Endowment policies: Safeguarding future generations

Taking an endowment plan ensures protection and stability for your loved ones. We explain how they work.

Life is such that it tests one at various points in time. It can be sweet and rosy one moment, and depressing the next moment. But while one may have no control over one’s destiny, one may at least try to wrest some control over how one fares financially during an obstacle.

There are ways to secure one’s finances for the future, so that the family’s dreams may remain on course for successful fruition! We refer to a useful insurance product known as the ‘endowment policy’. Read on to know how it can help one realise their loved ones’ goals with not much expense in the present moment.

Understanding endowment insurance

An endowment life policy is a policy that has the dual benefit of life protection as well as regular savings to grow your wealth for the future. It encourages and rewards the savings habit by helping the policy holder create a large corpus of money over a period of years. This corpus is given to the policy holder when the plan matures, and it is in reality an appreciation over the money invested through the years.

The premiums paid by the policy holder are split in two parts: one part pays the premium, while the other is invested in equities. This latter component gets capital appreciation and helps pay the bonuses on the policy.

The calculations in endowment policy

When the endowment insurance matures, the policy holder gets the money in the form of a terminal bonus and a reversionary bonus, plus the sum assured. The bonuses are paid annually.

• If the policy has a premium of Rs 21,000 with a Policy term of 25 years and Sum assured = Rs 5 lakh, with the average bonus declared during these years as Rs 48 per Rs 1,000 of the sum assured, it would amount to Rs 24,000 per year.
• Thus, the bonus would be Rs 6 lakh for 25 years. Assuming the plan pays a terminal bonus of Rs 5 lakh (this is an arbitrary number for calculation), the total monies the policy holder gets are Rs 15 lakh. However, the holder has paid premium of Rs 21,000 x 25 years = Rs 5 lakh.
• This means that the endowment plan has given returns at 12% [Total gains/total premium x 100 / Total tenure]

Helping to strengthen the family’s finances

Not only does the endowment life insurance provide life protection, it also gives stable and steady returns over a period of time. The money that comes by way of the plan maturity can fund a variety of expenses, from children’s education to making a down payment for a house. More importantly, it helps keep the family afloat during a financial emergency.

Blood and sweat goes converting a house to a home…

…and insurance helps protect it. Taking home insurance safeguard your precious home from attack and damage.

Buying one’s own home is a cherished dream for most people. Whatever one may or may not achieve in life, one ardently wishes to achieve the dream of buying a house. An owned home is a prized asset that keeps one safe from the outside world. It is as important to one’s emotional wellbeing as the presence of loved ones and a stable job.

But buying a home is not easy. People spend many years repaying their home loans and spend a lot of money in designing the home to fit their tastes. Both home purchase and renovation are costly, time-consuming affairs that test one fortitude to its absolute limits. It is hard work to buy and take care of the house, and keep it in good condition for years to come.

And yet, your home is vulnerable to attack and damage. Protect your precious home with the best home insurance policy in India today.

Why take home insurance?

Home insurance is, in layman’s terms, a protection policy for your home just like a health policy is a protection policy for an individual. It keeps your home safeguarded from a variety of eventualities, such as:

• Theft or break-ins
• Arson
• Natural disasters such as floods, earthquakes, lightning strikes, hurricanes, etc.
• Accidents such as fire and partial/complete collapse of the building structure

Whether the catastrophe is man-made or natural, the health insurance plan helps you rebuild your home and more importantly, replace your valuable belongings that may be stolen or damaged. The best home insurance policies cover the factors listed above and also provide coverage for the home and its contents. Hence, you can even insure your valuables such as expensive art work, jewellery and electronic gadgets.

Some excellent home insurance plans also insure your belongings if you live in a rented premises.

Breathing easy with home insurance

Home insurance policies ensure your continual peace of mind about your home. Instead of worrying about what you’ll find when you return home from work or after a long vacation, you can install sophisticated surveillance systems and burglar alarms that deter attempts to break in and enter in your absence. Further, you can bolster these measures with a comprehensive home insurance plan that pays to rebuild your home and replace your precious items.

