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Published

You can have six nominees and may also specify the proportion of benefit that you would like each nominee to receive …

You can have six nominees and may also specify the proportion of benefit that you would like each nominee to receive
Kapil Mehta, Managing director and principal officer, SecureNow Insurance Broker Pvt. Ltd

Published in Mint Dated 23rd May, 2012

I am a 29-year-old married male. I have a term plan of Rs. 50 lakh. We recently had a baby girl. Now I plan to increase the sum assured to Rs. 1 crore. Should I now go for a unit-linked insurance plan (Ulip) or an endowment plan?
—Nityanand Sahay

Published in Economy & Finance , Business
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  • 1. Ask Mint Money | Give credible reason if youwant to nominate nephew, niece to planYou can have six nominees and may also specify the proportion ofbenefit that you would like each nominee to receiveKapil Mehta, Managing director and principal officer, SecureNowInsurance Broker Pvt. LtdPublished in Mint Dated 23rd May, 2012I am a 29-year-old married male. I have a term planof Rs. 50 lakh. We recently had a baby girl. Now I plan toincrease the sum assured to Rs. 1 crore. Should I now gofor a unit-linked insurance plan (Ulip) or an endowmentplan? —NityanandSahay Your sum assured should be at least 10 times your annual income. If you earn up to Rs. 10 lakh a year, then your term cover is adequate. The incremental Rs.50 lakh of term insurance that you buy should cost less than Rs. 8,000 for a 30- year term.The second insurance that you must have is health insurance forthe entire family.The third insurance for you to buy should be a 10-year growth-oriented Ulip. Do not invest more than 25% of your savings intoaUlip.
  • 2. I would not recommend a traditional endowment plan since ittypically has high hidden costs and provide limited exposure toequities. At your age, equity would be one of the best long-terminvestments to consider.I am 32 years old and have a one-year-old child. I havethree Ulips for which I pay an aggregate sum assuredof Rs. 40 lakh and aggregate premium of Rs. 35,000. I planto buy a term plan as well. How much should be the coveramount for me? Should I stop any of the Ulips I alreadyhave?—VinodKondiyalYour term cover should be about 10 times your annual income,less Rs. 40 lakh of insurance that you already have. At your age a30-year term plan for a cover of Rs. 50 lakh will costabout Rs. 8,000 per annum.It is hard to comment on the Ulips you have without some moredetails. However, as a general rule, if you purchased these afterSeptember 2010, then keep them active because these are Ulipswith a cap on charges. If these were bought before that then youwill need to compare the continuation costs with surrendercharges to take a decision.I am 35 years old. I want to take a Rs. 2 crore term coverand nominate six people to that. Will I be allowed to doso? Also, my annual income is Rs. 15 lakh. Will I get such ahuge cover? Can I name my nephew and niece asnominees?—A. DharYes. You will get a Rs. 2 crore life insurance cover becauseinsurance companies routinely allow a sum assured up to 15times the annual income.
  • 3. You can have six nominees and may also specify the proportion ofbenefit that you would like each nominee to receive. If there isinsufficient space in your proposal form, then use a separatesheet to list out the nominees.You can name your nephew and niece as nominees, provided yougive a credible reason to the insurer. Some credible reasons couldbe that they are financially dependent upon you or that you donot have children of your own and treat them like your own.Kapil Mehta is the managing director & principal officer,SecureNow Insurance Broker Pvt. Ltd