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Basics of life insurance

21 May, 2009 By:Unknown in Life Insurance,

Life insurance provides a family with financial support in the case of death of the breadwinner of the family. According to a life insurance policy, a fixed amount of money is paid to the insured or the beneficiary at the end of its term or upon the death of the insured. Life insurance also offers investment benefits. With an insurance policy, you can save for your old age, fund your child's education, save taxes and so on.

Besides other saving benefits a life insurance policy can be linked to a person's pension plan. A person can make contributions to a pension scheme, funded by a life insurance company. A policy can provide security for your family, protect your home mortgage, take care of your estate planning needs and look at other retirement savings/income vehicles.

Besides serving as a protective cover, life insurance acts as a good money-saving scheme, which enables one to accumulate wealth to acquire assets, get children educated and retire comfortably. Most life insurance policies also provide tax benefits under various sections of the Indian Income Tax Act. Insurance policy holders pay a monthly, quarterly or annual premium to insurance companies. When individuals die or when the policy has reached maturity, a pre-determined amount is paid to the policy holder or the dependents as nominated by them.

It is a wise decision to go for a life insurance policy. Lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family. The loss of income following the breadwinner's death will cause the family immediate economic hardship and make it harder for them to realize future goals like paying for children's education. Whether you are married or not you may need life insurance to protect your partner or surviving family members. Unless you already have sufficient financial resources, your survivors will need insurance cover. A life insurance policy can be the basis of protection and financial stability after one's death. There can never be adequate compensation for the loss of a dear one. But, if the family is also left without sufficient money to meet basic needs, they will suffer more.

Insurance companies collect premiums from a large number of people. Only a few of these insured people may actually suffer the loss. Thus insurance companies invest the money they collect and end up making money.

Why you need loan for education

30 Apr, 2009 By:Unknown in Education Loan,

You may need loan for any reason. It may be some personal reason like marriage or education of your children or even some foreign trip.

Higher education can be expensive. If you send your children abroad for education then there are lots of costs involved including lodging, boarding, and tuition charges. The cost of foreign education is going up and up due to lots of factors. The most of people in India can't afford foreign education due to this reason. Here comes the need for education loan, which is a kind of financial aid given to needy students for meeting the expenses of their higher education both in India and abroad. After furnishing all the required documents to the bank, students get the loan. The bank or the financial institution pays the money directly to the educational institute or university at the due time. The loan is re-payed by the student after he has finished his education and starts earning after getting a job. The terms and conditions of the loan can be negotiated.

Suppose your children have grown up and they have finished their schooling in India. Now they want to get some higher study abroad. Then you need lots of money for sending them abroad. If you are not very rich and do not have lots of money saved then you simply can't afford to pay for the education abroad. In this situation education loan comes to your rescue.

Higher education in a foreign country may help in the future of your children. After completion of their education, they may land a well paying job either in India or abroad. So, it is better for you to get education loan for your children as it will be beneficial for them in the long term.

 

Why loan against property is a good option

20 Apr, 2009 By:Unknown in Loan Against Property,

If you need money for any specific need like marriage, business expansion, foreign education then a good way to raise money is to get a loan against your property. The only condition for that is that you need to own a valuable asset in the form of a self-occupied house or a commercial property. It is a secured multi-purpose loan with longer tenure and lesser rate of interest than a personal loan.

You can take a loan against property for any reason like getting your son or daughter married, expanding your business, taking a foreign vacation or sending your children to overseas for study.

The criterion for applying for a loan against property is that it should be a freehold and self-owned property, having a clear and marketable title. The loan is given as a certain percentage of the property's market value (around 40-60 per cent). The value of your property will be determined by the bank offering you the loan. Anyone can get a loan against property given the person is a minimum age of 21 years, employed or self-employed with a regular income and is owner of a property.

The exact amount of loan against property given to you depends on factors including your income, repayment capacity and your past credit history. It also depends on the number of dependents, assets, liabilities, stability/ continuity of your employment/ business and the co-applicant's income.

It is advisable to do proper research before going for a loan against property. Ask the people who have opted for it in the past for their views on what bank offers the best loan deal. Have a proper look at the terms and conditions of of all the banks and try to read the fine print.

It is also important to look at the length of the repayment term. Choosing a lengthy repayment term will mean each monthly repayment is lower and this might well look attractive when making your application. However, the longer you take to repay the loan the more interest you'll have to pay in total. It's not unusual to have to repay double the amount you've borrowed once the loan term gets into the region of decades rather than a few years.

The basics of business loan

20 Apr, 2009 By:Unknown in Business Loan,

Business loans are provided by various banks to business people for their short or long term financial needs. A lot of times it is important for businessmen to acquire a certain amount of money for running their enterprise. It is well known that without the required capital no business can run. For any business whether in initial stage or in growth phase, capital is required to keep up the momentum.

Banks and other financial institutions offer business loans for expanding, modernizing or improving small, medium or large scale businesses. Banks often offer loans that are either secured loans and unsecured loans. A secured business loan means that the businessman keeps something as collateral against the loan amount taken. Collateral can vary depending on various factors. It can be anything from raw material to finished products, land or even the building of the business. In secured business loans the interest rates are comparatively low and they have much more flexible repayment options.

Secured loans are long-term loans that can be given to business owners that are well established and wish to increase their fixed assets or expand their business. Long-term loans can also be provided to start-up businesses, usually for purchases of land or buildings, construction efforts, and long-term working capital. These loans have terms that run 3-5 years.

On the other hand, unsecured business loans do not require a collateral. It is often at a higher rate of interest and are taken for a comparatively smaller tenure. These short-term loans are usually used for short-term working capital for a business temporarily in need of cash. It is needed mostly due to seasonal fluctuations, and other short-term problems that a business may encounter. Before going for a business loan properly evaluate the situation. See how badly your need the money and when. You should evaluate how much loan you should take that you can easily repay later.

 

How to select the right bank for home loan

20 Apr, 2009 By:Unknown in Home Loan,

Owning a house of own is a dream for every person. Lots of people go for any bank loan in the case they can not afford to pay the full price of a house. Banks and other financial institutions offer home loans to people who meet the required eligibility.

Various banks offer home loan with their own terms and conditions. The interest rate, eligibility criteria, documents required, etc, all differ depending on the bank offering the loan. Many banks may be having some fine print or “conditions apply” that need to be carefully looked into. It is better to verify the facts properly before deciding to go for a loan offered by a certain bank. It may also happen that you may qualify for the loan of a certain bank only as it may differ depending on the bank.

It is advisable to do proper research before going for any loan. Ask the people who have opted for a personal loan for their views on what bank offers the best loan. Many a times it happens that you go for a loan offered by a bank and later repent about your decision.

Do proper study of the banks' eligibility criteria. You need to have certain qualifications for getting a home loan. The eligibility criteria are related to your age, income, past repayment history and the cost of the property. It also considers your work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc. Banks normally lend up to 3-4 times the annual gross income as a home loan. Every bank has its own set of eligibility criteria that may differ slightly.

 

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