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LIFE INSURANCE

Your Path to Wealth Creation and Peace of Mind: WHY UNIT LINKED INSURANCE PLANS (ULIPS) ARE A GAME-CHANGER

In today’s fast-paced world, achieving financial security and growth has become more critical than ever. With rising inflation, increasing education and healthcare costs, and volatile interest rates, finding a plan that balances both wealth creation and protection can feel overwhelming. But what if there was a solution that offers both financial growth and peace of mind for you and your loved ones?

Enter Unit Linked Insurance Plans (ULIPs) – a powerful, flexible financial tool designed to secure your future while addressing your evolving needs. ULIPs combine the best of both worlds: Life insurance coverage, Market-linked investment opportunities, and Liquidity. They not only provide financial protection for your family in the event of an unfortunate circumstance but also help you accumulate wealth over time. Plus, the liquidity feature allows you to access a portion of your investment when needed, making it an even more versatile financial solution. With these unique benefits, ULIPs are truly a game-changer in modern financial planning.

UNVEILING THE REAL RETURNS: INFLATION’S IMPACT ON INVESTMENTS

• INFLATION’S IMPACT: Over the past decade, inflation has been on the rise, significantly impacting traditional investment returns, which typically hover around 5% to 6% per annum.
• SOLUTION: These numbers highlight the importance of considering real returns and tax implications when making investment decisions, emphasizing the potential benefits of equity with protection & investments which provides high returns in combating inflation.

WHY CHOOSE A REGULAR ULIP PLAN?

ULIPs are more than just insurance; they are a versatile investment vehicle that grows with you. Here’s why they should be a key part of your financial strategy:

• Dual Benefits: A ULIP offers both life insurance protection and the potential for market-linked returns, giving you the best of both worlds.
• Tax Advantages:

(i) Enjoy tax savings under Sections 80C and 10(10D) of the Income Tax Act, making your investments more efficient.

(ii) One of the standout advantages of Unit Linked Insurance Plans (ULIPs) is the tax-free maturity benefit. If your total annual premium is ?2.5 lakh or less, the maturity proceeds are exempt from tax under Section 10(10D) of the Income Tax Act.

• Liquidity Options: With partial withdrawals allowed after 5 years, you can access a portion of your funds in times of emergency, giving you financial flexibility when needed most.
• Flexible Fund Choices: ULIPs give you the power to choose from a variety of funds (equity, debt, hybrid) based on your risk appetite, allowing for greater control over your investment portfolio.
• Fund Switching: As market conditions change, you can easily switch between funds to align your strategy with your evolving financial goals and risk tolerance without any charges.
• Compounding Growth: Regular investments and the power of compounding work together to generate wealth over time, enhancing your financial future.
• Rider Benefits: ULIPs offer additional rider options such as critical illness, accidental death, and disability cover, allowing you to customize your policy for comprehensive protection.
• Loyalty Additions & Wealth Boosters: Access your funds after the initial 5-year lock-in period.
• Loyalty Additions & Wealth Boosters: Many ULIPs offer loyalty bonuses and wealth boosters, which help amplify your returns as you stay invested, ensuring your wealth grows steadily.
• Cost-Effective: With the return of charges and low-cost structures, ULIPs provide you with high value for your money, delivering greater financial efficiency.
• Simplified Application Process: Thanks to liberal underwriting guidelines, applying for a ULIP is easier than ever, with a smoother application process and higher approval rates.
• Competitive Charge Structure: High Protection ULIPs, with their competitive charge structure, ensure that more of your money goes into building your wealth, enhancing your returns.

HOW DOES THE ULIP PLAN WORK?

1. Bajaj Allianz Life - Magnum Fortune Plus II

Example 1: Rakesh, a 35 years old male wants to plan for his child’s higher education. He decides to opt for Magnum Fortune Plus II. He opts for a plan with Policy Term (PT) of 20 years and Premium Paying Term (PPT) of 10 years. Rakesh decided to invest 15,000 per month for 10 years.

Example 2: If he opts for a WOP (Waiver of Premium) Rider:

FUND PERFORMANCE (AS ON 20TH NOVEMBER, 2024)

2. MAX Life - Flexi Wealth Advantage Plan

Example 1: Mr. Sahil aged 35 years wants to fund his son Rohan, a 3 years old’s education, he purchased Max Life Flexi Wealth Advantage Plan with the details as below:

Example 2: Mr. Sharma aged 35 years purchased Max Life Flexi Wealth Advantage Plan with the details as below:

FUND PERFORMANCE (AS ON 20TH NOVEMBER, 2024)

“ULIPS OFFER A POWERFUL BLEND OF PROTECTION, GROWTH, AND LIQUIDITY, PROVIDING A COMPREHENSIVE SOLUTION TO SECURE YOUR FUTURE. WITH LIFE INSURANCE COVERAGE, WEALTH ACCUMULATION, AND EASY ACCESS TO FUNDS WHEN NEEDED, ULIPS ARE THE ULTIMATE FINANCIAL TOOL FOR SAFEGUARDING YOUR LOVED ONES WHILE BUILDING LASTING WEALTH.”

