 "Readers' Corner: Anuj Agarwal")
I am 55 and have a term cover of Rs 10 lakh. My monthly income is Rs 1 lakh. I have two children aged 13 and 17. My wife also works and has a Rs 10 lakh life cover. Is this sufficient for me? If not, will I be allowed to buy one at this age?
Most life insurance companies have maximum entry age for term plans at 60 or 65 years. Being 55, you can definitely take a new term plan. The ideal amount of life insurance cover should be 8-10 times of your present monthly income, when you are gainfully employed. And, considering you have two children aged 13 years and 17 years, you should also create adequate financial backing for their educational expenses to come in the future. That is, when your children will go for higher studies, in a few years from now. You should evaluate the benefits accordingly. There are many online tools available that can help you arrive at your human life value, that is, the ideal amount of life insurance cover you need.
My son is two-and-half and has just started school. I want to make some investments for his higher education and future. Should I prefer a unit-linked child plan or a child endowment plan? I have heard unit-linked plans are not very good products. Would you agree? How much sum assured should I opt for?
You will certainly have to make smart investments to create financial support for your son's higher education and this is the right time to start with it. Both traditional and unit-linked insurance policies (Ulip) have their own set of advantages and disadvantages. If you desire to have a guaranteed return for educational expenses, a traditional endowment plan may ideally suit your need. These will give you debt product kind of returns. And, when you choose to invest in a Ulip, take the decision based on your risk appetite. As returns from Ulips are linked to the market, the product has a better upside potential, as well as has certain risk factors involved. Therefore, it will depend on the risk tolerance level of the individual in making the choice for investment. Though there are debt funds also, Ulip is the most transparent insurance product available. Hence, I do not agree that it's a bad product. The minimum sum assured you should opt for will depend upon the current income and the amount you wish to set aside for your son's future educational expenses.
Most life insurance companies have maximum entry age for term plans at 60 or 65 years. Being 55, you can definitely take a new term plan. The ideal amount of life insurance cover should be 8-10 times of your present monthly income, when you are gainfully employed. And, considering you have two children aged 13 years and 17 years, you should also create adequate financial backing for their educational expenses to come in the future. That is, when your children will go for higher studies, in a few years from now. You should evaluate the benefits accordingly. There are many online tools available that can help you arrive at your human life value, that is, the ideal amount of life insurance cover you need.
My son is two-and-half and has just started school. I want to make some investments for his higher education and future. Should I prefer a unit-linked child plan or a child endowment plan? I have heard unit-linked plans are not very good products. Would you agree? How much sum assured should I opt for?
You will certainly have to make smart investments to create financial support for your son's higher education and this is the right time to start with it. Both traditional and unit-linked insurance policies (Ulip) have their own set of advantages and disadvantages. If you desire to have a guaranteed return for educational expenses, a traditional endowment plan may ideally suit your need. These will give you debt product kind of returns. And, when you choose to invest in a Ulip, take the decision based on your risk appetite. As returns from Ulips are linked to the market, the product has a better upside potential, as well as has certain risk factors involved. Therefore, it will depend on the risk tolerance level of the individual in making the choice for investment. Though there are debt funds also, Ulip is the most transparent insurance product available. Hence, I do not agree that it's a bad product. The minimum sum assured you should opt for will depend upon the current income and the amount you wish to set aside for your son's future educational expenses.
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in