I want to take a 50-year term insurance plan for my son who is 25 years old and has started working. Kindly advise.

Subodh Gupta

Currently, term plans offer the maximum cover between 30 and 35 years. Annual premium will depend on the quantum of cover, premium mode selected, age at entry and medical situation of the life insured. Term plans can be bought online as well as offline. Online term plans tend to be cheaper by about 10%.

How will new Irda norms on traditional policies benefit me if I take a term policy as I am 40 years old?

Ramanuj Subramanium

There is no direct impact on term plans per se. Term plans are pure protection products, without any investment component, and most of the premium paid by the policyholder is towards mortality charges. While current regulations require traditional as well as term plans to offer a minimum cover equivalent to at least 10 times of annual premium, in case of term plans, this criteria is normally met. The cover tends to be far higher in term products compared to traditional products, where the premium also factors in an investment component. It’s always a good time to buy term plan. The earlier you buy the better.

Can I get tax benefit on a single-premium policy? How much return can I expect from such a policy after maturity?

Deepankar Sen

Yes, you can avail tax benefit under Section 80C in the year of purchase and under Section 10 (10D) at maturity, assuming that the minimum death benefit throughout the policy term remains 10 times the single premium paid, in case of life insurance policies issued on or after April 1, 2012. There are single-premium plans in both unit-linked and traditional platforms and maturity returns will depend on the platform as well as the specific investment philosophy of the product.

I want to invest R30 lakh for an annuity product. How much monthly pension will I get?

MP Prasad

Annuity rates will depend on the type of annuity chosen. For instance, in lifetime annuity, annuity is paid till the person is alive and there is no return of purchase price even if the individual passes away mid term, whereas in lifetime annuity with return of purchase price, annuity is paid till the person is alive, and the single premium paid for purchasing the annuity is given back to the nominee on the death of the individual. There are other options, such as annuity with term guarantee where annuity is paid out for fixed term irrespective of the individual?s mortality status during the term; if the individual survives the term, the annuity continues for life.

How should I look at an investment-cum-insurance policy for my daughter (10)? I will need a lump sum for her higher education and marriage.

Rajender Rathore

Depending on your risk appetite, you could opt for an insurance plan of either traditional or Ulip variety. Opt for a plan where you are the insured and your daughter is the beneficiary. She will get the benefits irrespective of your mortal status. Before the purchase, determine the cost of planned education at the future point and opt for a sum assured that corresponds to this amount. This can be arrived at by factoring inflation over the time to the event to the cost of similar education on the current date. There are two types of child plans available. One that pays out sum assured to the child at the policyholder?s death or maturity or survival benefits at policy maturity to policyholder. Under the second category, both sum assured and maturity benefit are paid in case of policyholder?s demise in a staggered manner.

* The author is executive vice-president, Kotak Mahindra Old Mutual Life Insurance

* Send your queries at fepersonalfinance@expressindia.com