FIXED INCOME

Bonds are a type of fixed-income security used by governments, corporations, and other entities to raise funds for various purposes. They are a reliable investment option that offers regular income, making them an excellent choice for portfolio diversification and a hedge against market volatility. In this guide, we will explore the different types of bonds available in India and discuss key terms and concepts that every investor should understand before investing.

WHAT ARE BONDS?

At their core, bonds represent a loan that an investor gives to the bond issuer. In return, the issuer promises to repay the loan amount (called the principal or face value) on a specific maturity date while making periodic interest payments along the way. Bonds are an essential component of the fixed-income market, which is often less volatile than equities and provides stable returns.

TYPES OF BONDS

Investors in India can choose from several types of bonds, each serving a different purpose and catering to varied investor needs.

• Sovereign Bonds

Issued by national governments, sovereign bonds are considered one of the safest investment options. These bonds help governments manage their fiscal needs and are backed by the country’s credit. For example, Government Securities (G-Secs) issued by the Reserve Bank of India are sovereign bonds.

• Municipal Bonds

Local governments issue municipal bonds to finance public works projects such as schools, roads, parks, and infrastructure upgrades. These bonds contribute to community development and often come with tax benefits, making them attractive to retail investors.

• Corporate Bonds

Corporations issue bonds to raise funds for various purposes, such as expanding operations, making acquisitions, or managing cash flow. Corporate bonds are a popular investment choice as they often offer higher returns compared to government bonds, albeit with higher risk.

• Zero-Coupon Bonds

These bonds are issued at a discount and do not pay periodic interest. Instead, the bondholder receives the full face value upon maturity. For example, if you buy a zero-coupon bond for ?900 and it matures at ?1,000, the ?100 difference is your return.

• Green Bonds

Green bonds are designed to fund projects that promote environmental sustainability, such as renewable energy initiatives, water conservation projects, and climate change mitigation efforts. They are gaining popularity among socially responsible investors.

UNDERSTANDING CORPORATE BONDS

Corporate bonds are essentially loans taken by companies from investors. Companies issue these bonds to secure funds for various business needs, including expansion, acquisitions, or paying off existing debt. Corporate bonds can be secured or unsecured, depending on whether they are backed by collateral. Investing in corporate bonds can offer attractive returns and regular income. However, it is essential to understand the key terms associated with bonds to make informed decisions.

KEY TERMS EVERY INVESTOR SHOULD KNOW

• Bond Issuer

The bond issuer is the entity that issues the bond. This could be a government, municipality, corporation, or financial institution. The issuer promises to make periodic interest payments and repay the face value upon maturity.

• Bondholder

The bondholder is the investor or lender who purchases the bond and receives interest payments from the issuer.

• Face Value

Also known as par value, this is the bond’s nominal value, representing the amount to be repaid to the bondholder at maturity. For example, a bond with a face value of ?1,000 means that the issuer will repay ?1,000 at the end of the bond’s term.

• Market Value

The current trading price of the bond in the secondary market. A bond’s market value fluctuates based on changes in interest rates, credit ratings, and market demand. For instance, if a bond with a face value of ?1,000 trades at ?950, it is said to be trading at a discount.

• Maturity

The maturity date is when the bond issuer repays the principal amount to the bondholder. Bonds are classified based on their maturity:

o Short-Term Bonds: Maturity within 1–3 years.

o Medium-Term Bonds: Maturity within 4–10 years.

o Long-Term Bonds: Maturity of more than 10 years.

• Coupon Rate

The coupon rate is the annual interest rate paid by the issuer on the bond’s face value.

Example: A bond with a ?10,000 face value and an 8% coupon rate pays ?800 annually, regardless of its market value. Interest payments may be made monthly, quarterly, semi-annually, or annually.

• Yield to Maturity (YTM)

YTM represents the total return an investor can expect if they hold the bond until maturity, assuming all interest payments are made on time and reinvested at the same rate.

