Life Insurance: Deepak Sood

I plan to invest in a unit-linked insurance plan (Ulip). What are the risks?
The risk is borne by the investor. These plans put money in funds which differ in mix of assets. The fund is selected by the investor according to his risk appetite. Those with a higher appetite go for high equity exposure. Erosion of investment, however, may take place, if market crashes.

Policyholders keep track of the stock market, interest rates and fund performance regularly. Ulips provide switching of funds, redirecting future premiums, liquidity etc.

There are many riders offered on term covers. But the cost of my cover rises a lot on buying rider(s). So, how does one justify these?
A life insurance policy covers the risk of death. Other covers are offered as optional rider benefits.

For example, an accidental death and dismemberment rider pays an enhanced sum in case of death due to accident. It also pays on dismemberment due to it. Similarly, a critical illness rider pays on being diagnosed with pre-defined critical illnesses. These are payable if the insured is unable to work due to injury or illness. Hence, by paying a small premium, you benefit from a higher cover.

I, 34, earn Rs 28,000 monthly. I plan to retire at 50 and need an ample corpus. How much should I invest in a pension plan to create it? And, which plan should I buy?
You have ample time to create a corpus.

The sum needed will depend on the money you need, the annuity rate at that time and the type of annuity you need (for example, with or without spouse pension, increasing pension, etc.).

If you want pension linked to the final salary (say 50 per cent of it), then investment will depend on salary growth. But if you want a fixed sum, then it will depend on future return, annuity rate, etc.

The writer is managing director and CEO of Future Generali Life Insurance.