As a parent, holding your child in your arms is the most precious feeling. You want to do everything in your power to protect them and keep them secure. Unfortunately, life is designed in a way that you cannot always be there to safeguard them in the future. Therefore, it is wiser to have a plan in place to protect them, especially when you’re not around.

Your children depend on you for their needs and even their future goals. In your absence, they might have to suffer both emotionally and financially. Without a proper source of income or a financial cushion, your children might have to compromise on their standard of living and even give up their life dreams. The emotional impact of losing a parent can subside over the years, but the monetary impact of losing a breadwinner can leave them distressed or leave them struggling over a longer time. 

Amidst the fast pace of this life, rising uncertainties and the ever-changing dynamics, it is critical that your spouse and children have a reliable financial backup to secure them financially in your absence. For this purpose, you can consider investing in a comprehensive term insurance plan. 

Know how can a term plan provide total protection for a child’s future:

What are term plans, and how do they protect your child’s future?

Term insurance policies are pure life insurance plans that pay out an assured benefit to your nominee in case of your unfortunate demise during the plan tenure. When you buy term insurance, you can easily secure the future of your child from being jeopardised by the financial struggles they would otherwise face because of the loss of income.

A term policy is one of the most reliable insurance policies because it does not have an investment component and remains unaffected by the volatile movements of the market. Your children have the freedom to use this money to pay for their regular expenses, maintain their standard of living or even accomplish long-term financial goals like pursuing higher education. 

The all-new Edelweiss Tokio Term Plan – Total Protect Plus gives you an additional and optional benefit to enhance your term life insurance coverage by selecting Child’s Future Protect Benefit. This benefit gives you the freedom to increase your life cover, on opting for an additional sum assured from 10% to 100% of the base sum assured, if your child is between 0 and 18 years of age. This term plan for parents allows you to create a wider financial safety net for your child. 

What are the benefits of a term policy?

If you buy online term insurance, you are essentially investing in your peace of mind. This term plan for parents acts as a reliable financial security instrument for your little one.

Here are some top benefits of a term policy:

• Financial security: Term insurance secures the future of your child by providing them with guaranteed financial aid in the event of your passing. Terms plans guard your children and dependents, such as your spouse, against having to take on any financial burden. The money can be used by children to pay off any existing debts, meet their living expenses and even pay for their education or set up a business. The term policy benefit can be a lump sum or regular monthly income. 
• Reasonable premiums: Term insurance plans are one of the most cost-effective and affordable life insurance policies. These plans offer wide sum coverage at a fraction of the term insurance premium as compared to other similar plans. If you have a high sum assured, good term plans also give you discounts on term insurance premiums. Affordable term insurance premiums and discounts make it easier for you to buy comprehensive coverage, thus providing a significant corpus for your children. Female lives covered also involve lower premium costs.
• Flexibility: Sound term plan for parents give you higher flexibility. These term insurance policies allow you to choose coverage as per your requirements. You also have the freedom to define your policy term, which could be aligned with your child’s education years. Further, you can customise your premium payment frequency (annual, semi-annual, quarterly, monthly) and death benefit mode (lump sum, monthly income, lump sum plus monthly income) to suit your child’s financial needs.
• Tax benefits: When you buy online term insurance, the premiums you pay for your term policy are exempt from taxes under Section 80(C). Additionally, the death benefit received by your child in case of your unfortunate demise during the term policy tenure is also tax-free under Section 10(10D) of the Income Tax Act, 1961. This allows you to take advantage of tax benefits in the present as well as not burden your children with tax liabilities in the future. 

Overall, a term policy is a recommended protection plan that you can use to protect your child. It is a legacy you can leave for your family that can cater to their needs. You can have peace of mind knowing that your children can live a financially sheltered life even if you are no longer around to support them.

As a parent, investing in a term plan for parents is a wise choice that you should make as soon as your child is born. Investing early on gives you the advantage of getting lower premiums, high sum assured, better discounts and an extended security period. 