• Internal Rate of Return (IRR)

IRR calculates the annualized return of an investment, considering both the timing and amount of cash flows. This metric is particularly useful for evaluating bonds with periodic interest payments.

• Secured vs. Unsecured Bonds

? Secured Bonds: Backed by collateral, such as property or revenue streams, providing an additional layer of security for bondholders.

? Unsecured Bonds (Debentures): Not backed by specific assets, relying solely on the issuer’s creditworthiness. These bonds often carry higher interest rates to compensate for increased risk.

• Credit Rating

Bonds are rated by agencies like CRISIL, ICRA, or CARE to assess the issuer’s ability to meet its obligations.

? Investment-Grade Bonds: Rated BBB and above, indicating low risk.

? Junk Bonds: Rated below BB, offering higher returns but with higher default risk.

• Default

Default occurs when the issuer fails to pay interest or repay the principal amount as agreed.

WHY SHOULD YOU CONSIDER INVESTING IN BONDS?

Bonds are a versatile investment tool offering several benefits, including:

• Portfolio Diversification: Bonds provide stability to portfolios dominated by volatile equity investments.
• Steady Income: Bonds offer regular interest payments, making them a reliable source of income.
• Capital Preservation: Bonds, especially government and secured bonds, are considered safer investments that protect capital.

However, bonds are not without risks. Interest rate fluctuations, credit rating downgrades, and issuer defaults can impact returns. Therefore, investors should conduct thorough due diligence and align their investment choices with their financial goals and risk tolerance.

MUTUAL FUNDS

Hybrid Mutual Fund is a combination of more than one type of fund. While they invest in shares of companies listed on the exchange, like equity funds. Likewise, debt funds, these also invest in fixed-income instruments like bonds, debentures, treasury bills, etc. Hybrid funds provide a mix of three major asset classes – Equity, Fixed Income Market and Commodities Market. With this, they provide dual benefits in the form of:

• Capital appreciation from the equity portion.
• Stable growth from the debt and gold allocation.

Hybrid mutual funds are actively managed open-ended funds. This means you can invest and withdraw from them throughout the year. There is no lock-in period.

The main goal of the fund manager is to benefit from price appreciation in all three asset classes while balancing the risk. Hybrid Mutual Funds are safer than pure equity funds but are riskier than debt funds. Hence, they’re apt for moderately aggressive investors. This is also an excellent first step for beginners who want to test the waters before going all in.

WHERE DOES HYBRID MUTUAL FUND INVEST?

The fund manager of a Hybrid Mutual Fund collects the corpus from investors and then divides it among equity, debt, and commodities. A hybrid mutual fund invests in the following:

• Equity shares of large-cap, mid-cap and small-cap companies.
• Debt instruments like corporate bonds, sovereign papers, commercial papers, zero coupon bonds, certificates of deposits, etc.
• Commodities like gold, silver, crude oil, etc.

HOW DOES A HYBRID MUTUAL FUND WORK?

There are three major principles of Hybrid Mutual Funds:

• Asset allocation is the process of deciding how much to invest in which asset class. If the stock market is declining, fund managers will shift to debt instruments for stability. And when the interest rates increase, they will shift to equity shares. For a successful hybrid fund to work, a healthy mix between equity, debt and gold is crucial.
• Correlation is another important factor in hybrid funds. Will you invest in assets that rise and fall together? Perhaps No. An ideal portfolio has assets that are inversely proportional. This means if one asset goes up, the other will go down. So, your profit and loss are balanced.
• Notice that when the equity markets fell, gold prices went up. Now if you had invested only in equity funds, you would have missed the rally in gold. But with hybrid funds, you can capture the ups and downs of all asset classes.
• Diversification is the third principle of hybrid funds. Here, you split and spread your investment amount across multiple asset classes. This increases your overall return while reducing the risk. This is exactly what a hybrid mutual fund does. The fund manager divides the collected corpus into various asset classes.

ADVANTAGES OF HYBRID MUTUAL FUNDS

There are six reasons as to why Hybrid Funds are a good option:

Single Point Access to Different Asset Classes: This is one of the biggest advantages of hybrid funds. When you invest in a hybrid fund, you get access to equity, debt, gold, silver, and other commodities in a single place. This helps you maintain a relatively smaller portfolio without compromising on assets and diversification.