It does not do to worry constantly about the health of your home. Just like you took a health insurance plan for yourself and your loved ones, go ahead and take home insurance for your house so that you can breathe easy when you’re away.

Sports as a Career

Back in the 1980s, most youngsters in India had a limited set of career options they could choose from. These were careers that were considered safe by the parents and since they were safe because countless others had already opted for becoming a doctor, engineer or lawyer before. Those children who harbored thoughts of becoming professional sports persons were gently but persistently dissuaded from pursuing sports as a means of earning a livelihood.

Changing Face of Sports Careers

Since the 1980s, there has been a sea change in the way the entire country looks at sports as a career. Today, it is no surprise to see top sports persons earn millions from not just playing sports but from endorsements and other avenues. Sports stars are no less than actors or other celebrities and the media follows their every move hungrily.

The T20 cricket world cup and the Indian Cricket Leagues that have sprung up and brought club-class cricket to spectators is a well-known phenomenon. The huge amounts of money that is poured into cricket has led to a maturity in the revenue models that were hitherto associated with sports. Whereas 20 years back, an international or national level sports person had no option but to to fade into obscurity, ignored by the media and their achievements forgotten by those around them. The influx of media attention on sports has helped to develop a platform where players can be recognized and the rest of the country can get to know about their achievements. Not just in playing sports, but a number of related options have opened up in the sports-related industry. Sports marketing, management, administration and training have emerged as new areas. So have sports medicine, nutrition and even sports law. The latter is indicative of new areas where sports and other professions overlap each other, such as sports journalism.

Sports & Business Sense

Traditionally, a sports person was not expected to be good at business matters. As a professional sportsperson, if you had life insurance and a term plan, that was the limit of your forward planning. All that was required was a passion for the game and years of hard work. The hard work usually translated into a coaching or training job when the person has retired from active sports. Sports-related injuries also take their toll over time and many have to step down due to this reason. Many young athletes have had to step down from promising futures in sports due to injuries. Usually, at which point, it is back to the life insurance and term plan calculations, however insurance payouts vary according to the premium chosen and the type of injury. What insurance does is provide the necessary peace of mind to focus on getting back into the game.

Road Trip Tips

Let's say the company you work for decides to shift you to another town. The way things stand, this other town is not too far off and you have already fixed a date for the packers and movers to shift your entire household kit. This usually leaves us with the strange space of having to figure out exactly when should you travel and how much should you take along with you. Actually, how much you take along with you will depend on what you leave out of the truck from the packers and movers and how much luggage you can carry. So okay, you have got the household kit organized, and you have an idea of what will fit into the three bags that you need to survive anywhere and in whatever circumstances. That leaves the car.

At this point, the imagination drifts a little spark down certain neural passages in your brain and you get the bright idea of putting your bags in the car and driving down. However, just like you have a life insurance policy as a backup plan for your family’s future, you need to plan for all contingencies for the road trip.

Designated Driver Duties

Just Kidding: If you are going to take the car, then keep in mind that for the duration of the journey, your car becomes your mobile habitat. Remember how dirty train compartments get with the temporary inhabitants they suffer? Well, a day's driving and you can be equally callous to your earlier standards of cleanliness. Keep this in mind if you have kids and seriously consider how to childproof your car for the trip.

Tune-up: Take the car in for a check-up before taking it out on the highway. Tires, brakes, lights, horn, battery, air conditioner, oils and fluids, coolant and drive belts, get them all checked by a good mechanic.

Sleep Well: No jokes. Avoid the farewell party on the night before and get a full night’s rest. There really is no fun in driving hours on end on a hangover and your mouth feeling like shoe leather. Don't forget, drowsy drivers eventually die by their own hand.

Emergency kits: Pack a blanket, flashlight, jumper cables for starting the car in case of a dead battery, tire changing or repair kit, spare parts such as fuses, bulbs, and other sundry things that might strike you as useful. Don't forget to include a first aid and medical kit.

Do remember to carry all your documents safely with you, including driver’s license, passport, life insurance policy, birth certificate and school records.