Four ways to invest your money for a safe future for your Child

Parents invest money for their children for major events such a higher education, marriage and for a better lifestyle. Every parent wants to give the best to their child and secure their future even before they’re born. Most parents start saving for the future of their children immediately after their birth and some even start before that.

Saving for your child is a very crucial step in childcare. It should be done precisely after studying the market, the risks, the benefits and all other aspects related to a savings plan. Every option has some pros and cons and should be taken into consideration before starting investing in savings plan.

Here are some of the options to look at for securing your child’s future:

1.      Child’s Saving Plan: A child insurance plan gives a lump-sum amount to the child in-case of the death of the policyholder. This also results in waiving off all the future payments of the premiums. The insurance company continues investing money on behalf of the policyholder. The child is given parts of the investment from time to time according to the terms of the policy. There are also plans that concentrate specifically on education in-case of the death of the parents.

2.      Endowment Plans: An endowment plan is a life insurance policy that provides life coverage along with an opportunity to save regularly over a specific period of time so that your nominee can receive a lump-sum amount on the maturity of the policy. Subsequently, one can use this maturity benefit to fulfill their various financial needs like funding their children’s education, saving for retirement, buying a house, children’s wedding etc. An endowment plan not only provides maturity benefit, but in-case of death of the policy holder, the child also receives the full sum assured amount.

3.      Public Provident Fund (PPF)/ Fixed Deposit (FD): PPF is the most popular tax-saving and long term investment plan. The interest rates are dependent upon the market now. One can even invest up to Rs.1 Lakhs in a year. It matures in a period of 5 years but you can extend it every 5 years after its maturity date. Fixed deposits can give you regular income by the interests on the amount that are made every month or every quarter.

4.      Stocks and EFT’s: Stocks are risky assets but they have many advantages over other investment options so if you are willing to take the risk stocks give the highest return over the long term. It's a liquid investment. ETF’s are much like stocks. Through ETF’s, you can invest in entire countries or sectors. These are transparent and cost effective investments.

These are some of the option which you can opt for securing your child’s future.

Tax Benefit on Life Insurance Policies

The first investment one should make when they start earning is to buy life insurance. Not only is it an ultimate savings tool, but you can also reap a number of tax benefits off it as well. The right life insurance policies are life a safe deposit, where put in your premium over the term of the policy and save for you long term goals. They are also a great tool for tax planning, something that is extremely important for everyone.

How can your life insurance policies help you save tax, you ask? The benefit of tax deduction is available for Premium paid on life insurance policies under Section 80C of the Income Tax Act.

What is this section all about? As per this section of the Income Tax Act, an individual can claim up to Rs.1, 50,000 from his or her taxable income as a deduction. Deductions are provisions created by the government to help taxpaying citizens save their money. However, these deductions have to be put to good use, which means, this amount must be invested in tax savings plans, life insurance policies or endowment policies. Under this section, you can also claim deductions for tuition fees for education, for medical expenses incurred or even for the payment of the principle amount of your home loan or the stamp duty and registration charges incurred while buying a new home. In the case of life insurance, you can claim a part of your income, that you pay as your life insurance premium, as a deduction.

To be eligible for this deduction though, you need to fulfil certain criteria. You can only claim this deduction if you are the purchaser of the life insurance policy. It can be either for you or for your spouse. You cannot claim this deduction if you’re simple paying the life insurance premium for anyone else. You can benefit from health insurance for parents. So keep in mind, for whom you are buying and what type of insurance are you buying, speak your life insurance company and clear any doubts you might have about this.

Life insurance policies are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. At the end of the term the pay out that you received from your life insurance company and the premium that you pay them is completely tax free.

How to Insure and Invest for Self-Employed People

When you work for a multinational company or any big company your employer pays to make sure that you and all the employees have health cover and life cover. Being employed with a company gives your insurance benefits along with a steady income. Self-employed people do get the same benefits as they are their own boss. With so much work pressure and constant stress self-employed people usually overlook or neglect the importance of buying insurance.

So if you’re self-employed and don’t know how to start your insurance journey then let us help you.

Here are some essential plans and policies that you need to invest in, in order to secure your finances.

1.  Life Insurance: This is the first and foremost investment anyone should make. Life Insurance Plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan. The life insurance claim that you receive on maturity of the policy is tax free subject to applicable terms and conditions.

2.  Unit Linked Investment Plan (ULIP): ULIPs are a great way to invest your money. They provide insurance cover as well give you returns through equity. This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for maximum time.

3.  Critical Care Insurance or Cancer Care: Critical or Cancer Care Insurance is a type of health insurance that covers medical expenses of the policy holder in case he/she contracts any of the critical illnesses listed in the policy. Critical illnesses covered include, cancer, heart disease, vital organ failure and even disability.

4.   ELSS Tax Saving Mutual Fund: Mutual funds are the best way to invest your money for long term benefits. They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%.

5.  Bond: Purchasing bonds of a particular company is like giving that company a loan. The company will pay you interest on your loan. In the case of some companies the interest can be as high as 10% or 12% p.a. These bonds usually have a maturity of 10 to 15 years.

What One Can do to Pay Lower Premium for your Term Life Insurance

We can’t help growing up, but is there such a thing as growing up too fast? Are there ways or things that we do or eat in our day to day life that contribute us aging faster than we normally should? Can our lifestyle or habits really cut short our lifespans? The answer to all these questions is yes. Your lifestyle choices can have a bad effect on your health and in turn on your life span. Not only that but habits like smoking or drinking also have an adverse even on your life insurance premium.

Yes, it’s true, if you’re a smoker and you buy a term plan, your terms and premiums can be starkly different than those of a non-smoker. This is all because a smoker is more likely to contract diseases like respiratory illness and complications, COPD, emphysema, stroke, hypertension, heart disease and cancer (mostly lung cancer).

If you’re a smoker and wish to reduce your term life insurance premium, here are some things you could do, apart from quitting smoking of course.

1.  There is no such thing as an occasional smoker. Almost all insurance companies classify smokers from non-smokers with this simple rule. If you have used tobacco in the last 12 months you are classified as a smoker. So if you wish to apply for a term plan or any other form of Life Insurance, it’ll be a good idea to abstain from smoking for at least 12 months.

2.     There are insurers that are more open to insuring smokers than others. The population that smokes is huge in India and every year it only keep going up. Although the claim risk is very high, insurance companies still go ahead and offer insurance to the smokers. Some organisations attract the smokers aggressively because they offer comparatively lower premium amounts. Look for an organisation that offers a health insurance policy that suits your needs.

3.  There are programs called smoking cessation programs that are offered by insurance companies and employers alike. These programs can help reduce your term insurance premium a great deal. The catch here is that you need to abstain from smoking for at least two years for you insurance premiums to go down significantly.

4.    If you wish to quit smoking after you’ve already purchased a Term Plan then you can notify your insurance company about the same and ask for a review every year that your policy is active in order for them to lower your premiums.