Life insurance: V Philip

While buying an endowment or a money-back policy, agents usually give a benefit illustration. While showing these illustrations, what factors, if not considered, would widen the gap in projected returns? How genuine are these projected returns?
A benefit illustration is a sample projection of the benefits provided by an insurer, indicating the benefits payable according to the terms and conditions of the policy. A benefit illustration is mandatory only for unit-linked insurance plans (Ulips). However, you could insist on a benefit illustration for these policies from your agent. If the agent does not provide it, you could check the insurer's website or contact the insurer's office or call centre. In the case of a traditional policy, it is highly improbable an agent would hide anything, though he could over-promise non-guaranteed benefits such as bonus rates in participating policies, as these change every year. However, it is always better to check the authenticity of the benefit illustration by cross-checking the terms in a brochure or a policy bond or the insurer's website. Once you receive a policy bond, please check it for any discrepancy in the policy terms and the promises of your agent. In case of a discrepancy, you could opt for the free-look period and return the policy.

I am 28 and have a protection plan with an assured sum of Rs 25 lakh. I have invested in FDs and the PPF. I will get married by the year-end. I am not interested in buying Ulips, as I invest directly in stocks. Please advise.
An ideal way to choose the right life insurance plan is to assess the human life value (HLV). There are various HLV calculators provided by insurers on their websites, as well as through distributors. Some companies such as Bajaj Allianz also have simple tools such as Smart Choice that throw up an insurance plan based on the risk appetite, disposable income and goals. One of the main risks to be considered for long-term financial planning is interest rate fluctuations. Based on the information provided, long-term guaranteed plans such as an endowment plan could help you hedge the likely downside risk from equities.

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in


Today, V Philip, CEO of Bajaj Allianz Life Insurance, answers your queries