However, with so many online term insurance plans available, it is vital that you conduct in-depth research and choose the best term policy as per your needs. Get your term insurance quotes, know the policy terms and conditions, inclusions and exclusions, as well as term insurance premium affordability, before you make the final decision. 

The choices you make today can significantly impact the future of your children. So, take the right step in the right direction, with Edelweiss Tokio Life – Total Protect Plus and Child’s Future Protect Benefit option!

Term insurance is a financial backup covering premature death. The reason why a term plan is one of the essential inclusions in your financial portfolio is that aside from ensuring monetary freedom for your family, it also promises to fulfil other financial aspirations. Aside from a Life Cover, an online term plan also makes you eligible for several advantages.

Usually, people buy term life insurance cover until the age of 60. Here are the reasons why paying for term insurance till the age of 60 is a wise financial decision.

Advantages of paying for term insurance till 60 years of age 

1. Premium Payment During Salaried Years

Making term insurance premium payments is easier when you have a fixed income in the working years of your life. While the age of retirement is being pushed and individuals are extending their work-life, generally, 60 is when most working professionals choose to retire.

Post-retirement, the monthly spending budget is revised, and you tend to cut down on extra expenses. However, when you are earning, you can easily set a certain amount aside for paying the term insurance premium.

When the premium payments are completed at the right age, they don’t burden your pocket.

2. Worry-Free Retirement

The second innings of your life should be free from financial liabilities or all elements that bring you down. You make investments in the initial phase of your career to reap its fruit during retirement years, when you don’t have an income source supplemented by a work-life.

However, if your term insurance continues beyond the age of 60, this mandatory premium payment might affect your retirement funds rather than be a beneficial investment. Experts recommend early investments in plans that will provide you with passive income to support your lifestyle during retirement.  

3. No Dependents

One of the most important reasons to buy term life insurance is to secure the life of your dependents if something unfortunate were to happen to you as the sole breadwinner of the family. In the initial stages of your career, these financial dependents might include your children, spouse, or aged parents.

However, this equation changes after the age of 60, especially concerning your children. Generally, when you are 60, your young children are old enough to earn for themselves, and you need not have a term insurance plan to secure their futures.

Moreover, because you have retired, the term insurance premium will most probably have to be paid by your children on your behalf. This is why extending your term plan beyond the age of 60 is not a wise financial decision in the long run.

Important Considerations Before Buying Term Insurance

Every individual has different financial requirements, which consequently also changes their term insurance needs. Amongst others, flexibility is one of the greatest term insurance benefits, enabling insurance seekers to choose a plan that addresses their concerns.

As a term plan secures the financial well-being of your family, it is important to do adequate research before investing in a policy. When you buy an online term plan, you can compare different policies to find the one that suits your needs. Here are the things you must ensure before buying an online term plan:

• Reliable Insurance Provider

Choosing the right insurer is just as important as choosing the right insurance cover. You must undertake an analysis to check whether the insurance provider has the financial health to validate your claims. You must also check the claim settlement ratio of the insurance provider to check their credibility.

• Determine Your Coverage Requirements

Every insurance seeker must take a look at their lifestyle to determine how much financial cover do they need. In addition to this, it is also important to observe your liabilities, such as any loans you may have taken, and add that to the coverage amount. Finally, also consider inflation in your coverage amount to ensure wholesome financial protection of your loved ones.

• Suitable Riders to Enhance Your Plan Benefits

Amongst the best term plan benefits is that it enables you to enhance your cover with a choice of add-ons to your basic policy. If the policyholder dies due to any of the conditions specified in the rider policy, the nominee receives an additional amount over and above the death benefit.

With increasing health risks and soaring hospital bills, a critical illness rider is recommended to every policyholder. For individuals who travel a lot, an accidental death benefit rider can be highly beneficial.  

