Term insurance cover must be equal to total income of 10-15 years

Published: November 19, 2019 1:56:03 AM

Your life insurance plan should be a mix of income and saving plans to provide funds at specific points in time for your daughter’s education and help create a corpus for future needs.

Term insurance, total income, insurance, personal finance, insurance policy, insurance companyELSS investments carry lock-in period of three years and can’t be redeemed prior to completion of the lock-in period.

By Ashish Kumar Srivastava

> I am 40 years old have a wife and a daughter as dependents. How much life insurance cover do I need?
– Gurpreet Sahani
Your life insurance plan should be a mix of income and saving plans to provide funds at specific points in time for your daughter’s education and help create a corpus for future needs. Take adequate term insurance plans so that your family’s future aspirations and lifestyle stay protected. Your term insurance cover should be equal to your annual income of 10-15 years.

> I invested in an ELSS fund last year. I want to withdraw it on paying penalty. How can I do it?
—Tanmay Mittal
ELSS investments carry lock-in period of three years and can’t be redeemed prior to completion of the lock-in period.

> My daughter plans to go abroad for higher studies. Should I buy a life and health insurance for her?
—Abhik Das
Yes, it is necessary to buy a comprehensive health insurance for your daughter as the cost of medical care is substantially high abroad. Do check with the university as they usually have tie-ups with health insurers to provide appropriate health cover to foreign students. If you are funding her foreign education through a loan, review your life insurance cover amount and also secure the liability of the education loan through a credit life insurance plan. It will be good idea to also buy a life insurance plan for your daughter which can help you create corpus in a few years’ time for her future requirements.

> I want an assured corpus for my son’s education after 10 years. How can I save money in life insurance and what kind of returns can I get?
—Swaraj Sapam
There are life insurance plans which provide fixed lump-sum at maturity or at predetermined intervals. There are plans which provide regular income for certain specified period. A mix of these can gene-rate cash as per needs. Invest in an endow-ment plan wherein you pay for 5, 7 or 10 years and it provides the desired amount at the end of 10 years. Child insurance plans come with an inbuilt waiver of premium benefit in case of your demise. Investment in unit-linked insurance plans may be considered for market-linked returns and traditional plans for assured returns.

The writer is MD & CEO, PNB MetLife. Send your queries to fepersonalfinance@expressindia.com

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