Why Life Insurance?

________________________________________________________________________________________________ _

Savings + Protection = Insurance

Protection First, Savings Next

Insurance First, Investment Next

Life Insurance does not give GREAT Returns on Investments; but it does give a GURANTEED
Return on your Investment, plus a financial protection against the loss of human life value.

What they have famously said about life insurance?

 Whatever excuses you may have for not buying life insurance now, will only sound
ridiculous to your widow after you are gone.
 Fun is like life insurance; the older you get, the more it costs - Frank McKinney Hubbard,
(1868 – 1930, American cartoonist, humorist, and journalist)
 The only thing a man can buy on the instalment plans, on which the widow won’t have to
finish the payments, is life insurance and life insurance.
 The determination of life insurance salesmen to succeed has made life pretty soft for
widows- William A. Feather, (1889 – 1981, American publisher and author)
 You don’t buy life insurance because you are going to die, but because those you love are
going to live.
 Life Insurance offers a man the only way where he can make his will before he makes his
money.

What is Life Insurance?

Life Insurance is a financial cover for a contingency linked with human life like death, disability,
accident, and also retirement. It is a contract represented by policy document, in which an
individual or entity receives financial protection or reimbursement against losses from an
insurance company.

Insurance policies are used to hedge against the risk of financial losses, that may result from
damage to the insured or his property, or from liability for damage or injury caused to a third
party.

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
 What is an investment?

In economic sense, an investment is the purchase of goods that are not consumed today but are
used in the future to create wealth. In finance, an investment is a monetary asset purchased with
the idea that the asset will provide income in the future or will be sold at a higher price for profit.

What are type risks does an individual face in his / her life?
 Accident  Retirement
 Disability  Living too long
 Dying too early

Why do I need life insurance, anyway?

 To ensure that the family has financial support after primary earner’s demise.

 To ensure you are able to finance children’s education and their other needs.

 To ensure you have a constant source of income during critical illness or after retirement.

 To ensure you have a premium standard lifestyle even after retirement.

What are some of the commercial benefits of having a life insurance?

 The cash value of life insurance is GURANTEED to grow, it can never go down.

 The Life Insurance is most liquid assets available that can be utilized at anytime and for
any reason.

 Unlike other investments it does not penalize for accessing it early.

 Certain Life Insurance policy gives you instant loan on surrender value.

 You get certain Tax Advantage plus Death and Survival Benefits.

 It can cover your children education and marriage expenses.

 It can replace your spouse’s income when sufficiently covered.

 The life insurance can pay off your debts.

 You can pay off your estate taxes

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
  It can pay off your funeral expenses.

 You can buy your business partner’s shares after his demise.

Life insurance addresses / covers 4 key needs of customer economic life

cycle.

Insurance
Retirement
Investment
Protection

Savings

How much Life Insurance do I need?

 How many dependents do you have?

 What kind of life style do you want to provide to your family?

 How much you need for children’s education and then marriage?

 What your investment needs are?

 How much loans / debt do you have?

 How much life insurance can you afford at present?

What are the various methods of calculating life insurance?

There are four to five main methods to calculate your ideal life insurance coverage.

Human Life Value Method

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
A way of deciding how much life insurance an individual may need. It is the sum of money that a
person could have earned over his remaining working life, for his family and dependents, had he
been alive or lived beyond 65.

A human-life approach is a method of calculating the amount of life insurance a family will need
based on the financial loss the family would incur if the insured person were to pass away today.

It is usually calculated by taking into account a number of factors including but not limited to the
insured individual's age, gender, planned retirement age, occupation, annual wage, employment
benefits, as well as the personal and financial information of the spouse and/or dependent
children.
According to this method, the amount of life insurance coverage one should buy is directly
proportionate to the economic value, otherwise called as Human Life Value (HLV).