• Buy Online Term Insurance

Term insurance benefits are better when insurance is purchased online. Not only does it enable easier comparison of the policies available online, but it helps you save more on the policy. The term plan premium is cheaper when you purchase it online instead of in person, which makes your policy cost-effective. The digital payment options further ease online insurance purchases.  

The Edelweiss Tokio term plan comes with a host of attractive features that ensure comprehensive financial protection. After selecting the suitable term insurance cover, the policyholder can either choose to pay the premiums to the age of 60 or until the conclusion of the policy term based on their preference. And, what’s more? You get the trusted and reliable after-sale service and seamless claim settlement of Edelweiss Tokio Life Insurance.

Conclusion

A term plan is an important investment for the financial health of your loved ones. However, to avail yourself of the various term plan benefits, ensure that you choose the right cover and the right duration of your term insurance policy.

Are you new to the world of investing? Do you plan on investing in mutual funds via the SIP mode of investment? Look no further. This article acts as an investment guide on how to invest in mutual funds via SIP. Read on to know more.

What is SIP

Systematic Investment Plan, commonly known as SIP is a way to invest your money in the desired investment vehicle. Under SIP investment, systematic and regular installments are made towards your desired mutual fund scheme regularly.

The periodicity of the intervals can be daily, weekly, monthly, semi-annually, or annually. An investor can save as low as Rs 100 in mutual funds via SIP. There are different types of SIP an investor can choose from – regular or vanilla SIP, top-up SIP, perpetual SIP, etc.

How to invest in SIP

Investing in mutual funds via SIP is a seamless process. Just follow these simple steps to invest in SIP:

1. Analyze your investment goals and your risk profile

Understanding your risk profile is very important before you begin your investment journey. After careful analysis of your risk profile, it is equally important to understand your financial objective or what do you aim to achieve from your investments.

2. Choose the right type of investment

Selecting the right investment option must be dependent on your risk profile, financial objectives, and investment duration. Do not forget to check the past performance of the investment avenue. After finalizing the right type of mutual fund for your profile, follow these simple steps:

• Properly fill the KYC [Know Your Customer] form
• Deliver mandatory identity proofs such as Aadhar card, bank details, address proof, utility bills, etc.
• You need to provide a cancelled cheque of the SIP investment amount if you decide to go forward with the offline mode of investment. However, if you choose the online mode, you would need to fill the ECS [Electronic Clearing Service] mandate form.

3. Choose the investment date

As an investor, you have the liberty to choose a date that suits your needs. Usually, it’s advised to choose the date that you get your salary or a regular income on.

4. Decide the investment horizon

Investing in SIP is a good way to achieve your financial goals. Determine the investment horizon needed to reach your goals. You can also use an SIP calculator to understand the future value of your investments.

5. Choose between online or offline mode of investment

As an investor, you have the choice to invest in mutual funds online or offline via SIP. Irrespective of the fact that you choose online mode of offline mode, the investment amount automatically gets debited from your bank account and is used to buy mutual fund units of your desired scheme.

6. Stay invested until your financial goals are met or end of your investment horizon

SIPs are a good way to create wealth to fulfill your long-term investment horizons. Unlike lumpsum investment, you do not have to worry about timing the markets. Instead, SIP investment believes in the concept of time in the market. So, ignore the volatility associated with your mutual fund investments and stay invested until you have achieved your financial goals, or your investment horizon ends.

SIP investments are a godsend investment avenue to those retail investors who cannot afford to invest their entire investment horizon in one go. Use them properly to achieve your financial goals. Happy investing!

Many individuals draw a handsome salary but are unable to convert the salary into tangible returns. One of the probable reasons is minimal understanding about putting the money in the right investment vehicles. It goes without saying that each one of us wants to make the most out of our investments but that is something that can be imagined only in the wildest dreams.

