D. REAL ESTATE

What is Real estate ?
 
A piece of land, including the air above it and the ground below it, and any buildings or structures on it along with its natural resources such as crops, minerals, or water, immovable property of this nature, an interest vested in this; an item of real property, buildings or housing in general.

Real estate can include business and / or residential properties, and are generally sold either by a realtor ( An Agency, or Agent or Broker connected with Real Estate ) or directly by the individual who owns the property ( for sale by owner ). Also the business of real estate, the profession of buying, selling, or renting land, buildings or housing.

Real Estate as an investment option

Real Estate refers to invest­ment in immov­able prop­er­ties which includes land, build­ings, flats etc. Invest­ing in real estate involves the pur­chase of real estate and sell­ing it for a profit.

Basi­cally invest­ment in real estate involves a sub­stan­tial invest­ment and for a long period of time. Major­ity of the investors invest in real estate in the form of buy­ing a house.

But real estate invest­ment is beyond this and the objec­tive behind the invest­ment is to make prof­its. Before mak­ing a real estate invest­ment, the investor should eval­u­ate the risk appetite and invest­ment amount.

The dif­fer­ent types of real estate invest­ments are as follows :–

A) Rental
The main aim of this form of invest­ment is to rent out prop­erty to a ten­ant and earn a con­tin­u­ous stream of rent from the ten­ant. The value of the prop­erty also increases over a period of time. The risk in this form of invest­ment is the owner of the prop­erty has to find out a ten­ant and also need to pay for the main­te­nance expenses.

B) Trad­ing
Basically traders in real estate in order to make a quick profit buy prop­er­ties for a short term ( six months) and sell them at a profit. Traders look out for buy­ing under­val­ued properties / very hot prop­er­ties and sell them at a profit.

C) Long Term Invest­ment
There is a cer­tain group of investors who invests in real estate basi­cally plot of land from a long term per­spec­tive. The objec­tive is over a period of time the value of the prop­erty will rise and the owner will make a profit by sell­ing it. The biggest flaw in this invest­ment is money is blocked for an indef­i­nite period and the appre­ci­a­tion of the prop­erty value is unpredictable.

REAL ESTATE INVESTMENT DEPENDING UPON THEIR NATURE :
 

a) Residential real estate
These are investments or properties such as houses, apartment buildings, townhouses, and vacation houses where a person or family pays you to live in the property. The length of their stay is based upon the rental agreement, or lease agreement.

b) Commercial real estate
These are investments consisting mostly of office buildings. If you were to take some of your savings and construct a small building with individual offices, you could lease them out to companies and small business owners, who would pay you rent to use the property.

c) Industrial real estate
These are investments consisting of storage units, car washes and other special purpose real estate that generates sales from customers who temporarily use the facility. Industrial real estate investments often have significant "fee" and "service" revenue streams, such as adding coin-operated vacuum cleaners at a car wash, to increase the return on investment for the owner.

d) Retail real estate
These are investments consist of shopping malls, strip malls, and other retail storefronts. In some cases, the landlord also receives a percentage of sales generated by the tenant store in addition to a base rent to incentive them to keep the property in top-notch condition.

e) Mixed-use real estate
These are investments are those that combine any of the above categories into a single project. Mixed-use real estate investments are popular for those with significant assets because they have a degree of built-in diversification, which is important for controlling risk.

f) Real Estate Investment Trusts or REITs
A real estate investment trust or REIT is a tax designation for a corporate entity investing in real estate. The purpose of this designation is to reduce or eliminate corporate tax. In return, REITs are required to distribute 90% of their taxable income into the hands of investors. The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.

REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges.

REITs can be classified as equity, mortgage, or a hybrid.Those Trusts trade like stocks and own a portfolio of underlying real estate or real estate mortgages. Understanding the differences, advantages, and drawbacks of REITs is so important.

The key statistics to examine in a REIT are net asset value (NAV), funds from operations (FFO), adjusted funds from operations (AFFO) and cash available for distribution (CAD). In the period from 2008 to this writing (2011), REITs face challenges from both a slowing United States economy and the late-2000s financial crisis, which depressed share values by 40 to 70 percent in some cases.

