Insurance: Kamesh Goyal

I pay an annual premium of Rs 12,000 on a unit-liked insurance plan (Ulip). An agent mis-sold me this policy three years back, but I continued with it. I will be completing the three-year lock-in period soon. Should I surrender this policy? When does it make sense to discontinue an Ulip?
As I often emphasise that Ulip is a product that offers dual benefits of life protection and market-related investments over a long term. Since it is the most ideal plan for long-term investment, exiting early is not advisable. Ulips are designed in a way that after the initial 1-3 years, the cost structure is minimal, thus it is better for you to continue with the policy.

I would strongly suggest you to continue if liquidity is not an immediate concern. However, in case you want to reduce the element of risk, try switching your funds, which are often free-of-charge for a maximum of three times in a year. Else use funds such as asset allocation funds and such portfolio strategies as “Wheel of Life”. These automatically provide risk-return optimisation.

This will help in continuing your life cover as well as optimise returns.

Can you explain what is the scope of an insurance policy that covers an individual for job loss?
There is an insurance plan which covers payment of equated monthly installments (EMIs) for a home loan. The plan is often bundled with a home loan itself, and is currently not available on a standalone basis. Most insurers offer this product with a maximum payment cap of three EMIs in case of a job loss. The reason for job loss has to be a merger or acquisition or disability of the insured.

I am a 33-year-old salaried male. Over the last two years, auto insurance rates have come down significantly. This has induced me to think of changing my insurer. I have retained the same insurer for the past 10 years for three different cars. My current car is a Maruti Swift Vxi which I purchased in Delhi in 2006. I am now based in Mumbai and use the same car for city driving.
As a thumb rule, consider the service efficiency of the insurer in terms of your overall experience with the insurer, claim settlement experience, services offered such as on-the-spot claim payment or SMS alerts on claim status, hassle-free or on-line renewal facility, etc. Then look at the coverage offered by different insurers and make a comparison of the premium on the basis of coverage offered. It can always happen that the premium may seem to be low, but with restricted coverage terms such as high deductibles, absence of personal accident cover, non-existent NCB that may have serious consequences at the claims stage, lower IDV, etc. Thus a decision to buy insurance should be based on price, coverage and service level of the insurer.

Kamesh Goyal is the country manager of Bajaj Allianz. Send your queries at yourmoney@bsmail.in