Various factors effecting Human Life Value method of determining life insurance coverage are
following:

 Age
 Current and future earnings,
 Current and future expenses
 Expected rate of return

Human Life Value

= (Yearly income * 10) + (Loans or Total debt outstanding – Savings, investments and
Insurances)

OR

HLV = Annual Income * 10 * No. of dependents

OR

Simply speaking, HLV = Annual Income * 20

Income Replacement Value

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
Insurance coverage = Annual Income * No. of years remaining in work life (65 – Current
age)

Need Analysis method

In this method, the calculation is done on the basis of day-to-day family expenses till the life
expectancy of the youngest member in the family. The major factors to consider for assessment
are:-

 Number of dependents and their needs

 Loans
 Children education
 Children marriage
 Provision for non-working spouse
 Kind of lifestyle you want to provide your family
 Any other special need

Once you sum up all the above expenses, the figure you arrive at is what the family needs today,
considering that you will die today. Then deduct the life insurance policy you already had and all
your assets. This new figure is the gap that you need to bridge. Note that invested assets do not
include residence and car. You must think and seek the help of an insurance agent to understand
your insurance needs and get advised on the right type of insurance cover today.

Underwriter’s Thumb Rule

Under this approach, the required sum insured should be in multiples of annual income
depending on the age. For instance, individuals between 20 and 40 years of age should have
life insurance coverage worth 30 times of their annual income, while those above 40-50
years of age should have life insurance coverage 20 times of their annual income.

Premium as a percentage of income

According to this rule, 8% of the breadwinner’s annual income plus an additional 1% for
each dependent should be spent on life insurance premium. Say your gross annual income is
Rs 5 lakh and you have 2 dependents — your wife and child.
=Rs. 500,000*8/100 + (500,000*2/100) = 40,000 + 10,000 = Rs. 50,000 premium / annum

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
 Why Life Insurance Corporation of India?
LIC is the most trusted brand and largest investor Governed and Owned by Government of India.
Insurance from LIC comes with Sovereign Guarantee for the sum assured.
LIC is the most reliable and trustworthy institution in India since 1958.
LIC provides life coverage and economic benefits for at most affordable premiums.
The mission and vision of LIC is to explore and improve the quality of people’s lives by providing
financial security.

What is Life Insurance Corporation of India by Numbers?

LIC is the number one insurer in the world in terms of volume by selling around 3.75 crore
policies in 2007-08
LIC is second biggest real estate owner in India after Indian Railways and highest Income Tax
paying organization in India.

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
It has won Golden Peacock award for Excellence in Corporate Governance.

LIC’s total contribution to social sector in India

Total investment in Nation Building Activities is Rs. 5,76,000 crores.
In socially oriented sector like water, drainage & housing etc, LIC had invested Rs. 5,635 crores
during 2007-08 and total investment in these sector is Rs.32,321 crores.
Total investment in the entire Social Sectors in India around Rs. 89,000 crores
Different incentive schemes for villages, Schools and Banks under Bima Gram, Bima School and
Bima Banks.

Financial Strength of Life Insurance Corporation of India

LIC's investment income in 2007-08 was Rs.40,655 crore from Total income of Rs, 1,76,559
crore

The Total Assets of the corporation as on Rs. 21,70, 807 crore or $350 billion dollars as on
2016

LIC is the largest institutional investor in Share Market, on an average Rs.100 crore invested
every day.

During the year 2007 LIC earned the profit Rs.10,000 crore from the Sale of Equity.

LIC is the largest financial institutional investor both in Equity market & Term House.

Conclusion
Insurance is an intangible product with benefits available in the longer run.
Life insurance coverage needs change with the time, therefore, it is important to review your
insurance needs regularly.

The above insurance coverage methods give you an indicative value only.
The final insurance portfolio should be decided as per your financial standing.
Protection First, Savings Next

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364
 https://www.licindia.in/Home

Your Welfare is Our Responsibility

Mukesh Joshi
Chief Insurance Advisor, Financial Planner & Wealth Manager
LIC Agency Code:- 4612921
Branch Office- Dr. DN Road, Fort, Mumbai- 400001
mukesh.dk.joshi@gmail.com
Contact me: 976-857-1777 / 885-036-7364