Hi friends. Apparently the legendary Ragenier has insured his voice, so if he loses his voice, you can claim it through his insurance. Just imagine this seventy-three-year-old celebrities NE worth right now reported on internet is 400 and 50 cores. I believe it is going to be much more than 400 and 50 careers and still he has ensured his voice and on the contrary, people like you and me who are still far away from beingrupa.
Have not really understood the value of the insurance in the right way in this video. I'm going to present to you six huge term insurance mistakes that people like you and me must avoid.
Mistake Number one is people sign up for endowment plans and never switch to the term insurance plan. And this happens because most people get trapped into the sales pitches of smart insurance agents and end up signing for endowment plans. Endowment plans are those plans where basically you are not only covered for your life, but at the end of the policy, you are also going to get a maturity amount which sounds great well. Actually, salespeople make it sound really, really great, but they are not. In fact, theyre wealth destroys. Let me show you calculations to prove it. So what you see on my screen is I've picked up an endowment plan from Internet. I'm not going to name the insurance company because they're going to sue me if I do that. But let me walk you through the calculations here.
Let us assume that you're a 25 -yearol non-smoker married male. The typical endowment plan that might work is something like this, that you pay monthly premium of 10 thousand rupees. So in a year you are going to pay one lack 20 thousand rupees and over ten years of period you are going to pay 12 la ruses and in return what you're going to get. Let's understand that very quickly. Firstly, you are going to get a life cover of 12.8 laroies, so if you unfortunately die then your nominees are going to get 12.8 laroies of life Insurance.
But you will also get the maturity benefits. Let me walk you through those. So the first thing is that after having paid for the first ten years, during the first ten years, you're not going to get anything 11 th year and 12 th year. Again, you will not get paid anything. In fact, in the 11 th and 12 th year you are not paying anything and you are not receiving anything right from 13 th year. What is happening in this plan is that you can withdraw or you will get paid.
11900 rupees per month for the next 30 years and this is a very, very smart sales pitch that people take.
Mainly the insurance agents that you are going to get 11900 rupees per month for the 30 years of your life. Next 30 years.
And also not only this you are also going to get at the end of 4030 year which is after the 30 year finishes. So 13 years +30 years after Forsyth 30 year you're also going to get a lump sum benefit of 11 lack 70 thousand rupees. So basically you are withdrawing 11900 degrees every month from 13 th year onwards. For the next 30 years that comes out to be 42 las 84 thousand rupees and at the end of 30 th year you are also going to get 11 lac 70 thousand rupees, meaning your total benefit is going to be 54 lack rupees. So just to summarize this what you've done is you have paid 12 la rupees over ten years period first ten years and you get nothing in that ten years. You get the life insurance cover of 12 point data laroies.
From 13 th year up to the next 30 years. That is 43 RD year. You are going to get.
11900 Rupees every month that will come out to be 42 lack 84 thousand rupees and at the end of 43 rd year you are going to get 11 lac 70 thousand rupees as a Lumsum. Amount.
Your total benefit becomes 54 lags and the way people sell these insurance plans is that look you are only investing 12 Lacroeses and you are going to get not only 54 Lacroeses, you are also getting insurance cover of 12.8 Lacroies. Now let me prove you why this plan is a wealth Destroyer and what you need to do is.
Think about consider about changing this plan to a pure term insurance plan. Let me now show you equivalent calculations. Now if you switch to a pure term insurance plan, let us see how the calculations will go so again, taking the same 10 thousand rupees per month that you're putting in the endowment plan for the ten years. If you take that, what I'm doing is, I'm calculating here that if you were to go for a puretime insurance plan for two cars of life insurance cover for exactly the same profile, which is twenty-five-year old non-smoker married male, then you are likely to pay close to 1600 rupees per month. That is what I have found on internet. From looking at various insurance policies again, I'm not going to promote any policies here, but the point is very simple. If you do that for that 1600 rupees of per month premium, you're going to get two cores of life insurance cover, which is close to 16 to 17 times more insurance cover that you're going to get here.
From the previous endowment plan, so that is point number one that you're getting 16 2 17 times more insurance cover that is phenomenal. Point number two, is that out of this 10 thousand rupees, if let us say 1600 has gone into the Pure Diinsurance Plan.
The remaining 8300 rupees. What you can do is if you put it into a NI index plan. Pure nifty and 50 index plan. I've created a lot of videos around that on my channel. You will learn that very easily. Assuming that 12 percent return for next ten years, this will become 19 las 49 thousand rupees. Okay, now in the 11 th year and 12 th year you are not investing any more money for those two years. Let us say again, this money grows up by 12 percent. So this 19 lax 49 thousand rupees in the next two years will become 24 lax 46 thousand rupees so far. So good now from 13 th year is when from the endowment plan the earlier plan you were getting 11.9 thousand rupees per month back. So I've done the same calculations here. What I'm saying is what you do is now with this 24 lag 46 thousand rupees. You put this into a good systematic withdrawal plan of a mutual fund.
