Insurance: Kamesh Goyal

While buying a term plan is premium the only criteria that one should look? Are there other things that would matter?

A term plan is a basic life insurance cover against death of the proposer or life assured. The main purpose of a term plan is to provide high insurance coverage at a low premium. This is ideal for those who want to provide a requisite financial cushion to their family / beneficiaries against the adversities in life due to a premature death of the life assured during the policy term. Hence, one should decide the term plan not based on the premium alone, but the amount that they would like to set aside for their beneficiaries. A thumb rule is a life cover of at least 7-10 times the annual premium. You should also look at existing liabilities and loans like home, car or personal loans so that the quantum of Sum Assured should be adequate enough. The tenure is also an important consideration which will decide the feasibility of paying regular premiums. You should also consider the possibility of increase or decrease in liability, which can impact the sum assured. Some riders are available, which can be taken along with some of the term plan products, like the accident, critical illness and hospital cash riders. Some term plans also offer waiver of premium, where the premiums are waived in the events, as structured in the rider. It is always better to choose such riders as they come at a very low price. The reputation of the company in settlement of claims should always be considered along with price while taking the final decision

I purchased an endowment plan five years back. I now feel that it was a mistake. I should have considered a term plan instead. What are the things I should look for before discontinuing my policy?

An insurance plan has to be brought as per the individual’s needs. Endowment and term plans are two distinct plans and as such provide different benefits. An endowment plan provides the payment of sum assured, in case of death or on maturity of the policy term. A term plan provides payment only in case of premature death and does not accrue any maturity proceeds. In your case, if you were paying premiums regularly for the last five years, the policy must have acquired a surrender value. This is the value you will get when you decide to discontinue the policy. The surrender value would be lesser than the total premiums paid. In such a scenario, I would advise against discontinuing the policy. Pay premiums regularly to continue the life insurance protection. You should also realise that once you discontinue the existing policy and take a new one, the premium might increase slightly. The new premium would be calculated as per your present age which will be higher. While discontinuing policy, one should check whether the policy acquired surrender value, which happens only after a minimum of three years.

I am abroad for the past couple of years. Can I buy a pension plan? What happens if I become citizen of my current country of residence?

Insurance products are generally provided to Indian citizens only. A pension plan can be purchased by an NRI for themselves or their relatives. Since you are abroad for a short period you can purchase a pension plan. However if you relinquish the citizenship of India, you need to inform the insurer immediately who will consider the case suitably.

Kamesh Goyal is Country Manager, allianz & CEO, Bajaj Allianz LifeInsurance

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