Technically, lending money for real estate is also considered real estate investing but I think it is more appropriate to consider this as a fixed income investment, just like a bond, because you are lending money with property securing the debt. You have no underlying interest in the appreciation or profitability of a property beyond the interest income to which you are entitled.

Likewise, buying a piece of real estate or a building and then leasing it back to a tenant, such as a restaurant, is more akin ( related ) to fixed income investing rather than a true real estate investment. You are essentially financing a property, although this somewhat straddles ( sit or stand with one leg on either side of ) the fence of the two because you will eventually get the property back and presumably the appreciation belongs to you.

C.POST OFFICE SAVINGS SCHEMES

Investment in Post Office Savings

Indian Postal ser­vice pro­vides var­i­ous invest­ment schemes. The most attrac­tive schemes are as fol­lows –

a) Post Office Recurring Deposits,
b) Post Office Monthly Income account,
c) Kisan Vikas Patra,
d) National Sav­ings Cer­tifi­cates,
e) Senior Cit­i­zens sav­ings scheme.
Investors can invest in these schemes in their near­est post offices.

A) POST OFFICE RECURRING DEPOSITS,

Monthly Savings Option
POST OFFICE RECURRING DEPOSIT SCHEME   (PORD)
Name of the Scheme	Interest	Maturity Period	Limit of Deposit	I.T.benefit	Place of Deposit
PORD	-----	5 years	Min: Rs.10 Deposits can be in multiples of Rs.5. Maximum: No limit	-----	All Post Offices

For example of Rs. 10 every month for 5 years will fetch interest of Rs. 128.90/- with Principle of Rs.600/-. After 5 years the account can be continued for another 5 years at the same rate of interest.

Opening of Account

The account can be opened by a single adult of two adults jointly or a minor who has attained the age of 10 years or a guardian on behalf of a minor.

Deposits may be made a minimum of Rs.10/- once in a calendar month, in multiples of Rs.5/-. Amount of deposit made at the time of opening the account shall not be changed.

A depositor may have more than one account in his own name or jointly with others. There is no ceiling on deposit. Monthly installments can be paid in advance and in that case, a suitable rebate is allowed.

Loan Facility

Loan up to half of the deposit may be taken after one year and before maturity. This must be repaid together with interest in one or more installments. Loan not repaid is deducted together with interest from the amount payable at the time of closure of the account.

Insurance Benefit

In case of death of a depositor, his legal heir or nominee becomes entitled to get immediately the full maturity value of the account/accounts subject to the maximum account value of Rs.50 /-

(a) the account is not a discontinued one
(b) twenty four months have elapsed from the dates of opening the account, and
(c) the age of the depositor at the time of opening of the account was between 18 and 53 years.
(d) there should not be withdrawal during the first 24 months.

Account may be opened through authorised women agents under Mahila Pradhan Kshetriya Bachat Yojana (MPKBY). Recurring Deposit account may be opened through Payroll Savings Scheme for employees in State / Centre Government and Public undertakings.

B) POST OFFICE MONTHLY INCOME ACCOUNT

#  Rate of inter­est is 8% per annum payable monthly. Invest­ment of Rs 1 Lakh will give a return
    of around Rs 666.67 per month.
#  Min­i­mum invest­ment amount is Rs.1500/- or in mul­ti­ple thereof.
#  Max­i­mum amount is Rs. 4.5 Lakhs in sin­gle account and Rs. 9 Lakhs in a joint account.
#  Period of matu­rity – 6 years
#  A bonus of 5% on the prin­ci­pal is pro­vided on matu­rity.
#  Deduc­tion of 3% on the deposit amount if amount is with­drawn before 3 years
#  Deduc­tion of 2% on the deposit amount if amount is with­drawn after 3 years
#  Inter­est income is tax­able but it is not deducted at Source.
#  Account is trans­fer­able from one post office to any Post office in India free of cost.

C) KISAN­VIKAS PATRA (KVP)

Kisan Vikas Patra or KVP is a sort of savings, which is regulated with the help of government and post offices. This Kisan Vikas Patra KVP is a plan, which allows the investors to make their investments up to double amount in a less duration of time in comparisons to the other governmental plans.