The financial needs and wants of every individual are different. They largely depend on factors like risk profile, financial goals, and assets [& liabilities]. To see your savings grow, it is important to participate in the ‘India Growth’ story. Investing in the best-suited investments is an absolute necessity else your savings might not give you significant returns.

[Read – Why Investing Is Necessary]

Before jumping into the investments game, you should take into account the following factors:

• Status of existing portfolio
• Current assets & liabilities
• Rate of Inflation
• Volatility on Investment Markets
• Liquidity
• Risk Profile [or risk tolerance]

Lastly, the goals set for your investments are dependent on your risk profile. As an investor, it is essential to understand that higher returns means higher risk. If you are a risk-averse investor, opt for a investment avenues where risk is aimed to be kept at minimal level and endeavour is to provide reasonable returns! The upside of this approach is that there are minimal chances of losing money. Should you go for risk-averse (low returns) investing or high-risk (high returns) investing? The investment option chosen by will squarely depend on the answers to the above questions and whether your goal is short-term or long-term.

The infographic below shows how you can stay invested for a long-term [or should we say that it helps in being a smart investor]:

Now that you are aware of the primary benefits of investing, the next important question that comes to mind is ‘Which are the major avenues of investing‘?. Here are some of the major investment avenues that are preferred by investors spanning different investment goals:

• Equity Mutual Funds
• National Pension System [NPS]
• Public Provident Fund [PPF]
• Debt Mutual Funds
• Bank Fixed Deposits [FD]

Lastly, if you are not a risk-averse investor, you should give a shot to the stock market! On the other hand, systematic investment route like Systematic Investment Plans [SIPs] are suited for investors that are looking for long-term returns with regular investments of as low as Rs. 500. The best thing about SIP is that staying invested for a long term helps in accumulating a sizable amount of potential wealth over time.

SIP calculator can be used for calculating the monthly SIP amount that has to be invested for aiming to achieve the said goals in a particular time period. Depending on the market conditions, you can switch between different types of mutual funds [e.g. debt, equity, etc.] to minimize the risk and maximize the returns.

However, keeping a tab on the performance of SIPs and choosing the ones that meet your end goals can be a daunting task! This is especially true when you do not have much time and energy to focus on the financial aspects.

This is where a Robo Advisor, a digital platform that provides AI-driven, automated, and algorithm-driven financial planning services can be of immense help. Since the platform is AI-driven, there is no human intervention and you can get the best investment advice in the least possible time.

Robo Advisor is a financial advisor minus human intervention

Robo Advisors offer the same benefits as financial advisors i.e. providing financial advice to the investors based on their expertise and requirements. You can plan your investments in a much better way by going through a financial advisor (or even a robo advisor).

Here are the major benefits of engaging with a financial advisor [or robo advisor]:

• Chalking out SMART [Specific, Measurable, Achievable, Realistic and Time-bound] goals
• Laying out an investment plan that aligns with your financial goals
• Regular monitoring of investment portfolio
• Revising [or rebalancing] portfolio based on market conditions

There are a number of investment avenues to choose from and a financial advisor can be a boon to help you realize your financial goals. If you are inclined to invest in Mutual Funds; do check out the schemes offered by L&T Mutual Fund and Equity Linked Saving Schemes [ELSS] which offer Tax Saving. Always have the habit of reading the scheme related documents before investing to understand the scheme type, investment patterns and the risk factors associated with particular investments and consult your financial advisor to understand the implication of any investment. The provisions pertaining to tax applicability and exemption are as per the current tax laws and are subject to change

Start Investing Now So That Your Money Works For You

Disclaimer: This information is for general information only and does not have regard to the particular needs of any specific person who may receive this information. L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates; does not guarantee/indicate any returns/and shall not be held liable for any loss, expenses, charges incurred by the recipient. The recipient should consult their legal, tax, and financial advisors before investing. The recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Humans are hardwired to do whatever it takes to protect their families and loved ones. We can mountains for our families. But have you ever thought of what would happen if due to some unforeseen circumstances you aren’t with them anymore? The emotional void you leave behind will take some time to get over and you cannot do much about it, but you certainly can make sure that your family does not go through any financial hardship after you, by simply buying a term life insurance.

