Loans Against Insurance Policies

September 16, 2014 4 Comments


wealthymattersThe news that Life Insurance Corporation (LIC) of India has recently surpassed banks as the largest personal loan lender in India has turned the focus on insurance policies as collateral. Apart from LIC, other life insurers like ICICI Prudential Life and Edelweiss Tokio Life, and several banks, including the State Bank of India (SBI), ICICI Bank and HDFC Bank, offer loans against life insurance policies.

Loans are granted only against traditional policies that have life cover along with a savings element in them. Term insurance covers and unit-linked insurance plans cannot be pledged to secure loans against them.Policies must acquire surrender value -the amount you would get if you terminate the policy after a certain years -to qualify for loans. You must assign the policy in favour of the insurer to get a loan. Typically, insurance companies offer loans up to 85-90% of the surrender value. LIC charges an interest rate of 10%, to be paid every six months. Read more of this post

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The World’s Biggest Life Insurance Policy

March 19, 2014 1 Comment


wealthymatters

Guinness World Records has announced the World’s Biggest Life Insurance Policy ever issued.

However,neither the record keeper nor the issuer would say who is covered by the massive policy.Dovi Frances, the adviser who arranged the policy, would only say it went to a well-known technology billionaire from California.

The wealthiest of the wealthy often buy life insurance for several reasons.Primary among them are tax purposes.In many countries,a wealthy estate is often hit with a hefty tax bill, and there may not be enough cash to cover it, since many millionaires and billionaires hold their wealth in investments.

This $201 million policy overtakes the previous record of $100 million.It is more complicated than most. It’s underwritten by 19 different insurance companies, each with a slice of less than $20 million. If a single company took the risk of the whole policy they would go into bankruptcy if a claim were to be made.

The yearly premium is in the low single-digit millions.

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Savitri Jindal’s Assets

August 26, 2012 6 Comments


wealthymatters.comHave you ever wondered about the assets of the really wealthy?Personally I have always been interested in knowing just where wealthy people have their money.My take is that wealthy people didn’t get that way or don’t stay that way without knowing a thing or two about keeping and growing their money safely.That is why I was interested when I came across her statement, given before the returning officer, while filing her nomination papers in 2009 for the Haryana Legislative Assembly elections.

Savitri Jindal is India’s richest woman. She is the widow of the late O.P.Jindal.In her statement given before the returning officer,Savitri Jindal states that she has moveable property worth Rs 17.75 crore and immovable property worth Rs 25.94 crore.I think it’s interesting to see how much of her money she has in a liquid form.Compare this to our asset allocation.Most of us are bound to have most of our money stuck in our houses.A house is a necessity, but it makes sense to acquire one’s fortune and then splurge on fancy houses rather than try to become wealthy by sinking money in our homes.

Savitri Jindal does not own a car.I think this lady shows us women a way out of owning a depreciating asset-claim you don’t drive.Having a car at one’s disposal is good but owning it might not be so wise wealth-wise.Keep the luxury car purchases for after you reach the stage of acquiring luxury homes. Read more of this post

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