Insurance - Let's Uncomplicate! ~ CEDRUS WEALTH PARTNERS

Section 1:

Life is not complicated. We are complicated. When we stop doing the wrong things and start doing the right things, life is simple.

This applies to all aspects of our life including today's topic on insurance.

Insurance is a risk management tool and hence no one would like the events attached to it become a reality. Death, illness, property damage are the key events attached to insurance against which we are safeguarded when we buy an insurance cover.

We have observed that many individuals key objective in buying an insurance cover are tax benefits and returns. Hence, there is massive miss-selling for this product. People have been lured by intermediaries to buy insurance policies with promises of high returns on maturity.

We recommend not to combine insurance with investments due to the following reasons:

Low insurance coverage
Very high charges
Illiquidity
Lack of transparency
High surrender charges.

The above factors will lead to low returns and low insurance cover.

Individuals should have clear goals and should accordingly invest in instruments which would help them achieve their goals. When one buys insurance, there should be no other objective than managing risk.

Let’s uncomplicate……….

Life insurance:

Goal:

The life style of dependents should be the same even after the demise of the bread earner

Suitable product: Term Plan.

This is a pure insurance plan which would pay the dependents the amount covered on demise of the policyholder. It’s the cheapest and most effective product to cover against death.

A Term plan of HDFC LIFE Click to Protect is recommended. This is an online term plan with cheap premium.

Health Cover:

Goal:

Medical costs are rising on daily basis. In case of any medical emergency health insurance will pay for all the medical costs attached on hospitalization.

Suitable product: Family Floater with critical illness rider.

Apollo Munich Health Insurance optima restore is recommended for the above cover. This policy has benefits like no claim bonus of 50% per year up to double the sum insured, no capping for room rent & no load after claim.

Apart from the above covers one can buy a property cover and accident cover based on ones needs and requirements.

This is all what is required to cover risks attached during our life.

Our only advise to investors is to not mix investments and insurance together. Have pure insurance and pure investments attached to your goals.

Section 2:

Insurance also can be used as a social good by helping individuals like maids, office staff get covered.

The government has announced following schemes for the lower class.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

On opening of a bank account, one gets-

Special Benefits under PMJDY Scheme
Interest on deposit.
Accidental insurance cover of Rs. 1 lac
No minimum balance required.
The scheme provides life cover of Rs. 30,000/- payable on death of the beneficiary, subject to fulfillment of the eligibility condition.

IT OFFERS: Accidental death and disability cover of Rs.2 lakh.
COSTS: Premium is Rs.12 per year.
WHO IS ELIGIBLE: Anybody who has a savings account in the banks that offer this scheme.

IT OFFERS: A pure protection term insurance cover which pays Rs.2 lakh to dependents in the event of the policyholder's death.
WHAT IT COSTS: Premium is Rs.365 a year.
WHO IS ELIGIBLE: Anybody in the age band of 18-70 years.