The plan and subscription for Kisan Vikas Patra is now available at every post offices that are regulated through government. Kisan Vikas Patra KVP is known as the most reliable savings procedure as the government conducts it directly and regulated by it. It is also said as the most reliable way of investments just because of the support and backup of Indian government.

Subscription for a Kisan Vikas Patra or KVP can be done by completing following few requirements which are mandatory for it.

#  These requirements includes like minimum subscription of five hundred is to be done in     
     initial stage and no limit for any maximum amount like Invest­ment amount in denom­i­na­tions
    of Rs.100, Rs 500, Rs 1000, Rs 5000, Rs 10,000
#  Like other investments, in this Kisan Vikas Patra KVP plan too the Rate of inter­est is 8.4%
    per annum com­pounded yearly. Invest­ment of Rs 1 Lakh will become Rs 2 Lakhs after a
    period of 8 years and 7 months and also assures to double the amount in approximately 9
    years.
#  Kisan Vikas Patra or KVP can be subscribed by any adult in their name. Apart form it a
    minor and two adult's persons with a joint account,companies and firm can also subscribe it.
#  Here, it should be noted that any NRI or any member of Hindu Undivided Family are not
    bounded to subscribe these Kisan Vikas Patra KVP plan. Reinvestment plans are also
    present with this KVP plan.
#  But this reinvestment on Kisan Vikas Patra plan is only allowed by the authority on maturity
    of the policy.
#  Interest income is tax­able but not deducted at source

Other features apart from the above ones are also included in this KVP plan. These patras acts like an security for issuing any bank loan form credit lending institutions.

They are also transferable to any other name under the rules and regulations of Kisan Vikas Patra KVP plans. This plan is known as the best way to increase the investments without spending a long duration of time.

In a short time period with a fixed rate of interests, this plan acts as a guaranteed returning interest amount after completing the maturity of it.

D) NATIONAL SAV­INGS CER­TIFI­CATE (NSC)
 
The National Sav­ing Cer­tifi­cate makes it easy for cit­i­zens from all walks of life to save for a rainy day. With the min­i­mum amount set at Rs 100 only, one also gets an 8% inter­est on the amount cal­cu­lated biannually.

Since the NSC comes under Sec­tion 80 C, it also enti­tles you to get tax deduc­tions up to
Rs 1, 00,000. How­ever from 2005 –2006, the inter­est accu­mu­lated on the NSC amount is taxable.

NATIONAL SAVINGS CERTIFICATE ( NSC VIII ISSUE )

a) Scheme specially designed for Government employees, Businessmen and other salaried
classes who are Income Tax assesses.
b) No maximum limit for investment.
c) No tax deduction at source.
d) Certificates can be kept as collateral security to get loan from banks.
e) Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80 C of
Income Tax Act.
f ) Trust and HUF cannot invest.

NATIONAL SAVINGS CERTIFICATE ( NSC IX ISSUE )

a) No maximum limit for investment.
b) INR. 100/- grows to INR 234.35 after 10 years.
c) Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-
1000/-, 5000/- & Rs. 10,000/-.
d) A single holder type certificate can be purchased by an adult for himself or on behalf of a
minor or to a minor.

Buy National Savings Certificates ( NSC's ) every month for Five / Ten years – Reinvest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.

BRIEF HIGHLIGHTS

#  Rate of inter­est is 8% per annum com­pounded six monthly but it is paid six monthly.
    Investment of Rs 1 Lakh will become Rs 1,60,100 after a period of 6 years.
#  Min­i­mum Limit is Rs 100 and No max­i­mum limit on investments.
#  Investment amount in denom­i­na­tions of Rs.100, Rs 500, Rs 1000, Rs 5000, Rs 10,000.
#  Investments in NSC are eli­gi­ble under sec­tion 80 C of Income Tax Act.
#  Annual Inter­est income qual­i­fies for tax rebate under sec­tion 80 C of income tax act, if it is
    deemed to be reinvested.
#  Individu­als and minor through guardian are eli­gi­ble to invest.
#  Inter­est income is tax­able but not deducted at source.

