insurance Archives – Page 3 of 4

What’s wrong with a ULIP?

February 25, 2016 by Vipin Khandelwal

There is a raging debate on ULIPs. Article after article is being published in favour or against a ULIP. Since this is the last leg of the tax saving season, the pitch has become even more shrill.

There was recently an article on ValueResearch about choosing ELSS vs ULIPs and there are angry comments on the article to the extent of accusing the writer of taking sides and not presenting a true picture about ULIPs. Both the camps, for and against, have made their points and it is difficult to ignore either.

If you are not truly aware of what a ULIP today is, you may want to first read another post here.

Now, let’s come to the real issues with ULIPs. What’s wrong with a ULIP?

Investment decisions – How to get them right?

January 8, 2016 by Vipin Khandelwal

Investment Decisions Case 1 – Insurance Premium

A few weeks ago Rahul, a friend of mine, called up an insurance company to buy a term plan. He wanted a cover of Rs. 3 crores for 40 years.

The agent heard him and said that for a cover of this amount Rahul would have to pay Rs. 36,068 every year as premium.

The agent then told him that he wanted to make another suggestion.

“Yes, tell me.” Rahul was keen to know.

“Sir, I will give you an option where you pay premium for only 10 years but you will get a cover for full 40 years.”

Rahul was excited. This seemed like a bargain.

Life Insurance Term Plan: 5 practical buying tips

January 4, 2016 by Vipin Khandelwal

Over the last couple of weeks, I have had several queries on life insurance. Thankfully, the readers were aware that term plan is the right insurance product to buy.

Yet, when it comes to actually buying the term plan product and decide which policy to go for, some questions do remain. This post is going to deal with those questions and attempt to give perspectives, which you can use to find your own answers.

The questions around buying life insurance term plan

The most common questions are

Should one buy term plan online or offline?
Should one buy it from the insurer with the best claim settlement ratio?
Should one break the required insurance cover into multiple policies or buy just one policy?
Should one select regular premium or lower premium payment period option?
Should one buy it from LIC or a private insurer?

I will try and use the learnings from the interactions with my clients, readers as well as my own experience, to offer various perspectives. I would be happy to read your thoughts and feedback in the comments too.

Let’s go.

Pension Plans: Wolf in sheep’s clothing?

November 2, 2015 by Vipin Khandelwal

I started investing in HDFC Pension Champion from Year 2010 for sum of Rs 1,50,000 per annum. I have completed 5 years of investment and I see the returns as of today is @ 8.02%. I stopped investing from this financial year, as the returns are less than the normal FD rates. I am thinking to invest in Mutual funds instead of ULIP.

I understand from your previous articles that, if I wish to surrender the policy no taxes to be paid and no reversals of 80C deductions as the invested period was 5 years.

The above note is what a reader (I will call him Rajesh) sent to me recently.

I believe that you or someone you know also owns a pension plan. We have a few lessons to learn here. First, some basics.

What are pension plans and how do they work? – The Sheep’s clothing

Surrender Value Taxation – Must know insurance facts

January 19, 2019September 22, 2015 by Vipin Khandelwal

I am increasingly convinced that insurance (specially the investment variety) is a super complex product. There are so many ifs and buts attached to the product. It could have been otherwise so simple to understand and buy.

With the current product structure, it is just not possible for a layperson to understand and evaluate the product and make an informed decision. And on top of it, there are tax laws.

Well, I guess there is no point complaining. We will have to learn to navigate through the jungle.

Recently, I received the following query from a reader. It is about surrender value taxation of a life insurance policy.

Insurance: All that is wrong with it and you!

September 15, 2015 by Vipin Khandelwal

I was aware that there was a lot of mis-selling happening with insurance products. I had heard horror stories in the media. I had seen my investor clients being made targets. At one time, an agent even tried to sell to me something that I really didn’t need.

For clarity, mis-selling means giving you a product that is not fit for your needs. For example, a ULIP (with a high degree of exposure to equities) is sold to a retired person who is looking for regular monthly income.

So, I knew about mis-selling but I had no idea to what extent this mis-selling was taking place, until I read this.