I have a pure term policy, Amulya Jeevan, from LIC for R50 lakh. Now, I want to take a similar policy for my wife, who is 34 years old, and daughter who is four. Should I take the same policy for both of them?

?Biswaroop Sen

Yes, it is always advisable to go for the term plans first with appropriate covers. Several insurance companies now offer term plans online, which tend to be cheaper by about 10-15% than the conventional term plans sold offline. Compare offerings from different insurers for the gender, age, cover amount and policy term as per your specifications and buy the plan that suits you the most.

I have a mediclaim policy from New India Assurance for R3 lakh each in a four-member family. What are critical illness and personal accident riders and how can I get both of them added to my policy?

?Sumant Kumar

Riders are add-on covers that can be taken over and above the base plan to extend your risk cover at a nominal charge. For example, a critical illness rider offers cover against pre-specified critical illnesses. If the life assured suffers from any of the pre-specified illnesses, the benefit payout is made. Generally, critical illness and personal accident riders are available with life insurance plans and you can approach the insurer for this inclusion.

I have come across many products with the highest NAV guarantee. How does the guarantee work and for how long do I need to invest in these products?

?Anuja Sinha

Highest NAV guarantee plans pay the highest NAV achieved by fund units over a specified period of time. These plans come generally for policy terms ranging between seven and 10 years. They work on the constant proportion portfolio insurance (CPPI) model, which, while limiting downside in the event of falling stock markets, also tend to constrict gain and leverage that could be achieved through participation in rising markets. In such plans, given the guarantee, over the policy term, a significant portion of the fund stays invested in debt market instruments. Depending on the percentage of guarantee offered, there is also usually a separate guarantee charge, which lowers the investment component. Such plans will appeal to investors with lower risk appetite who do not mind foregoing higher equity returns and paying extra charges for the sake of guarantee.

After retirement, I have accumulated a corpus of R20 lakh, out of which I want to invest R15 lakh in an annuity scheme to get regular pension. How much monthly pension can I expect, what will the interest rate be and will the payout be same throughout my life?

?Sooman Prabhu

Annuity rates vary from company to company. You have to check with the insurance companies regarding their rates and the monthly payout they can provide for life.

The author is executive vice-president, Kotak Mahindra Old Mutual Life Insurance n Send your queries at fepersonalfinance@expressindia.com