Outsmart your parents by following this simple trick

I went to my hometown for a long weekend recently, and without a doubt my parents were overjoyed to see me, not forgetting to pamper me with their love and stuffing me with my favourite dishes. And why not, it had been a long time since I visited them. One morning, when we ran out of stories of relatives and office gossip, I was faced with the inevitable. As my father took a big bite of mummy’s delicious aalu parantha, he popped the question, “What have you planned for the future?”

Till the last time I visited home, I had wished they wouldn’t confront me with this question, but this time I was ready. I had the perfect answers to all the questions that would come in my direction. I started with a confident smile, “Dad I have started saving money.”

“Just saving and investing won’t do anything, insuring yourself is also important. What if you’re married tomorrow and something unfortunate happens to you; how will your wife and kids survive?”

“Oh, so you have already decided that I’ll have kids, that’s interesting!” I continued, “Well, don’t worry about that, I’ve invested in a ULIPs - Unit Linked Insurance Plan. It shall give me dual benefits of investing and insurance. Moreover, I’ll save tax for the premiums, too.”
He was surprised; I knew so much! He continued to listen to me as I explained that now with ULIP, I was not just investing but also insuring myself. He seemed impressed. 

The conversation took an interesting turn into how government jobs were better than corporate jobs. He, having been a government employee all throughout his career, always praised it for the various benefits the job offered as compared to my corporate job. Benefits like, more holidays, better work timings, salary, a home, health benefits and pension. When he mentioned “pension”, it brought a smile on my face. I said, “Dad, that’s also covered!” Dad went silent for few seconds, “How come?” I proudly explained, “I’ve started investing in annuities. Once I retire, I will receive a certain amount of money every month to cover my expenses, just like your monthly pension.” 
My dad, as he tried his best to outsmart me, asked me this: “So, do you earn that much, to take care of your daily expenses, additional expenses and all these investments?” I smiled again, “Yeah sure, these investment plans don’t require large sums of money, one can start with a minimal amount as much as Rs. 500.” 

“You’re 30 now, do you think you’ll be able to save enough for your future?” he tried his luck with this final question. I took a deep breath, “Dad, it’s better to be a little late than never. After all what matters is that I’ve started investing in my future. Over the course of the next 20-30 years, the initial investments can compound at 15 times! Soon, when I get a salary hike, I’ll increase the premium amount. My investment plan lets me customize according to my needs.” 

Finally, my dad gave up, gave a smile and said, “I’m proud of you.” 

“After all, I didn’t turn out all that bad, eh!” We laughed, as we got up from the dining table. Thanks to my advisors at Edelweiss Tokio Life Insurance, he hasn’t questioned me about my future plans ever since.

                          How much insurance do you need?

A life insurance is, without a doubt, the most key component of any financial portfolio. It is an ideal tool to provide financial security for your loved ones. For instance, a term insurance provides a life cover at lower premium rates, is easy to understand, flexible and provides a tax benefit. In perhaps the difficult moment of someone’s life, a life insurance provides the mental comfort that they are taken care of financially.

It creates an income replacement for your loved ones in case of your sudden demise and takes care of future financial contingencies during important life stages like your child’s education, marriage and more. Depending on your needs, there are a bouquet of life insurance products available – a term insurance, endowments policies, a unit linked insurance plan and more.
So, when buying a life insurance, how do you determine your life’s worth? Here are some factors to consider, when determining the answer to that question:

a)      Income replacement:

The most crucial aspect to remember when buying a policy is that it is before anything else an income replacement tool. Without an alternate source of livelihood, your loved ones may not be able to manage their expenses if your insurance does not provide an adequate cover.
The general rule of thumb is that the death benefit on your policy should equal at least 10 times your annual salary. However, it would be ideal that the death payout be in the range of 15-20 times your annual income.

b)      Liabilities and future expenses:

Liabilities – outstanding loans and mortgages – that you may have currently are an important consideration when determining the sum assured. In your absence, you have to ensure that your loved ones are not bogged down by your liabilities.   
Similarly, important life stages like your child’s education, and their marriage also factor into the math when deciding on the sum assured. While this might seem like a trivial factor, lifestyle and standard of living plays a key part too. You have to ensure that your death payout will enable your family to continue to live at the same standard of living you are currently.

c)       Cost of premium:

Paying the premium is a must if you want to keep your policy active. It could be a monthly, quarterly or annual payment cycle, depending on the choice you have made. When determining the sum assured, ensure that you will be able to pay the premium the policy will cost.   
Note that an uninformed purchase can lead to inadequate cover or worse yet an unideal insurance policy. Before you buy a term plan, it is crucial you conduct a thorough research and get a proper understanding of the product that matches your needs. With a wealth of information available at your fingertips, it is easy to compare the products as well.
In fact, there are simpler tools to identify your needs like the need-recognition and priority-ranking process by Edelweiss Tokio Life Insurance – Vijaypath. It easily identifies and ranks your six financial needs and suggests some really cool tailor-made insurance schemes to address your requirements. You can visit them at www.edelweisstokio.inand they would be happy to help you!