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About Life Insurance

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses can also be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.

Not sure, which is the best cover or insurer for your needs? Just contact us at 0120-3890270 or write to us at info@flyingsparrow.in

Retirement Planning

Retirement is the point where a person stops employment completely.

Retirement planning is the vital task of deciding how one will live once he/she retires. Retirement planning involves the deliberation of a quantity of factors, counting at what age you hope to retire, how much money you will need to cover the living expenses coupled with the things you plan to do once you've retired, and where your money will come from.

In short, retirement planning is setting up your finances for the era of life after you stop working.

Requirement for Retirement Planning

  • swift increase in the elderly population
  • Longer Life Span due to advancement in medical field
  • Refuse in the Joint Family System
  • Growing Medical Expenses
  • Early Retirement

Necessity of Retirement Planning

  • For Longer retirement years
  • Financial independence post retirement
  • Inflation so that expenses can be met

Planning for retirement

  • Firstly Estimate your current annual expenses.
  • Now adjust the annual expenses to account for factors impacting if you were to retire today.
  • Now calculate the Number of years left for retirement.
  • Now using inflation rate, calculate Future Value of this annual expense. This will be your annual expense in the first year of retirement.
  • Estimate the investment returns on post retirement corpus basis the asset allocation in the post retirement period.
  • Estimate the likely inflation (increase in cost of living) post retirement.
  • Calculate the Retirement corpus
  • Now estimate the investment returns during the accumulation phase or pre-retirement period basis the asset allocation.
  • Estimate the amount to be invested every year till retirement to achieve the retirement planning goal

So plan for your retirement as soon as possible so that you can generate a good amount of corpus for yourself at the time you retire.

There are various factors that needs to be taken into account to do retirement planning for oneself like cost, inflation, market volatility etc as these factors eat up the money saved by you.

Insurance Planning

As we all know that life is full of uncertainties and we want the best for our family in all conditions. Thus planning for the contingencies and taking solid steps to secure our family’s future is of top most priority.

Insurance Planning is one of the most significant pillars of Financial Planning. This is because Life Insurance is the only tool which can execute financial commitments in case of untimely death of the only earner of the family. Thus having a suitable life cover is important.

There is a difference in the premium amount if you take insurance at later ages. This is because the probability of diseases is larger at high ages and mortality is high.

Requirement for Insurance Planning

  • Increasing liabilities due to the loans people prefer in order to fulfill their needs
  • Nuclear family structure:
  • Increasing diseases

Calculating Life Cover

Calculating how much life insurance you need is one of the most imperative financial decisions you will ever make. It should never be an isolated decision depending only on how much of a premium you can afford.

  • It is simply based on your current annual income.
  • Insurance needs = annual income * number of years left for retirement.
  • Let's say your annual income is Rs 5,00,000. And you are 45 years old with 15 more years for retirement.
  • In this case your insurance cover equals Rs 5,00,000 * 15 = Rs 75,00,000.
  • Another way in which income replacement works is to multiply the annual income by 10 (also known as Income Replacement Multiplier).

Factors to consider in order calculating the life cover amount

  • Loans
  • Lifestyle kind you want to provide to your family
  • Provision for non-working spouse
  • Child's education
  • Child's marriage
  • Providing for financially dependent parents
  • Special needs
  • Dreams and aspirations such as contributing to charitable causes
  • Emergency fund post death
  • Monthly income needs
  • Monthly expenses

Overall Saving

Savings or you can say investments is a small amount of money saved in various installments which will convert a good lump sum amount in future which can be utilized to complete one's financial goals and thus results in capital creation for future. The prior one starts to plan for capital creation, the prior and expediently the goals of life can be met.

Requirement for Savings

  • Purchasing any asset dream can be easily fulfilled
  • Disciplined savings to control inefficient expenditures
  • Tax benefits

So start your savings as soon as possible to obtain all the above given benefits.

Health Planning

Health is the most significant thing for any human being and as a result planning enough for it becomes important.

Necessity of Health Insurance

  • Medical emergencies can hit anyone at anytime that to without warning, so to handle these unpredicted contingencies health planning becomes necessary.
  • Also due to a lot of cost involved in good medical care, one's savings get exhausted in profound medical operating expenses and with rising cost it can get worse.
  • With today’s changing lifestyles of people due to unmanaged long working hours, lack of exercises, increasing stress levels, improper eating habits etc, the immunity system gets weakened and thus the chances of illness gets increased.

Tax Planning

Tax Planning is a very significant part of an individual's financial planning. Nobody wants to give their hard earned money as taxes. Therefore planning for taxes is important so that one can get utmost advantage of all the necessities available under the Income Tax Act 1961

Insurance policies enjoy tax benefits under section 80C and section 10(10D), subject to conditions.

Buying an Insurance policy only for the reason of tax saving is not good. A person should focus on his goal planning as well and then buy the life insurance plan. Tax saving is incidental in nature. Therefore one should look at his life requirements also while buying insurance.

Education Planning

Every parent’s dream is to do everything best for their children. Now-a-days, Child's education and marriage requires a lot of systematic planning. These are generally goal based planning and thus some amount of money needs to be allocated every month.

For your child’s good education, you will have to do three things right: invest the appropriate amount, at the right time and in the right mix of investment options. A savings effort that factors in these three points will help you in today’s era of inflation.

Requirement for Child Insurance

  • Increasing cost of education
  • For the overall development of child and to make him an all rounder in all the fields
  • Child Insurance plans has the benefit of Waiver of Premium, which says that if something happens to the parent, all the future premiums are waived off and are paid by the insurance company and thus the goal for which child planning was done does not get defeated.
  • Tax Savings

How to Plan Future for your child

  • Start as early as possible
  • Place security with Life Insurance
  • Waiver of Premium concept