Out of all the types of policies, term insurance is one of the simplest forms of life insurance, wherein the policyholder pays regular premiums to the insurance company, and in return, the insurance company pays the nominee a pre-decided amount of money in case of the policyholder’s demise. Here are a few reasons why term life insurance should be the first step to secure your future.

Financial security

A term insurance plan secures the future of your family. Be it your spouse, children, or elderly parents, it is like a monetary aid that ensures that they won’t face financial burden after your demise.

Affordability

Investing in your future shouldn’t mean you should live in a financial crisis in the present. A term life insurance plan is one of the most affordable life covers. The premium amounts are minimal which means you get to plan your finances without any trouble.

Tax benefits

Under section 80C of the Income Tax Act, the premiums paid for a term insurance plan are tax-deductible up to a limit of Rs. 1.5 lakh per annum. Also, the death benefits that the beneficiary receives are also tax free.

Additional coverage

By paying a little extra along with your premium, you can alter your term insurance plan to cover additional risks such as hereditary or critical illnesses and accidents. Some insurance coverages also allow to increase policy coverage after a certain time.

Pick a term life insurance plan that suits all your requirements. The ideal coverage to choose while buying one is somewhere in the range of 15 to 20 times your annual household expenses.

If you are like most people, you probably use the terms ETFs And Mutual Funds interchangeably. It’s not your fault – as a concept, they are essentially the same. However, there are places where they differ, albeit slightly. Mutual funds and Exchange traded funds (ETF) are broad concepts, but let us have a comparison of specifically index funds and index ETFs.

Firstly, they are both passive investing instruments. Conceptually, they are the same.

However there are structural differences between the two that you need to know:

• An index fund is similar to any other mutual fund investment. But it differs from an active fund, because it does not create alpha but only reduces and minimizes tracking error. In case of index ETFs too, the focus is on minimizing the tracking error and reducing the cost of the funds.
• Since index funds are open-ended, they are open to purchase and redemption at any time. On the other hand, Index ETFs don’t do any sale or purchase- these transactions are between buyers and sellers in the market.
• When it comes to the number of units and AUM of the index funds and mutual funds, they keep changing. However, the number of units and AUM of the index ETFs do not change because they are close ended. And once the NFO is closed, other than the value accretion there is no further addition to the corpus.
• Mutual funds issue units which are valued after adjusting the TER or total expense ratio. Meanwhile ETFs trade in the fractional shares of the underlying commodity or index.
• When we talk about operational process flow- buying index fund units from an AMC increases the AUM of the fund, which reduces when you redeem it. Whereas in case of index ETFs, you can buy or sell only if there is liquidity in the market.
• An index fund purchase or redemption is executed at the end-of-day NAV. NAV stands for Net Asset Value which is based on the market value of all stocks adjusted for the TER or total expense ratio on a daily basis. On the other hand, in case of index ETFs, prices fluctuate and vary in real time.
• Index ETFs in India cost much lower than index funds. While index funds have an expense ratio of about 1%, index ETFs have an expense ratio of 0.35%. Even with factors like brokerage and statutory charges, index ETFs are more affordable.
• Another difference is that Systematic Investment Plans [SIPs] can be structured in an index fund. SIPs provide rupee-cost averaging that lowers the average cost of owning the units. Index ETFs do not support SIPs because they are close ended.
• Another ETF vs Mutual fund point is that ETFs also provide another benefit, that they can be leveraged as short or long leveraged products. This isn’t possible when it comes to mutual funds, and definitely not available in the Indian market.

So this is how Mutual funds differ from ETFs. Now that you know the difference, you can choose to invest in mutual funds or go for ETFs and make an informed choice.

