Life Insurance: Deepak Sood

I had bought two unit-linked insurance plans (Ulips) five years before (for wife and daughter). I am advised to redeem my wife’s Ulip, as it’s doing badly. And, given the mortality rate and other fees, there are slim chances of getting a positive return. Should I redeem or just stop paying the premium?
The charges in a Ulip are front-loaded and taper over a period of, say, five years. Now that your policy is five years old, the charge will be less and this means a larger or major portion of the premium is invested. Ulip funds are directly linked to the market performance. Over a longer term, say 15 years, Ulips have the potential to provide higher returns. Hence, it is advisable to continue paying the premiums. Active switching in Ulip funds will help minimise losses. You could consider switching from your existing fund under the policy to one with a lower risk profile.

I am 52, earning and plan to retire at 60. I would like to buy a term cover of Rs 1 crore, as I would like to limit my premium paying liability in case of a financial uncertainty. Have I taken a right decision?
Term insurance is usually taken by the breadwinner of family to ensure financial security in case of his/her death. Savings and investment plans are taken to meet specific financial needs like child’s education, marriage, retirement. Your responsibilities are not clear here. If you intend to provide financial security to your family, then you may take a term plan which is comparatively cheaper than a savings-cum-insurance plan. However, if you are looking at wealth creation/retirement, look at savings/retirement plans offered by insurers.

Our father had not appointed any nominee for three of his insurance plans. Will the policy proceeds go to our mother, who is alive, or to the legal heir?
Nomination helps the insurer in early release of policy proceeds, as it gives valid discharge to the insurer. Without nomination, the insurer has a procedure for paying to the legal heir(s). However, there should not be any dispute on the collection of policy proceeds. The person receiving it does so as an executor to distribute it in accordance with the will of the deceased or the laws of distribution applicable in the case.

The writer is the MD & CEO of Future Generali Life Insurance