E) SENIOR CIT­I­ZENS SAV­INGS SCHEME

#  Rate of inter­est is 9% per annum. Inter­est is payable on 31st March / 30th Sept / 31st
    Decem­ber in the first instance and there­ after, inter­est shall be payable on 31st March,
    30th June , 30th Sep and 31st Decem­ber.
#  One time deposit of Rs 1000 and its mul­ti­ple thereof and max­i­mum amount not exceed­ing
    Rs 15 Lakhs
#  Period of matu­rity – 5 years
#  Eli­gi­bil­ity Cri­te­ria — Age should be 60 years or more, and 55 years or more but less than
    60 years who has retired on super­an­nu­a­tion or oth­er­wise on the date of open­ing of account
    sub­ject to the con­di­tion that the account is opened within one month of receipt of retire­ment
    ben­e­fits.
#  Early clo­sure is allowed after a period of one year with a deduc­tion of 1.5% inter­est and
    after 2 years 1% inter­est.
#  Inter­est income is tax­able and deducted at source, if the inter­est amount is more than
    Rs10,000 per annum.
#  Invest­ment in the scheme is eli­gi­ble for tax ben­e­fit under sec­tion 80 C of Income Tax Act.

B.LIFE INSURANCE

WHAT IS LIFE INSURANCE ?

An agree­ment between an indi­vid­ual (often the insured per­son) and a life insur­ance com­pany 
( the insurer) that guar­an­tees the pay­ment of a stated amount of money on the death of the insured or at the end of a spec­i­fied term.

It is a risk mea­sure taken by an indi­vid­ual for the ben­e­fits of his / her depen­dents in his / her absence. As life is uncer­tain, an indi­vid­ual by tak­ing an insur­ance pol­icy gives a cush­ion to his 
/ her ben­e­fi­ciary / nominee where they are enti­tled for an insured value in case of the insured untimely death.

Life insurance is designed to provide financial security to your designated beneficiaries at the time of your death. A predetermined amount of money will be paid to the person or persons named on your policy, according to State Farm Insurance. These funds are typically used to cover funeral costs, taxes and other miscellaneous expenses. When applying for life insurance, your age will not only affect the cost of your policy but your health will be scrutinized when you reach a certain age.

WHY LIFE INSURANCE IS NECESSARY ?

Human life has no guarantee, which is full of uncertainty and being uncertainty comes the risk. We can’t say any thing about our future. What will happen in coming few seconds no body knows? We also can’t say about our self,

However well prepared we are, we do not know what is around the corner and what kind of fate awaits us and that is the reason why life insurance is so critical.

Life Insurance caters to your following requirements :


• Financial Security to your family
• Investment & saving options
• Protection of your home mortgage
• Saving options for Retirement through Pension plans
• Saving options for Children through Children Insurance Plans

If you don’t have life insurance already it may be worth considering, at least now to take a life policy which guarantees you a sum of money during the term of the policy should you be unfortunate enough to pass away. This policy is guaranteed as long as you make the monthly premiums on the policy. Now the premium is determined by actuaries who work out how long you are likely to live given your lifestyle. This sort of policy is essential if you have dependents that you want to protect financially in the event of death.

NEED FOR LIFE INSURANCE


Today, there is no shortage of investment options for a person to choose from. Modern day investments include gold, property, fixed income instruments, mutual funds and of course, life insurance. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets.

WHICH PEOPLE THINK ABOUT LIFE INSURANCE ?

There are many more, of those a few are illustrated as below,  

1) People are just too busy, and besides, it will never happen to them. They believe that they can take care of getting the insurance in place tomorrow, next week, when rates come down, or when they loose a little weight. 

2) They don’t take the time, effort, and initiative to think deeply about an inherently uncomfortable and unpleasant situation.

3) They believe that the coverage from work will always be enough, be the best value, and be available.

4) They do not have the skills to determine how much, or what kind, of life insurance they should have. They are concerned that if the consult an insurance professional, they will be “sold” coverage that they don’t need. It never occurs to them that an insurance company will never insure an asset for more than it is worth. This extends to the financial value of their life.

Likewise, a much larger risk is being unable to generate an income due to sickness or accident. But an even smaller percentage of the population has individual disability coverage.

WHO NEEDS LIFE INSURANCE ?


Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even if you have no dependents, such as your desire to cover your own funeral expenses.