Mutual funds or stocks? You must have often find yourself wandering between these two diverse investment products. Experts believe that it is hard to declare a conclusive winner as both investment products are highly dependent on the performance of the economy, individual companies, and sectors.

Mutual funds offer diversification opportunities to investors that is quite useful when the markets are volatile. What’s more, an investor can benefit from the price movements of the stocks by investing in mutual funds via a Systematic Investment Plan [SIP]. It also frees them from the urge to time the markets.

Stocks on the other hand offers investors with greater flexibility to invest in companies they know of and put their trust in. Stocks have a high risk-reward ratio.

Mutual Funds vs Stocks

The following table summarizes the differences between mutual funds and stocks

Despite the COVID-19 pandemic that struck the entire world, followed by what seemed like a never-ending lockdown, investors interest in both the investment products – stocks and mutual fund SIPs has gone up in 2020.

What’s more, people started investing more in mutual funds via SIP during the lockdown, especially during the times the markets were very volatile. This portrays that there is a high awareness about the benefits of SIPs among user base as being the best investment tool during volatile markets. This is due to the concept of rupee cost averaging offered by SIP investments.

Mutual funds or stocks – Who will win the battle in 2021?

Whether you choose to invest in mutual funds or stocks must entirely depend on your investment portfolio. Stocks are suitable for investors who have a high risk appetite and are fine with the volatility in their investments to earn higher returns.

On the other hand, mutual fund investments are ideal for those investors who have a relatively lower risk profile and are looking to diversify their portfolio with different securities such as stocks, bonds, money market instrument, etc.

If you are still confused about the right investment product for your portfolio, you might consider taking the services of a mutual fund expert or advisor. Happy investing!

What is NAV?

A mutual fund scheme comprises of several units, also called as unit shares. The Net Asset Value or NAV of each such unit is basically its market value. In other words, it is the price at which an investor purchases or sells the units of their mutual fund scheme.

When you invest in mutual funds, you would find that several assets are managed under a fund. The Net Asset Value (NAV) of a mutual fund is announced by the Asset Management Company [AMC] on a daily basis, irrespective of the type of mutual funds. Typically, it is mandatory to disclose the NAV of mutual funds on the AMC’s website by evening. This becomes the basis of mutual fund investments for investors the next day.

How is the Net Asset Value relevant to investors?

It is not sensible and advised to base your investment decision solely on the Net Asset Value of any particular mutual fund scheme. Remember that NAVs do not entirely reflect the future prospects of any mutual fund scheme. It is merely the total value of the mutual fund scheme minus expenses and liabilities.

Hence, a higher NAV equals that the scheme investments have prospered too good or the scheme has been around for quite a time. Instead of focusing on just NAV of a scheme, investors should focus on the performance of the mutual fund scheme and the returns generated by the scheme.

What is the difference between Net Asset Value & Market Price of a Mutual Fund scheme?

Investors often blindly assume that the market price and the net asset value or NAV of a mutual fund scheme are the same. However, this is not true. They might be buying or selling the units of a mutual fund scheme at NAV but it shouldn’t be confused with the market price of a mutual fund scheme. The investors decide the share price in the stock market. On the other hand, the investors do not have the power to decide the NAV of any mutual fund unit.

Factors such as entry and exit of investors, company’s potential, demand and supply, etc. also determine the share price of a mutual fund scheme. So, the NAV will always be altered than the market price of a stock.

When an investor invests in mutual funds having a low NAV value, they would be allocated additional units as compared to investments in mutual funds with a higher NAV. This is one of the primary reasons why several investors think that it is better to invest in mutual funds that have a lower NAV. However, what they fail to understand is that the factor that really matters is the difference between the values of the NAV when they are purchased and sold. Thus, an investor shouldn’t be influenced by holding more units in a mutual fund scheme with lower NAVs. Happy investing!