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Chat Transcript
30 Apr - 12:00 hrs
Umesh Rathi | CFPcm, Arihant Capital
The fine print in insurance schemes
Chat Transcript
| guest: Hi, I took Bajaj Allianz unit gain plus insurance for my son arpond 5 years back. I deposited 5 installments of 25 k , but this year I skipped it. I have deposited 1.25 Laks and the current asset value is approx 1.47 Lakh. I believe it has not grown the way it should have. What do you suggest , should I come out and put this fund somewhere else or stick to it. |
| Umesh Rathi: The prime reason for low return in this plan is the charges which was deducted in initial years. Ulip plan is only profitable if your time horizon is 8-10 years. Due to heafty charges it takes long time to breakeven. Considering this now you should review the performance of the fund in which you have invested if the fund is outperforming benchmark then you can remain invested else you should withdraw your money and should invest as per your risk appetite. |
| thaslimhafeez: Hi..I am an NRI and i like to take Term Insurance of 1 Cr..which company gives Term insurance for NRI |
| Umesh Rathi: All the insurance company offers term insurance to NRI`s. The only constrain is that NRI can not take online term plan. |
| guest: Hi Umesh, which is the best pension cum insurance plan. I am 31 years old and my gross salary is 80k pm. what should be the cover i should have. Thanks |
| Umesh Rathi: You should avoid pension cum insurance plan because it is very costly affair and even not tax effective. For retirement you should invest after framing suitable asset allocation and for insurance you should take term plan. |
| vkdurbha: Hi Umesh, Which is the best children insurance policy considering the option of systematic withdrawal after ten years? |
| Umesh Rathi: There is no children insurance policy which provide yearly retrun of more than5-6%. Where as in education the actual inflation rate is more than 10%. So for insurance need you should take term plan and investment for children goals should be done seprately. |
| guest: Hi Sir, I am 35 years old and want to take a Whole Life Plan till 100 years of my age with a good life cover. Is going for ULIP OR traditional wholelife plans better? what are the best schemes available in this segment? |
| Umesh Rathi: It is always a better idea to keep your investments and insurance seprately. Even if you need whole life plan till 100 years. Though there is no company who provides term insurance till 100 years but if you compare the cashflow of whole life plan and the combination of term plan + investment only @ 7-8% p.a. your corpus will be higher in the combination of term plan and investment. |
| guest: Hi Sir,What kind of life insurance should I buy? |
| Umesh Rathi: If you need pure protection then Term Plan is best for you. |
| guest: How do I know how much life insurance I need? |
| Umesh Rathi: There are two methods of deciding the sum assured which is human life value and need based analysis. You can use need based analysis method for deciding sum assured. In need based analysis method you should add survivors living expenses, amount of outstanding life goals, outstanding debt, cost of dying (funeral, estate lawyer`s fees, etc.) and subtracts saleable investments and insurance already available. The difference is the sum assured required. |
| guest: Hi Sir, Most of the expert advice to take term plan but there is no return under Term Plan then why should I take Term Plan? |
| Umesh Rathi: Remember that nothing is free of cost. Even if you take ULIP plans, Money Back Plans, Endowment Plans or Whole Life Plans every plan attracts mortality charges which you have to pay. If you take term plan then in very small amount you can take higher sum assured. |
| guest: What is the difference between health insurance plan of General Insurance Companies and Life Insurance Companies? |
| Umesh Rathi: Health insurance plan of general insurance company works on the principle of reimbursement. In which hospitalization expenses (provided that of min of 24 hrs hospitalization) is paid upto sum assured. Health insurance plan of life insurance companies works on the principle of compensation. In which hospital daily cash benefit (provided that of min 48 hrs hospitalization) and major surgical benefits are paid as per the fixed amount under plan opted irrespective of actual expenses. In this type of plan premium are allocated in two parts one is investments and another is for providing benefits. Generally, premium and expenses are on higher side in such type of plan. |