Who will take care of my family if tomorrow something unfortunate happens to me?” If this question bothers you, then Life Insurance is the answer.

Of course, under any circumstances, the loss of a loved one is a traumatic experience. But, if your family is also left without sufficient money to meet basic living needs or prepare for future goals, they will have to cope with a financial crisis at the same time. A Life Insurance plan ensures that your family is financially secure even if tomorrow you are no longer around to care for them.

WHO ARE BENEFITED BY LIFE INSURANCE ?


Life Insurance can provide for two risks the risk of your dying early and the risk of your living too long.

It provides financial security to your family if you are not around anymore, depending on the type of life insurance policy you opt for. Different types have different premium levels and varying coverage.

Some insurance plans also provide income for you in your non-earning years i.e. after retirement. There are various life insurance plans that do this, such as endowment plans and pension plans.

Secure your family's future and provide for your comfort after all these hard years.

WHAT ARE THE APT AGES TO TAKE LIFE INSURANCE ?

AGES
When it comes to life insurance, Insurance Rate.com says age is one of the main factors a potential insurer will look at when determining your premium. A 25-year-old in excellent health will pay out significantly less than a 55-year-old who has a heart murmur.

RISK OF DYING
The older you are, the more likely you are to die sooner than a younger person. That means older people are generally considered to be higher risk clients because there is a greater chance your insurer will have to pay your beneficiaries sooner than it would be with a younger policyholder.

MEDICAL EXAM
When you apply for life insurance, you might be required to take a medical exam regardless of your age. However, according to advantage Life Insurance, a physical check up is practically a certainty for individuals who are older than age 40. Medical exams might also be requested of younger people who would like to take out high levels of coverage.

COMPARISON SHOPPING
Since insurance premiums are apt to get higher with age, it might take more time and effort to find an affordable rate. According to Insurance Life Ok.com, the Internet allows you to not only compare rates but learn exactly how life insurance works.

OLD AGE ADVANTAGE
There could come a time when old age might work in your favor when paying for life insurance. Insurance Life Ok.com says many insurance companies waive premiums when you turn 100 years old.

BENEFITS OF LIFE INSURANCE
Life insurance, especially tailored to meet your financial needs
Let us look at these unique benefits of life insurance in detail.

ASSET PROTECTION
From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation.

The core benefit of life insurance is that the financial interests of one’s family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer.

GOAL BASED SAVINGS
Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence.

Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage.

Life insurance is the only investment option that offers specific products tailor-made for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met.

ADVANTAGES OF LIFE INSURANCE
Some of the various advantages of insurance policy are listed below:

RISK COVER 
Life today is full of uncertainties; in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event.

COVER FOR WHOLE LIFE
The life insurance policy provides coverage for the whole life of the policyholder. It also provides protection in cases of serious illness.

MENTAL PEACE
The most important benefit of life insurance is that it assures mental peace. When a person goes for life insurance, he and his family are relieved from worries of future. Thus, it ensures mental peace.

FINANCIAL SECURITY
The policy of life insurance provides economical security to the family of the policy holder in case of death of the breadwinner. On occurrence of this unfortunate event, the family is forced with a cash crunch. But by availing a life insurance policy, this problem of cash crunch is solved by a lump sum amount paid by the insurer.

SAFE AND PROFITABLE LONG-TERM INVESTMENT
Life Insurance is a highly regulated sector. IRDA, the regulatory body, through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a long-term savings instrument, also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains.

GUARANTEED MATURITY VALUES
Protection against rising health expenses - Life Insurers through riders or stand alone health insurance plans offer the benefits of protection against critical diseases and hospitalization expenses. This benefit has assumed critical importance given the increasing incidence of lifestyle diseases and escalating medical costs.

ASSURED INCOME THROUGH ANNUITIES
Life Insurance is one of the best instruments for retirement planning. The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life.

PLANNING FOR LIFE STAGE NEEDS
Life Insurance not only provides for financial support in the event of untimely death but also acts as a long term investment. You can meet your goals, be it your children's education, their marriage, building your dream home or planning a relaxed retired life, according to your life stage and risk appetite. Traditional life insurance policies i.e. traditional endowment plans, offer in-built guarantees and defined maturity benefits through variety of product options such as Money Back, Guaranteed Cash Values,

LOAN IN CASE OF NEED
There are circumstances in life when the individual needs funds but is unable to get from various sources. The life insurance policy also provides a solution to this problem as loan can be taken against the policy and need not be repaid as the loan amount is deducted from the police value on maturity.

