are entitled to lower premiums. Future Generali India Life Insurance breaks down the impact of age on life insurance premiums for you.
Tip 4 - Choose Your Riders
Sometimes, buying different insurance policies to cover every risk separately might not be wise. You need not always buy different insurance policies for related needs. Riders are like addons to your insurance that provide an additional safety cushion. They can be added to your existing insurance cover. Here are some common riders you might want to consider adding:
- Critical Illness Riders - that covers the life insured in case s/he is detected with any of the critical illnesses specified.
- Accidental Death Benefit Rider - the rider offers an additional coverage equal to the actual sum assured in the event of demise due to an accident.
- Premium Waiver Benefit Rider - if the life insured is unable to pay the premium due to specific events, like permanent or partial disability, the premium will be waived.
Future Generali India Life Insurance offers many riders with their life insurance policies that you can take advantage of today!
Tip 5 - Adopt a Ladder Strategy
Your life goals have different timelines and budgets. Following one investment plan for all your goals is not feasible. Just like a diversified portfolio, buying different insurance plans secures your life and your family’s future while you sit back and accomplish your dreams. The idea of this strategy is to plan your insurance payouts to match debt repayments.
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To conclude, it also becomes essential to look for an insurance provider who can reschedule premium payments, offer grace periods for premium payments, or accept a partial payment if you are unable to pay premiums on time. Future Generali India Life Insurance offers all these benefits, assuring you a smooth and hassle-free insurance experience.
Buying insurance might need you to focus on minute details that require effort at your end when reading the fine print. However, choosing a trusted insurance company that answers all your questions and offers trusted expert advice also counts as a smart move!
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