Take personal term plan along with group life insurance: Pankaj Razdan

New Delhi | January 15, 2019 1:02 AM

Primary objective of term insurance is to eliminate financial burdens a family might face in case of untimely death of the earning member.

It is recommended to have a life insurance cover of 7-10 times of your annual income.

Since my employer is giving a group life insurance policy, should I (32 years old) also give a separate term plan?
– Daksh Gangwar

Primary objective of term insurance is to eliminate financial burdens a family might face in case of untimely death of the earning member. It is recommended to have a life insurance cover of 7-10 times of your annual income. It is also essential that you are covered until your retirement age. Therefore, evaluate your current policy provided by your employer to see if you are adequately covered. Also, a group policy provides coverage only until the time of employment; hence, it is always advisable to have an individual life insurance policy as it offers complete peace of mind while you work without worrying about your family’s future financial needs.

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 Where can I expect higher returns—Ulips or mutual funds to fund higher education expenses of my son?
—Ramesh Singh

ULIPs and mutual funds are different financial instruments and cater to different financial goals of an individual. Both are linked to the performance of the stock market and suit individual risk taking appetites. First evaluate your requirements and financial needs before opting for the appropriate one. In addition to investment Ulip offers life insurance cover and tax free returns.

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 Is maturity money from all life insurance policies tax free?
—Arvind Gupta

Taxability of maturity proceeds of a life insurance policy depends on capital sum assured and annual premium ratio. For policies sold pre March 31, 2012, it should be 1:5 and for policies sold thereafter, it should be 1:10 during the life time of the policy. However, this will not apply to claim on occasion of death of the insured.

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 My father had a life insurance policy which we found out 10 years after his death. Can we get back the money and what is the procedure?
—M K Gopal

You can intimate the claim at the nearest branch of the life insurance company along with the these documents – copy of death certificate, original policy bond, claimant statement form, KYC documents establishing relationship of life assured and beneficiary and copy of cancelled cheque (with name pre-printed). Also, carry originals of KYC documents and the death certificate for verification. The documents will be further evaluated by the insurer and the claim will be processed.

-The writer is MD & CEO, Aditya Birla Sun Life Insurance and Dy. CEO, Aditya Birla Capital. Send your queries to fepersonalfinance@expressindia.com

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