Life Insurance: Amitabh Chaudhry

While applying for a housing loan, can the bank insist I buy a life insurance policy? I already have a term life insurance policy.

The life insurance policy normally suggested by a bank while processing for a housing loan is to cover the loan amount you are applying for. This cover normally comes at a low cost and, hence, it is advisable you opt for it. Keep in mind your total liabilities vis-a-vis the cover you have purchased. If your term cover is sufficient to take care of your family needs and pay for the loan in your absence, you may opt out.

Read more from our special coverage on "LIFE INSURANCE"

• Insurers keep it simple and interactive

Since equity markets have become volatile, should I switch from equity funds to debt funds in unit-linked insurance plans? What is the lock-in period and charge for the switch?

It entirely depends on your risk appetite. Some choose to switch their funds into a debt fund to avoid further fluctuations. Others feel entering the market at a low point provides substantial potential for an equity upside. In case your investment horizon is long (number of years to maturity is high), it is advisable to stay invested in the equity fund to reap maximum benefits, while you might want to lock-in your gains by shifting your funds into a debt fund as you approach maturity. There is no lock-in period. So, you can alter your allocations any time after purchasing the policy. But, some insurers might charge a fee for the switch.

The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
Amitabh Chaudhry, MD and chief executive officer at HDFC Life, answers your questions