The reasons for buying an insurance policy are plentiful but which
out of these abundant reasons dominates the actual purchase of a policy. First and foremost it is important to understand that a life insurance policy is an essential component to ensure a safe and secured tomorrow for your family. It is one of the strongest reasons for any individual to opt for an insurance product. However, many individuals get confused before making their actual pick. To help you in zeroing in on a policy, we have provided you with some easy tips.

Key out your needs
Before you make your choice of buying a particular policy, it is important to analyse your needs. For example, if you have more dependents on you, then the need for the policy protection also increases. If the dependents on you are few, the need of the policy would vary accordingly. Besides, after a stipulated period if you want to get a lumpsum amount that you want to put into different use, you can decide the policy that suits your purpose.

Which policy to consider:
If you intend to have only a pure risk cover, a term policy should suffice the need. You get protected for a higher cover at a low premium. This insurance policy is in contrast to other saving plans, which include endowment, money back, whole life and ULIP policies. These plans are so called because of the maturity returns that are given at the end of the policy term.

Time to take action:
After having quantified your insurance needs, your next step is to approach your insurance advisor, take his help in making decisions if needed and purchase the policy. His/her understanding of the various policies and its workings will help you gain better knowledge of the products. And he would have more updated details that will help you take informed decisions.

Comparative study:
Before buying a policy, a comparison of various other plans will be helpful to you. Today’s world being a technology driven one, with just few clicks you can access a variety of products spread across various other companies. Or else your insurance advisor can help you with a complete analytical work.

All said and done, an insurance policy is an indispensable element in an individual’s life. A little analysis of the existing policies is important, for you should know where your hard earned money is getting invested. An insurance policy protects you and your family from the uncertainty of life and gives the much-needed financial support in the event of your permanent absence. It’s just the right tool to get your financial concerns in focus that will help you and family stay protected for life. Just imagine this situation if you were to die, could your family or dependants continue living the existing lifestyle, pay for the existing debt and loans? If the answer is no, then there is no reason as to why you shouldn’t be covered without an appropriate insurance policy. This question needs to be answered by an individual and therefore it would be right to trail off this article here.

What is National Savings Certificate?
NSC is the abbreviation of National Savings Certificates. These certificates are issued by the Department of Post and are available at all post office counters in the country. The Certificate can be held either jointly or singly. You also have the option to keep a nominee if you want.

The government assurance makes NSC attractive element and hence it finds its way to risk averse investors. Besides, it qualifies for tax benefit under section 80C of the Income Tax Act, 1961.

Features:
The duration of an NSC scheme is 6 years and is sold in denominations of Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs. 10,000. So, if you wish to invest Rs. 50,000, you will have to buy five different certificates of Rs. 10,000 each. You can apply for it in a Post Office or can even approach an agent. One individual can be nominated for an NSC scheme carrying the denomination of Rs. 100 and more than one individual can be nominated for higher denominations. If you wish to transfer the certificate to another nominee you can do so at a very nominal fee. There are instances of people losing their certificate or in some examples it gets destroyed, stolen or mutilated. In such cases, a duplicate copy can be issued by the post office on the payment of a set fee.

Its other benefits include loan availability. If you wish to take loan against the scheme, it can be done so by pledging it to the RBI, scheduled bank, a corporation or a government company, a housing finance company (approved by the National Housing Bank), etc. provided the respective postmaster has granted the permission.

Apart from the loan facility, NSC also qualifies for tax benefits under section 80C of the Income Tax, 1961. However, investors need to know that the interests accrued on NSC schemes are taxed. Wondering why? The reason being- the abolishment of Section 80L in the year 2005-06 in which the government decided to tax the interests rates which were earlier tax-free upto a limit of Rs. 12,000. So, following this rule, the interest on this particular scheme came to be taxed.

NSC falls under the category of ‘Income from other sources’ and the interests accrued on it are taxable. As far its rate of interest is concerned, it offers 8%, which is, compounded half yearly.

NSC is one of the best options for investors who are low on risk profile. Having worked out your needs and requirements, make your choice for this scheme.

So, you saw the house of your choice and have made up your mind to buy it. But are you familiar with the jargon associated with it. While applying for loans be it home, personal, car or anything for that matter, it is always better to acquaint yourself with some of the associated lingo. It would help you immensely to understand the exact connotation of the words.

Down Payment:
A partial payment made at the time of purchase and the balance to be paid later in installments. Down payment is to be borne by the loan taker, which is upto 10-20% of the total monetary value of the house.

Credit Appraisal:
When you apply for loan, the home loan company takes factors such as income, age, qualification, number of dependents, etc. into consideration. After evaluating factors like these, the loan amount is determined and sanctioned. This entire process is known as ‘credit appraisal.’

Offer letter:
Offer letter implies that the home loan company has agreed to consider your loan and hence would demand details from you. The offer letter would carry details containing the sanctioned amount, rate of interest, EMI amount, loan tenure, etc. The remaining formalities such as legal documents, property value will be considered at this stage. The pay out of the loan amount will take place only after the above-mentioned aspects have been evaluated thoroughly.

Equated Monthly Installment (EMI):
EMI is the abbreviated form of Equated Monthly Installment. It is that amount that needs to be paid every month. It combines your principal loan amount and the rate of interest.

The long-time insistence by investors to include Bank Fixed Deposits in the list of tax saving instruments has made the government to finally succumb to the demand. The government has now included Bank Fixed Deposits (FDs) as an eligible tool for tax benefits under section 80C.

Fixed deposits are the latest addition in the tax saving instruments provided they are locked-in for a period of 5 years. So an investor seeking to avail tax benefits can enjoy the tax exemption by investing in the FDs.

The increasing interest rates have its own pros and cons. With the rise in interest rates, investments in Fixed Deposits have come to give reasonable returns. At present, the interest rates are as high as 8%- 8.50% for common investors and 9% for senior citizens.

Going by the definition, Fixed Deposit is the lumpsum amount invested by the investor for a fixed period that would pay him interest on an annual basis. As maturity sum, the investor would get the principal amount along with the interest accrued. Also the interest rates given are higher compared to the one given in the ‘savings account’.

Presently, banks are offering an interest rate of 8%- 8.50% for regular fixed deposit and 8.50%-9% for senior citizens. These attractive interest rates, whets the appetite of risk-averse investors.

The Life Insurance Corporation of India (LIC) launched its new policy- Money Plus on 20th December 2006. .

It is a new unit linked endowment plan and offers investment-cum-insurance protection during the term of the policy, which can be anywhere between 5-20 years. The policyholder can choose the level of cover within the limits, which depends on the term chosen, mode and amount of premium he desires to pay. The allocated premium will be utilized to purchase units as per the selected fund type. The policyholder can choose any one of the 4 funds-Bond, Secured, Balanced and Growth Fund. Free switching between funds, four times every year is allowed.

The policyholder can also make partial withdrawal of units at any time after the third policy anniversary. The maximum entry age is 65 years and the minimum entry age is 0 years. The minimum and maximum age of entry are 18 years and 75 years respectively.

Money Plus has a unique feature- ‘Settlement Option’. As per this feature when the policy is due for maturity, you have the option to receive your lumpsum amount in installments spread over a period of five years. However, the life cover may become void during this period.