- 1. 100 Most Asked Finance Questions
- 2. When and why should you start saving?
- 3. Have you ever thought about how much you should save every month?
- 4. How is investment different from Savings?
- 5. When to start investing? What are the steps in the investment process?
- 6. What care should you take while investing?
- 7. What are various options available for investment?
- 8. What is meant by Interest?
- 9. How Does Inflation Affect Interest Rates?
- 10. What is Simple Interest?
- 11. What is Compound Interest?
- 12. Why 0% is not really 0% in EMI schemes?
- 13. What is Return?
- 14. What is the difference between return and interest?
- 15. What are the types of Asset Classes?
- 16. What is a PAN Card and its importance?
- 17. What are the types of bank accounts in India?
- 18. How to select a suitable savings bank account?
- 19. What is a Credit Rating?
- 20. What is a MAB (monthly average balance) and how does it affect you?
- 21. What is the maximum EMI I can service?
- 22. What is a credit card and how to use it?
- 23. What is credit score (CIBIL score) and importance of credit history?
- 24. Pay off credit card debt or Invest?
- 25. Meaning & usage of NEFT / RTGS / IMPS
- 26. What is a Bond?
- 27. What is a Derivative?
- 28. What is a Mutual Fund?
- 29. Public Provident Fund (PPF)
- 30. Employees Provident Fund (EPF)
- 31. National Savings Certificate (NSC)
- 32. Post Office Monthly Income Scheme (PO MIS)
- 33. Senior Citizen Saving Scheme (SCSS)
- 34. Kisan Vikas Patra (KVP)
- 35. Company Fixed Deposits (FDs)
- 36. RBI Savings Bonds
- 37. Capital Gain Bonds or 54 EC Bonds
- 38. Sukanya Samriddhi Scheme (SSS)
- 39. Non-convertible Debentures (NCDs)
- 40. Coupon Bearing bonds
- 41. Tax-Free Bonds
- 42. New Pension Scheme (NPS)
- 43. Atal Pension Yojana (APY)
- 44. What is meant by a Stock Exchange?
- 45. What is an Index?
- 46. What is a Depository?
- 47. What is Dematerialization and what are the benefits of having a demat account?
- 48. What is an ASBA facility and when can you use it?
- 49. What is meant by Securities?
- 50. Rights Issue Shares
- 51. Bull and Bear markets
- 52. Stock Split & Bonus Shares
- 53. Pay-in and Pay-out & Auction
- 54. Buyback of Shares & Open Offer of shares
- 55. Book-closure/Record date & Ex-Date
- 56. Where to find the stocks related information?
- 57. What makes stock prices go "up" and "down"?
- 58. Dividend & Dividend yield
- 59. What is a Clearing Corporation?
- 60. Rolling Settlement
- 61. How does one decide to buy and sell any equity share?
- 62. What are the various types of the risks once I start trading?
- 63. What is an Overvalued Stock or an Undervalued Stock?
- 64. Explain the terms -selling short and Margin Trading
- 65. What are Circuit filters & trading bands
- 66. What is Insider Trading?
- 67. What are advances and declines?
- 68. How much equity should I have? OR What should your asset allocation be?
- 69. What are the good parameters while selecting a good blue-chip company stock?
- 70. How to analyse whether a new IPO will succeed or not while going forward?
- 71. How to calculate gains on sale of equity funds?
- 72. What does ownership of a company give you?
- 73. How to obtain Annual Report / Quarterly report?
- 74. What are Company Earnings and its importance for an investor?
- 75. What is Financial Planning?
- 76. How do you budget? Is it necessary to have a budget?
- 77. How much emergency fund should I hold?
- 78. How much money should I save towards retirement?
- 79. How to fix timelines for your goals and align them with the proper investment vehicles?
- 80. How many years will it take to double your investment?
- 81. What should you choose - Fixed Deposit OR investment in Stocks?
- 82. Are debt funds better than fixed deposits?
- 83. Should I rent or buy a house?
- 84. Can I afford to buy a house?
- 85. What are the major points to consider while taking a housing loan?
- 86. How many mutual funds should an investor have?
- 87. What should be your ideal mutual fund portfolio?
- 88. What is the difference between dividend and growth options while selecting a mutual fund?
- 89. Which is the best mode to select in mutual funds - monthly, half-yearly or annually?
- 90. How to choose the best investment instrument for your goals?
- 91. What are the charges that I should keep in mind while investing in mutual funds?
- 92. How does the taxation on redemption of SIPs work?
- 93. How are your dividends taxed across shares and mutual funds?
- 94. What are the must know things about family finance?
- 95. What is a Nominee and why is it important to have a nominee?
- 96. What happens to your policy if you discontinue your premiums?
- 97. Explain what is Deposit Insurance?
- 98. Family floater health plan or individual policy – which is a better option?
- 99. How much life insurance should I have?
- 100. Why is life insurance necessary?
- 101. What is health insurance?
Why is life insurance necessary?
Insurance planning is an essential feature of every personal financial plan because of the following reasons: -
i. The number of nuclear families increasing
Earlier joint families were the norm in Indian society but nowadays an increasing trend of a higher percentage of nuclear families in the total number of households compared to joint families increases the need for life insurance as the dependency ratio increases significantly.
ii. Increase in Debt levels
With the change in the Indian economy in the last 20 years and subsequent growth with it, people’s appetite for loans (home loans, car loans, personal loans, etc.) has also grown exponentially. Banks and other entities are ready to give them credit. As the proportion of debt increases, there is a greater need for term insurance.
What happens if you die leaving behind outstanding home loans or car loans or personal loans? Unlike home loans, other types of loans do not have the feature of term insurance in-built in the premium. So, you need insurance to take care of this unpaid debt risk.
iii. Absence of social security increases the need for risk cover
India does not offer a social security system unlike western countries like the USA where the government provides you a minimum allowance to maintain your standard of living if you are unemployed and or do not have anybody else looking after you.
If you live well past your working age (highly possible with the advancement in medical science) then you would need income support. Life insurance can help you in your post-retirement years by providing regular income, so it functions as a useful tool for retirement planning.
iv. Providing financial support to the dependents
Particularly for those with dependents, life insurance is a fundamental element in their comprehensive financial plan. The purchase of life insurance is one of the most effective methods of protecting against the consequences of untimely death.
After a family suffers the loss of a loved one, it usually encounters a stressful readjustment period. In situations like this, proceeds from a life insurance policy (sum assured) can help the heirs/family members to maintain their standard of living.
Also, if the sum assured is a large one, then life insurance can also act a tool for effective succession planning (passing on the assets to nominees/heirs).
v. Enables goal-based savings and investment
Insurance is a means to systematically channelize your savings and invest regularly. Your periodic premiums are simply enforced savings and due to this discipline, you are assured of a lump sum amount on maturity. A policy can come in handy at the time of your child’s education or marriage. Not only this, but it can also help in your retirement planning and succession planning.
vi. Tax Benefits
In India, life insurance has been popular due to a number of tax incentives. The Income Tax act provides tax relief for investing in life insurance and investors use this form of investment for tax planning as well.
Your tax can be saved twice on a life insurance policy-once when you pay your premiums and once when you receive maturity benefits. Even during the continuance period, if you receive survivor benefits, they are tax-free. So, life insurance policies attract the EEE (exempt, exempt, exempt) regime which is good for you as at all the three-stage, you do not pay any tax.
Any amount that you pay towards life insurance premium for yourself, your spouse, or your children can be included under section 80C deduction of ₹1.50 lakhs in a financial year.
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