FACILITY OF LOANS WITHOUT AFFECTING THE POLICY BENEFITS
Policyholders have the option of taking loan against the policy. This helps you meet your unplanned life stage needs without adversely affecting the benefits of the policy they have bought.

MORTGAGE REDEMPTION
Insurance acts as an effective tool to cover mortgages and loans taken by the policyholders so that, in case of any unforeseen event, the burden of repayment does not fall on the bereaved family.

BUILDS THE HABIT OF THRIFT
Life Insurance is a long-term contract where as policyholder, you have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.

PROTECTION PLUS SAVINGS OVER A LONG TERM 
Since traditional policies are viewed both by the distributors as well as the customers as a long term commitment; these policies help the policyholders meet the dual need of protection and long term wealth creation efficiently.

GROWTH THROUGH DIVIDENDS 
Traditional policies offer an opportunity to participate in the economic growth without taking the investment risk. The investment income is distributed among the policyholders through annual announcement of dividends / bonus.

SOURCE OF MITIGATING CERTAIN LIABILITIES
The life insurance policy provides a great source to satisfy certain needs and liabilities like loans and mortgages.

TAX BENEFITS
Insurance plans provide attractive tax-benefits for both at the time of entry and exit under most of the plans.

TAX-FREE SOURCE OF SAVINGS
In addition it is a source of savings which is completely tax-free

MAINTENANCE OF LIVING STANDARD
The life insurance policy helps in maintaining the living standard of the family even after the death of the breadwinner by providing financial benefits to the family.

ENHANCED COVERAGE
The policy provides enhanced coverage by providing for medical benefits.

DISADVANTAGES OF LIFE INSURANCE !
With the benefits of both cash value and term life insurance come a few disadvantages.

The most significant disadvantage of cash value life insurance is the inconsistency in premiums.

Most cash value policies contain required premiums that can increase over time. This can make the policy quite expensive for people on a budget who wish to purchase enough coverage to benefit their family in the event of their death.

Although many policies contain riders in which dividends from cash accounts can be used to pay premiums, such an instance almost always results in taking funds away from the cash value or investment account.

There is also never a guarantee that sufficient funds will be available to cover missed premiums in the event a policyholder falls short.

There are also several disadvantages of term insurance,

1. The first being that it is not permanent. 
Although a policyholder may enjoy extremely cheap premiums when he or she is young, term products expire after a certain number of years, or when the insured reaches a certain age. When a policy expires, a new one must be purchased.

This means that a person must qualify for a new program based on his or her current age and health in order for coverage to continue. Many times, this results in much higher premiums or un insurability. Some term insurance does, however, contain "re-up" or "renewal" options that may not require proof that the customer is insurable to continue coverage.

2. Expensive
The life insurance can prove to be a costly affair, particularly when suffering from illness and regarded by insurers as High Risk due to some reasons like old age etc.

3. Irrelevant in case of no-family person
The life insurance policy is irrelevant for an individual who is not having any family or dependents

4. Increasing premiums
The premium payable increases with the increase in age. But the income gradually decreases which makes it difficult to strike a balance.

5. No benefit in case of long life
Some policies do not provide any cash benefit on the policy holder surviving the policy term. In that case, amount paid for premiums is wasted.


From the above discussion, it becomes clear that though life insurance is a mixed blessing, yet its advantages outweigh its disadvantages. But at the same time, it depends on the requirements of the individual.
.
TYPE OF LIFE INSUR­ANCE POLICIES
 
1. Term Insur­ance Policy
2. Whole Life Policy
3. Endow­ment Policy
4. Money back Policy
5. Annu­ities and Pension

A) TERM INSUR­ANCE POLICY


The Term Insurance policy is a Plain Vanilla Insurance Plan which offers financial help to the family in case of Insured’s demise only during a limited term/tenure of the plan. As & when the policy expires, you don’t receive any benefits at the maturity. One of the most striking features of this plan is its Premium rates which are very low along with the maximum sum assured. Now Insurance Companies have brought in Premium Back Term Plans wherein you get benefits at the maturity of the term even if you don’t make any claims, however this feature tends to increase the overall Premium amount.

