Terms you need to know in Insurance and Mutual Funds

Sum assured

Sum assured is also known as life cover. The amount which a life policy holder nominee will get at the death of the policyholder during the term of the policy is called sum assured. Generally, the amount of sum assured should be 5-10 times of your annual salary

Vesting Age

There are different types of pension plans in insurance. The age at which you want to start getting pension is called vesting age. An age of 55-60 is considered to be the appropriate vesting age

Annuity

Annuity refers to the annual payments on a monthly basis paid to the policyholder after you cross the vesting age

Surrender Charges

Surrender charges are levied by the insurer if you close the insurance policy before the vesting age. Generally, one is advised to think twice before surrendering the insurance policy

Mutual Funds

Mutual funds is a pool of funds which is managed by a professional fund manager in equities, debt and invests across various stocks and sectors and helps a retail investor to diversify his portfolio. There are various kinds of mutual funds namely large cap funds, mid cap funds, small cap funds, multi cap funds, thematic funds

Net Asset Value (NAV)

Net asset value is actually the price of a mutual fund scheme which is sum total of the market value of all shares held in a stock portfolio divided by total number of units outstanding. In other words, NAV is also called the book value of the mutual fund

This article is written by Mayank Gupta who runs a wealth management company www.wealthbazaar.in and provides portfolio advisory services and financial planning services