Benefits of Life Insurance
19 Dec 2019
Life insurance is a must in today’s world. Modern living is an expensive business, and people have to bear the burden of huge costs like children’s education, EMIs on home loans, healthcare and so on. So it is important for every earning member to have a life insurance policy to protect the financial interests of his or her family. There are many benefits of life insurance policy, which we will look at in this article.
Features of life insurance
Let’s look at the features and advantages of life insurance policy:
- Protection: The first and foremost objective of a life insurance policy is to ensure the financial protection of your family, and this could include dependent parents, spouse, children or siblings. The demise of the sole earning member could put dependents to considerable hardship, especially since cost of living is very high these days. Life insurance gives you the assurance that your family members will be looked after in the event of your untimely demise.
- Contract: Life insurance is basically a contract between the insurers and the individual who takes out the policy. You pay premiums every quarterly/half yearly/yearly to the company. In return, the insurer will give a lump sum to your family in the event of your demise.
- Premiums: Premiums are paid quarterly / half yearly which you need to pay to get life insurance. The amount will vary from person to person, depending on the tenure of the policy, age of the policyholder, health and type of policy.
- Affordable: Life insurance is an affordable way of ensuring the financial well-being of your family. Premiums on policies, particularly term insurance, are quite low and worth your while for the protection they offer.
- Easy to buy: Buying insurance from company is quite easy. Insurance companies have specified persons, who will visit you at your home or office and help you with options and paperwork. You can also do it online at your convenience.
- Tax benefits: Another one of the benefits of life insurance policy is that you can deduct the premiums you have paid from your taxable income. Under Section 80C of the Income Tax Act.
- Savings: There are some life insurance products that combine savings and insurance. This can be a good way of saving for the future and protecting your family at the same time
Types of life insurance
Now that we’ve seen the essential features of life insurance policy, let’s look at the types:
This is the most basic, and most popular, of life insurance policies. You purchase a policy for a certain period for which you pay premiums. For example, if a policyholder wants a policy till the age of 60, he or she can take one. And if the policyholder passes away before 60, the nominee is paid the death benefits.
Unit-linked Insurance Plan
A Unit-Linked Insurance Plan (ULIP) combines investment with insurance. At the end of the policy, the policyholder gets a certain sum. This is unlike a term plan where the payout is made only on the death of the policyholder. Part of the premium is paid for life insurance, while the remainder is invested in either stocks or bonds, depending on the investor’s risk appetite and investment goals. The investments yield returns which are then given to the policyholder after the end of the policy period
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Benefits & Features of Term Deposit
Earning income from your investments doesn’t have to be a complicated exercise. It is possible to earn a decent interest income out of the amount lying in your bank account by opening a term deposit account. A term deposit is any amount kept with the bank for a fixed period of time. With a Bank of Baroda fixed term deposit, you can open a term deposit bank account for a period as short as 7 days and earn income.
Benefits of Term Deposit:
Easy and convenient:
Opening a bank term deposit is very convenient. It can be opened online through NetBanking, or via the mobile banking application. Forms for a term deposit are available online and in branches.
Competitive interest rates:
Bank of Baroda offers competitive interest rates on term deposit schemes. The interest rates differ based on the period of the fixed deposit.
Bank of Baroda offers different options for fixed term deposits. The periods can be as short as 7 days or go up to 10 years.
Loan/Overdraft facility available:
Bank of Baroda term deposit customers can avail a loan/overdraft facility against their time deposit. The loan amount is available up to 95% of the fixed deposit amount. The rate of interest on these loans is 1.5% to 1.75% over and above the fixed deposit rate.
Term deposits can be used to create investments in the name of children and senior citizens.
You can use the nomination facility to nominate different people for different fixed deposits. Nomination can be done online and in the form as well.
Premature withdrawal allowed:
Each term deposit opening form has an option, callable or non callable. If the callable option is selected, it allows you to withdraw your term deposit prematurely. The rate of interest paid will be 1% less than the time deposit rate of interest.
Features of Term Deposit Scheme:
Fixed Term Investments:
Each bank term deposit is kept for the fixed duration that is selected. This amount is blocked for that duration and unless the callable option is chosen, the amount cannot be withdrawn before maturity.
Earn Interest half yearly:
Interest is earned half yearly compounded quarterly on these deposits. It is credited to the fixed deposit account on maturity. Monthly or Quarterly payment of interest in linked SB account is also available in selective schemes.
Beneficial rate for senior citizens:
Senior citizens get a higher rate of interest on these deposits. Bank of Baroda gives 0.5% extra to senior citizens for their term deposits.
No TDS if interest amount is less than Rs. 10,000/-
The limit for deducting TDS is Rs. 10,000. If your income is below the no tax limit, you can fill Form 15G/15H with the bank and TDS won’t be deducted.
Auto renewal of fixed deposit:
Instructions can be given to the bank to auto renew the term deposit once it matures. The principal and interest amount will be renewed automatically on maturity.
Minimum deposit amount:
The minimum deposit amount is Rs. 1,000 and can be increased in multiples of Rs. 100.
Opening a fixed deposit with Bank of Baroda is really easy and simple. It can be done online within a matter of minutes and opening it in a branch is convenient as well.
Features & Benefits Flexible Recurring Deposit Scheme
Flexible Recurring Deposit Scheme (Yatha Shakti Jama Yojana)
Bank of Baroda offers its customers a unique scheme that makes it possible for you to save money flexibly, month after month. You can avail the attractive Yatha Shakti Jama Yojana - a flexible recurring deposit scheme which comes with a host of benefits and salient features. Under the flexi recurring deposit scheme, depositors may choose a small core amount to open their deposit and increase the core amount subsequently, up to three times.
Features of the Flexible Recurring Deposit Scheme
Opening the flexi RD
The flexi RD can be opened with a small initial amount of Rs.100 only
Amount of deposit
Depositors may choose their initial amounts in multiples of Rs 100, up-to a maximum amount of ₹10,000. You may choose to deposit either your core amount or up-to 3 times your core amount. Core amount contributions are mandatory in this scheme.
Tenure of deposit
The tenure of the recurring deposit schemes range from 12 months to 120 months.
Interest on the flexi RD will be paid and credited on a half yearly basis in the months of September and March. The interest paid is calculated on daily balances, with half yearly compounding of interest.
Benefits of the Flexible Recurring Deposit Scheme
Additional interest rate benefits
Senior citizens with deposits below ₹1 crore are eligible for 0.50% additional interest. Staff and ex-staff members of Bank of Baroda are also provided with additional interest. Ex-staff members who are senior citizens can avail both bonus interest rates.
Nomination facility is also offered to flexi RD holders.
Premature withdrawal facility
Interest is paid after deducting a penalty of 1% from applicable rates or contracted rates, whichever is lower in only those cases that are subject to charging penalty.
Loan and overdraft facility
You may avail a loan or overdraft facility against the flexi RD of up to 95% of the outstanding balance in your account at interest rates as per Bank of Baroda guidelines.
No penalties are levied for delayed payments of monthly instalments.
No TDS will be deducted for persons submitting forms 15G/15H as applicable
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