• Lower Expense Ratio: With single-point access, hybrid funds also help you save a lot of money in the form of an expense ratio. Suppose you want to invest in equity, debt and gold funds but on an individual basis, you will incur the following expense ratios:
• Automatic Rebalancing: One of the biggest reasons to invest in hybrid funds is that asset allocation can be done by investors themselves.
• Adequate Diversification: There are two layers of diversification in a hybrid mutual fund. First, it diversifies across asset classes like equity, debt and gold. But in equity also, it will diversify across large-cap, mid-cap and small-cap stocks. Similarly, it will invest in government papers, commercial papers, etc. This is not possible in a pure large-cap or mid-cap fund. So, you get two layers of diversification when you invest in hybrid funds.
• Excellent Source of Dividends: Hybrid mutual funds are an excellent source of dividends. This is because they invest a big portion of their corpus in bonds, debentures etc. The interest earned on these bonds is distributed as dividends. They also earn dividends from equity shares. It’s like a double bonus.
• Suitable for Different Risk Profiles: Equity funds are suitable for aggressive investors. Debt funds are suitable for conservative investors. But hybrid funds work for both conservative and aggressive investors.

THINGS TO CONSIDER BEFORE INVESTING IN HYBRID MUTUAL FUNDS.

Here are the five things you should consider before investing in hybrid mutual funds.

Returns generated by the fund across bull and bear markets.

• Risk-adjusted returns – Sharpe, Treynor and Standard Deviation
• Credit quality of underlying debt papers
• Expense ratio and exit load of the fund
• Level of concentration risk and diversification

Who should invest in hybrid mutual funds?

Hybrid mutual funds are perfect for conservative investors as they have the debt component to balance risk of equities. Beginners who do not want to expose themselves 100% to stock market should invest in hybrid mutual funds. Retirees and senior citizens can also invest in hybrid mutual funds giving consistent dividends.

Reference: https://www.amfiindia.com/investor-corner/knowledge-center/SEBI-categorization-of-mutual-fund-schemes.html

GENERAL INSURANCE

Care Health Insurance has made significant efforts to provide superior health and financial security. As part of this commitment, we are proud to introduce Care Supreme - a comprehensive health insurance plan that offers extensive and unique benefits at an exceptional value. Care Supreme is a newly launched health insurance cover designed for individuals and families, aiming to expand healthcare safety within affordable pricing.

The policy takes care of major features, including hospitalization expenses, AYUSH treatment, domiciliary expenses, modern treatments, and organ donor coverage up to the sum insured without any capping. Moreover, this plan offers add-on coverages that enhance the attractiveness of the product. For instance, the Instant Cover feature ensures coverage for pre-existing diseases from the 31st day of enrollment. The Cumulative Super Bonus allows you to boost your sum insured by up to 500% over five consecutive years. Additionally, the Wellness Benefit provides up to a 30% discount on renewal premiums for achieving your active days target, among other benefits.

PRODUCT BENEFITS OF CARE SUPREME

• Sum Insured Options Available - 7L/10L/15L.
• Min Entry Age - 91 days with at least 1 Adult & 18 years age & Max. Entry Age :- Child: 24 years & Adult : No Age Limit.
• Up to 600% Of Cumulative Bonus (150%, 150%, 100%, 100%, 100%).
• Unlimited Automatic Recharge (Recharge available for unlimited times for related or unrelated illness).
• All Day Care Treatment cover.
• ICU No Limit.
• Pre-Hospitalization 60 Days up to SI.
• Post-Hospitalization 180 Days up to SI.
• Domiciliary Hospitalization Up to SI.
• Organ Donor Cover Up to SI.
• Advance Technology Methods Up to SI.
• Road Ambulance Covered (Below 15 Lakh SI 10000 per year & For 15 Lakh SI – Up to SI).
• Air Ambulance Covered Unto 5 Lakh (Optional).
• Unlimited E-consultation.
• Earned Bonus will not Reduce after Claim.
• Wellness Benefits (Discount on Renewal Premium).
• Annual Health Check up (optional).
• Highest Category Room Can Taken (Even Deluxe, Semi Deluxe, Super Deluxe,Suit Room too).
• Advance treatment too Covered Upto 100% of Sum Insured.
• AYUSH Benefit Covered Up to sum Insured.
• In Patient Care Up to SI.

Customers opting for INSTANT COVER (Optional Benefit) will be able to claim for any hospitalization related to Diabetes/ Hypertension/ Hyperlipidaemia/ Asthma after an initial wait period of 30 Days. Instant Cover benefit is applicable in policies where Diabetes/ Hypertension/ Hyperlipidaemia/ Asthma is declared as Pre-Existing Disease in policy.

Note: Instant Cover optional cover can be added in policy at the time of New Policy purchase & cannot be added in policy at the time of renewal.

HOW MUCH DOES IT COST WITH INSTANT COVER - FEW EXAMPLE

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