A term insur­ance pol­icy is a pure risk cover for a spec­i­fied period of time. In gen­eral terms it means that the sum assured is payable only if the pol­i­cy­holder dies within the pol­icy term.

For instance, if a per­son buys Rs 2 lakh pol­icy for 10-years, his nominee / beneficiary is enti­tled to the money if he dies within that 10-year period. If the pol­i­cy­holder sur­vives the 10 year period, the insur­ance com­pany keeps the entire pre­mium paid dur­ing the 10-year period.

Hence there is no ele­ment of sav­ings or invest­ment in such a pol­icy. It is a 100 per cent risk cover. It sim­ply means that a per­son pays a cer­tain pre­mium to pro­tect his fam­ily against his sud­den death.

He for­feits the amount if he out­lives the period of the pol­icy. This explains why the Term Insur­ance Pol­icy comes at the low­est cost. This is the cheap­est insur­ance available.

Following are the Term Insurance Plans by various Life Insurance Companies

Life Insurance Companies	Plans
Aegon Religare Life Insurance	iTerm Plan
Aviva Life Insurance	Aviva i-Life
Bharti AXA Life	eProtect
HDFC Life	Click2Protect
ICICI-Prudential	iProtect
Kotak Life Insurance	Kotak e-Term/e-Preferred Term
LIC	Anmol Jeevan
Max-New York Life Insurance	Level Term Policy
Met Life	Met Protect
SBI Life	SBI Life Swadhan
TATA-AIG Life Insurance	TATA-AIG Life-Assure

B) WHOLE LIFE INSUR­ANCE POLICY


The Whole Life Insurance Plans are Permanent Insurance Plans which run as long as the Policy Holder is alive. The Insured pays the premium amount throughout his life time. The beneficiary of the policy receives the coverage amount plus the interest & accumulated bonus only at the time of Insured’s death.

A Whole Life Pol­icy is an insur­ance cover against death, irre­spec­tive of when it hap­pens. Under this plan, the pol­i­cy­holder pays reg­u­lar pre­mi­ums until his death, fol­low­ing which the money is handed over to his fam­ily.

This pol­icy, how­ever, fails to address the addi­tional needs of the insured dur­ing his post-retirement years. It doesn’t take into account a person’s increas­ing needs either.

While the insured buys the pol­icy at a young age, his require­ments increase over time. By the time he dies, the value of the sum assured is too low to meet his family’s needs.

As a result of these draw­backs, insur­ance firms now offer either a mod­i­fied Whole Life Pol­icy or com­bine in with another type of policy

Following are the Whole-Life Insurance Plans

Life Insurance Companies	Plans
Aviva Life Insurance	Life Long
HDFC Life	Single Premium Whole Life Plan
ICICI-Prudential	ICICI Pru Whole Life
Kotak Life	Eternal Life Plan
LIC	Jeevan Tarang
Max-New York Life Insurance	Whole Life Participating
Met Life	Met 100- Limited Pay Whole life
TATA-AIG Life Insurance

C) ENDOWMENT POLICY


Endowment plans: The Endowment Plans are basically saving plans which offer Insurance against the Insured’s death during the term of the plan, simultaneously acting as a saving tool. Unlike Term Plans which don’t offer maturity benefits Endowment Plans provide benefits when the policy expires. In the case of the Insured’s death his family receives the sum assured/stipulated coverage along with the accumulated profits/bonus. When the Insured survives the term period he receives the life coverage plus the profits & bonuses.

It is a com­bi­na­tion of risk cover and finan­cial sav­ings. Endow­ment poli­cies is the most pop­u­lar poli­cies in the world of life insurance.

• In an Endow­ment Pol­icy, the sum assured is payable even if the insured sur­vives the pol­icy term.

• If the insured dies dur­ing the tenure of the pol­icy, the insur­ance

firm has to pay the sum assured just as any other pure risk cover.

• A pure endow­ment pol­icy is also a form of finan­cial sav­ing, whereby if the per­son cov­ered remains alive beyond the tenure of the pol­icy, he gets back the sum assured with some other invest­ment benefits.

