insurence: Insurance

Wednesday, September 19, 2007

Insurance

Hi, welcome
this is Ashim i want to inform you about insurence.

Every need to do an insurence for his good and tension free life.
fi your life become tension free you live long.
insurence may save yourlife one day and your family one day
from ruin.

see more - www.easyearning4all.blogspot.com

1 comment:

easyearning4all said...: very good.; April 17, 2008 at 7:59 AM

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Have your cake, eat it too Money management strategies that can help young couples enjoy the present and provide for the future

Marriage greatly changes your money life. That’s largely because two money personalities influence decisions after marriage instead of one before it. The views on how to spend, save, invest and borrow could be similar, or be so different that they become a source of conflict. After all, money management is not just about meeting current living expenses, but also about planning for major expenses in the future and for your retirement.

Individual needs, such as higher studies, and dependents, such as younger siblings and aged parents, have to be factored into the scheme of things. All this, over and above setting up a home, buying furniture and living up the early days together, is certainly not easy. The good news is that you can achieve this balance by following some basic rules of money management.

Getting Started
Manage your cash flows. The first step of sound money management is to track the cash going in and out of your household. “Earmark amounts for various heads such as groceries and utilities in the budget," says Veer Sardesai, CEO, Sardesai Finance. You will do well to list your major expenses and sources of funds. The budget will tell you how to cut expenses. “Spend 50-75 per cent of your income in the initial years of marriage. As salary increases, bring the figure down to 25-50 per cent,” says Sardesai. As part of this exercise, open a joint bank account.

Control debt costs. An important part of cash-flow management is to control the expenses on credit cards and the propensity to take personal and consumer loans to finance purchases. Since newly-weds tend to face a cash crunch, they are prone to taking loans to bridge the gap, mostly high-cost credit card debt at 36-42 per cent interest per annum and personal loans at 16-25 per cent interest per annum. It is important to ensure that your total loan repayments never cross 40-45 per cent of your take-home pay, with car loan EMIs ideally not exceeding 15 per cent of the take-home salary. Most importantly, do not revolve credit card dues.

Cash-flow management is also about putting in place a system to save for the future without much fuss (see Getting Savings on Track). You must have emergency funds to tide over uninsurable expenses such as dental surgery or job loss. These emergency funds and insurance covers for all insurable risks should be provided for before you make any investment. Otherwise, all your gains from investing would vapourise when havoc strikes.

Create emergency funds. Normally, it should be three months’ expenses. Increase the amount if your job security is low or you have many dependents. Keep putting fixed amounts into a joint account, operable by either or survivor, till you reach the target. This account could have a sweep-in facility with amounts above a threshold getting invested in a fixed deposit. If you need a large emergency fund, you could park a portion in short-term liquid funds of large and successful schemes, such as HDFC Liquid Fund and Reliance Liquidity Fund, which can be encashed easily and which earn a higher return. Do not touch funds for emergencies unless there is one.

Get a large insurance cover. After this, you need to complete your risk protection with insurance cover. Begin by getting a large life cover at the lowest possible cost. This is possible with life insurance term plans. For instance, a 30-year-old can get a Rs 10-lakh cover for annual premiums of Rs 3,500-4,000. Ideally, such a cover should help a surviving spouse meet living expenses and future requirements for a lump sum of money. This means that the size of your cover should go up as your income and expenses rise, or as the number of dependents increases.

Says Pranav Mishra, senior vice-president (product and sales), ICICI Prudential Life Insurance, “As a thumb rule, you would require a life insurance cover that is 8-12 times your present income. This rule is applicable for both single and double income couples.” If you take a home loan, your life cover requirement goes up by the extent of the loan. This is also the time when you should change the nominations of your old insurance policies to make your spouse a beneficiary.

The probability of medical ailments is less in the age group of 25-30 years—likely to be your age in the early years of your married life—but with the increase in lifestyle-related diseases and rising medical costs, you should ideally opt for a good medical cover. To begin with, subscribe to any group medical cover provided by your employer. Supplement that with individual health covers. Says Shreeraj Deshpande, assistant vice-president, Bajaj Allianz General Insurance, “If your combined salaries are less than Rs 10 lakh, you should take covers of Rs 2 lakh-3 lakh each. In case the combined salaries are higher, take health covers of Rs 3 lakh-5 lakh each.” Go for a floater policy in which the husband or wife can avail of the combined total cover in any year.

You also need to buy home insurance to cover the contents of your home, even if you stay in a rented house.

Manage your taxes. Tax payout is certainly a pincher in the cash crunch newly-weds face. Among the items that qualify for tax deductions are provident fund contributions by the employee, premiums for life insurance (term plans and unit-linked insurance plans or Ulips), investments made in equity-linked savings schemes (ELSS) of mutual funds, deposits in public provident fund (PPF) and principal repayment of home loans. It is important to try and exhaust the tax deduction limits in the initial years of marriage. But, it is also crucial to balance tax-efficiency with growth while investing, and not just focus on tax savings. This could mean investing some amount in a systematic investment plan (SIP) of an ELSS every month, so that your portfolio, which would have provident fund money among other debt options, gets a growth kicker.

There are other important things to be kept in mind. While you must have joint accounts (preferably on either or survivor basis) so that both you and your spouse have access to funds during emergencies, separate salary accounts with the second name being that of the spouse are also necessary so that incomes can be determined easily while filing tax returns. In case of double incomes, conventional wisdom is to use the higher of the two incomes to meet most or all of the living expenses, and use the lower income for investments to minimise the tax outgo on investment income.

Invest for growth. Once you have covered your life and health and taken care of your investments, it is advisable to take a pension plan to take care of your retirement needs. Over time, it is important to create a surplus and make it grow through growth investments such as exchange-traded funds or ETFs (see Taking the First Few Simple Steps, page 46). You can then graduate to higher risk, higher reward options such as diversified equity funds.

It helps if both partners participate in all financial decisions and have a basic knowledge of key financial subjects, such as bank accounts and investments. Financial wizardry is not called for, just a little bit of awareness and application.