I've created a separate video on systematic withdrawal plans. You will find that on my channel or I'll provide you the link somewhere here in this video. But the point is if you put this money into a systematic withdrawal plan and again. I assume 12 percent return for the next 30 years.
Then from 13 th year you start to withdraw 11900 rupees. As was the case in the endowment plan, that total withdrawal over 30 years is going to become 42 las 84 thousand rupees. That's what we saw in the previous endowment plan as well. But more importantly, you are also likely to get 37 las 82 thousand rupees as the lump sum because you're not withdrawing everything that you're investing here. And if you do the total of the withdraws you have done for the 30 years and the lum sum that you're going to get. If you add these two numbers, you are going to get to four coro 13 lags 66 thousand rupees versus 54 lag rupees of benefit that you were getting in the endowment plan. And let me now more interestingly, tell you the second part of this if you did not do a systematic withdrawal plan, if you did not want to have a monthly withdrawal income coming to your pocket, if you just went for a long-ter compounding this 24 lacks 46 thousand rupees at 12 percent for 13 years is going to fetch you seven caro 34 laropies. That is, the amount of wealth you can generate.
I'm again saying that this is not a short written. I understand it. From a mutual fund index fund perspective, it is not guaranteed that you're going to get 12 percent return. But the past data tells us if you look at the five years data ten years data, 15 years data of 5050 index returns. Average returns are somewhere close to 12 percent. So I' am again assuming that you're going to generate 12 percent returns. But you see the value that town insurance is generating for you. So if I were to quickly summarize, in the endowment plan you invest 12 las over ten years period of time and you get total benefit of 54 lac rues with the insurance cover of 12.8 lack. If you go for a term insurance plan, then what happens is you are going to get a two Corts of insurance cover. You are going to get fourros 13 lackroies of total benefits. If you go for a systematic withdrawal plan.
Assuming 12 percent returns and if you go for long-term compounding you're going to get a wealth of seven corris 34 lacroes again assuming 12 percent returns, it is not assured I'm putting that disclaimer right in front of you. So switching from an endowment plan to pure term insurance plan may be beneficial for you. But if you are not sure, please give a call to Ditto Insurance, which will give you the best advice on insurance. Ditto is an insurance platform backed by Zeroda and will give you free consultation to select the right insurance policy for you. Also. Detox is a spam free insurance platform giving you complete peace of mind. Dios expert advisors will help you to choose the best policy for you. They will not only help you in buying the policy, but they will also help you with the claim process should you ever need to use the policy. Basically, they do everything right from identifying the right policy for you to the claim process. You can simply click on the link provided in the description and go to their website, click on the bookquet call and then select term insurance. You can then.
Select the date and time that is convenient for you. Provide your personal details and sit back and relax. Ditto tea will call you and will discuss your personal needs for insurance.
Mistake number two: is Many people tell me that Raul I have a company provided term insurance plan. Why should I go for a personal term insurance plan? So here are the three simple reasons that you must consider taking your personal insurance plan, irrespective of whether you have a company insurance plan or not, number one is more often than not, companies will provide you a very generic term insurance plan. So for example, they might provide you a term insurance plan that covers up to five to ten times off your CTC. But the bigger question is that is that amount enough for you or not, and that is what you need to consider. Point number two is. Let us say that you leave your company and the next company that you join.
Does not provide term insurance plan as a perk and you're already 38 years of age. Then at the age of 38, if you try to buy a term insurance plan, your premium will be extremely extremely high. It does not make sense to not have a personal insurance plan. Point number three is the choices of insurance writers such as Critical Illness Cover et center. They may not be there in your company DUM insurance plan. Therefore, it makes sense to explore personal insurance plans and lastly, by not having a personal term insurance plan, what you're trying to do is you're trying to tie up your career with your life insurance plan. And to me, these two items are mutually exclusive items. Let me know in the comments if you have any specific rationales or reason.
Not to take a personal insurance cover but continue with the company insurance cover. Let us do some healthy debates on this topic.
Mistake number third: is most people are not even aware of the role of creditors when somebody untimely dies. Let me give you a very simple example. Let us assume Mr. X had an insurance plan of two car Rupees and he dies uptime day. Now let us also assume that Mr. X had a liability of home loan, which was of one K Rupees and also had taken a 50 la Rupees of business loan. So all in all, he had 1.5 Karo Rupees of liabilities that he had to pay. Now, because Mr. A is no more, his beneficiaries are going to get two Karo Rupees, which was the Summer Shot.
But the moment he gets two ka rupees what is likely to happen is the Home Loan Company is going to come knocking the door saying that we need our one kaoru. Ru piece back.
And also the business loan provider who has provided the business loan will also come knocking saying that.
We need our 50 laroies back. So imagine the beneficiaries which might be wife or mother or father or whoever it is.
Out of the two Corts will have to pay 1.5 coro rupees back to the creditors and if you do not want your beneficiaries to be in this position, what you need to do is buy a term insurance policy. That is under the purview of.