The cost of such a pol­icy is slightly higher but worth its value.

Following are the Endowment Insurance Plans

Life Insurance Companies	Plans
Aviva Life Insurance	Life Saver
HDFC Life	Endowment Assurance Plan
ICICI-Prudential	Guaranteed Saving Insurance
Kotak Life	Endowment Plan
LIC	Jeevan Anand
Max-New York Life Insurance	Life Gain
Met Life	Met Suvidha
SBI Life	SBI Life Sudarshan
TATA-AIG Life Insurance	Assure Golden Years Plans

D) MONEY BACK POLICY

These poli­cies are struc­tured to pro­vide sums required as antic­i­pated expenses (mar­riage, edu­ca­tion, etc) over a stip­u­lated period of time.

With infla­tion becom­ing a big issue, com­pa­nies have real­ized that some­times the money value of the pol­icy is eroded. That is why with-profit poli­cies are also being intro­duced to off­set some of the losses incurred on account of infla­tion.

A por­tion of the sum assured is payable at reg­u­lar inter­vals. On sur­vival the remain­der of the sum assured is payable. In case of death, the full sum assured is payable to the insured. The pre­mium is payable for a par­tic­u­lar period of time.

E) ANNU­ITIES AND PENSION


In an annu­ity, the insurer agrees to pay the insured a stip­u­lated sum of money peri­od­i­cally. The pur­pose of an annu­ity is to pro­tect against risk as well as pro­vide money in the form of pen­sion at reg­u­lar inter­vals.

Over the years, insur­ers have added var­i­ous fea­tures to basic insur­ance poli­cies in order to address spe­cific needs of a cross sec­tion of people.

LIST OF LIFE INSUR­ANCE COM­PA­NIES IN INDIA

1. Bajaj Allianz Life Insur­ance Com­pany Limited
2. Birla Sun Life Insur­ance Co. Ltd
3. HDFC Stan­dard Life Insur­ance Co. Ltd
4. ICICI Pru­den­tial Life Insur­ance Co. Ltd.
5. ING Vysya Life Insur­ance Com­pany Ltd.
6. Life Insur­ance Cor­po­ra­tion of India
7. Max New York Life Insur­ance Co. Ltd
8. Met Life India Insur­ance Com­pany Ltd.
9. Kotak Mahin­dra Old Mutual Life Insur­ance Limited
10. SBI Life Insur­ance Co. Ltd
11. Tata AIG Life Insur­ance Com­pany Limited
12. Reliance Life Insur­ance Com­pany Limited.
13. Aviva Life Insur­ance Co. India Pvt. Ltd.
14. Sahara India Life Insur­ance Co, Ltd.
15. Shri­ram Life Insur­ance Co, Ltd.
16. Bharti AXA Life Insur­ance Com­pany Ltd.
17. Future Gen­er­ali Life Insur­ance Com­pany Ltd.
18. IDBI For­tis Life Insur­ance Com­pany Ltd.
19. Canara HSBC Ori­en­tal Bank of Com­merce Life Insur­ance Co. Ltd
20. AEGON Reli­gare Life Insur­ance Com­pany Limited.
21. DLF Pramer­ica Life Insur­ance Co. Ltd.
22. Star Union Dai-ichi Life Insur­ance Comp. Ltd.


TOP LIFE INSURANCE COMPANIES
BEST LIFE INSURANCE 

Number of Policies Up to Dec 2011	Life Insurance Companies
20404281	LIC
785938	ICICI Prudential
698109	Reliance Life
640483	Bajaj Allianz
589855	Birla Sunlife
491927	SBI Life
405662	Max New York
397408	HDFC Standard
199275	Tata AIG
161910	ING Vysya
109614	Kotak Mahindra Old Mutual
100216	Aviva
100143	Future Generali Life
98904	Met Life
82037	Star Union Dai-ichi
73490	Shriram Life
69151	Bharti Axa Life
47322	Aegon Religare
45833	IDBI Federal
44899	Canara HSBC OBC Life
43929	DLF Pramerica
38498	IndiaFirst
36228	Sahara Life
1968	Edelweiss Tokio