FAMILY FINANCE

Insurance products are  broadly classified as Life and Non-life Insurance. LIFE INSURANCE    In a Life Insurance policy, the basic insurance cover is for the life of the insured person. In the event of death of the policy holder, the sum assured is given to the surviving family members.Traditional life insurance policies include term insurance, endowment policies and whole life policies.    In term insurance, the premium paid is the minimum for the sum assured. In case of death of the insured person, within the insured  period, the insured amount is paid. If he  survives the  insured period, he will not get any money back from the Insurance Company. This is the most economical type of policy.   Endowment Policy: This type of policies have insurance and a saving component. Normally the terms shall be from 5 to 30 years.In the event of death of the insured,the sum assured is paid to the family members who are the beneficiaries.If he...

   Basically Insurance is a risk transfer instrument or arrangement that a typical customer signs with an Insurance Company.    The basic logic in entering into an insurance contract goes like this. Life and events occurring in life, are largely unpredictable and unforeseen.These are beyond human control. But the consequential damages and sufferings to an individual are heavy and painful.    By entering into an insurance contract, we cover our selves and our family members against financial insecurities which come about due to such unforeseen occurrences,by paying a periodic insurance premium to the insurance company. In turn, the insurance company, undertakes to compensate you for the sum assured in case the particular event occurs.      Events may be simple inconsequential event or critical. Let me give some  examples. A kid falling down while playing football and  getting slightly bruised we may classify as inconsequential...

FINANCIAL TRANSACTIONS    As a family member you would enter into many financial transaction of substantial value with others like your family members, friends and different financial institutions. Here we exclude the day to day type of transaction that we get into, like buying weekly provisions, fruits, petrol ...   What we are considering here as transactions of importance may be a loan that you may extend to your near or far relative to get over an urgent medical emergency, a short term loan of Rs 2 lakhs given to your friend or colleague for getting over some loan payment deadline etc.    The other type of transactions which we are focused on would be making a fixed Deposit  in a bank or Post Office, investing in Shares or Mutual Funds, taking some insurance cover for life, health or property of self or other family members.       In all these cases, the person entering into such transactions must make sure that at le...