Mwp Act so what is MWP Act? It is simply married. Women's Property Act 1874. The way it works is that the term insurgency which are under the purview of MW Blue P Act they are handled by your trust. So in case of unfortunate demise, what happens is that the insurance proceeds will go to the trust.
And trust will send it to the wife and the children and the creditors will have no say in that because it is covered under the MWP Act again, I'm not an expert on this act. Please go ahead and do some research and make sure you make an informed decision about whether you want to cover under MWP Act or not.
Mistake number four is that many people think that insurance raids are not worth of the money, but two insurance raids that I personally like, and I encourage people to explore. Let me quickly walk you through them. Number one is life stage insurance rider, so most insurance policies they are fixed in terms of the amount that they are covering you for. So for example, if you take an insurance for one Karo Rupees, that one Karo Rupees cannot be changed later on, now you might have a natural question that Raul we should upfront, do the calculi and go for the cover that we need. So in this case, let us say one cor is sufficient enough. We.
Go for it? Why do we pay more premium well? Only if you know your life stages that are coming up in future. So for example, let us say you are married right now and have one kid and you are happy in your life.
But after ten years you decide to go for the second child and at that time you want to increase your insurance cover because there are more dependent on you now. Then your policy will not allow you to increase the insurance cover from one caro to two Kerr rupees. What you will have to do is take an additional insurance cover at that time which will be at a very high insurance premium because your age bid then might be 40 years. So this is where life stage add-on.
Helps you navigate the unpreductibilityity of the future and your life stages. Second is critical illness cover very, very important that you must consider why because this rider can allow you to have a good portion of your insured amount in case a critical illness is detected. So let us say Mr. X has a term insurance cover for two car rupees and unfortunately Mr. X is detected with a critical illness cover. So let us say Mr. X has a calm insurance cover of two car rupees and also had opted for a critical illness rider. And the way the policy was written is that if a critical illness is detected, then out of that two coro rupees 50 percent which is one coro will be given immediately to the beneficiaries. Now what happens is let us say mr. X unfortunately is diagnosed with cancer which is considered as one of the critical illness. Then Mr. X is going to get one coro rupees as soon as the cancer is detected and with that one coro not only Mr. Xx can.
Get on with the good treatment and save his life. But also they can continue with their household expenses without having to worry about going to office or work or whatever they can take that onecoro rupees and make sure that they can get good treatment as well as can take care of their short-ter expenses so that they can focus on curing that critical illness rather.
Than worrying about the finances. Now I'm not saying everyone needs this writer. What I would recommend is to give a call to ditto insurance. You can talk to ditto insurance experts and they will help you understand the right options for you and decide based on your own preferences.
Mistake number Five: Many people think that ULI policies provide not only the term insurance benefit, but they also provide a lumps of money at the time of the maturity policy. Why should they go for Term insurance? So here are three key points that will explain to you that why UKIP is not a replacement for term insurance. Point number one is in Term insurance. You can go for extremely high insured amount for example.
One Corrode, two corrode, three Coro, four Cortes. But in the cases of UKIP your insured amount is not going to go more than 20 las 30 las 40 las. So there's a huge difference here. Point number two is instead of taking a UKIP if you go for a combination of term insurance plus mutual funds, then what is likely to happen is that mutual fund is going to give you better returns than the ULI policy. And secondly, the term insurance is going to provide you a much higher insured amount. Therefore, the combination of mutual fund plus the term insurance might be a better option than ULE. If you would like me to create a full video on this topic, let me know in the comments and I will do full.
Calculations and present to you both the options for you to make informed decision. And thirdly, in case of the UIP policies, you are unlikely to get the options and the choices of the riders that you get in the term insurance
Mistake number six is people make mistakes around Nomine. Let me explain you very quick two points point number one is choosing your nominees should not be based purely on relationship, it should be based on the financial dependence. So for example, if you have a non-working widow mother who is 100 percent financially dependent on you, and on the second hand you have your working wife who is also dependent on you, but she's working somewhere, you really need to think hard before giving 100 percent nomination to your wife which is based on the relation because the rule is simple when you are gone, who is going to financially suffer the most and you must make the decision based on that, not.
Purely based on the relations and the second important aspect is that you must inform your nominees that you have taken a term insurance policy, share the documents with them, share the complete process with them so that they are aware and they are extremely clear about what is going to happen in case you are gone. So avoiding these six term insurance mistakes is extremely, extremely important and if you're looking for a spam free insurance platform to select the right term insurance policy for you, you can give a free call to ditto insurance and the expert advisors will help you out and I've given you the link in the description of this video. Let me know in the comments any personal finance related topics that you would like me to create content on. I will read your comments and I'll pick up the topic that most people want. Secondly, you can consider joining my youtube member community because that is where I talk about.
Stocks, mutual funds and also my personal investment journey so that you can learn a lot. Third, you can also follow me on Instagram, linkedin. Twitter. You will find the links in the description and also please be aware of the scams going on my name. Please be safe and vigilant. I will see you in my next video until then. Keep rocking.