[carboy]

Originally Posted by whitesquall

I am contemplating buying the "Child advantage Plan" from Kotak Mahindra for my baby. Any comments? Suggestions? I thought that policy is much better than the ones' provided by SBI Life and Religare. . .and also the good old LIC.

Why does a baby need life insurance?

[whitesquall]

Originally Posted by carboy

Why does a baby need life insurance?

What do you mean? Can you please elaborate??

[BaCkSeAtDrIVeR]

Originally Posted by carboy

Why does a baby need life insurance?

Originally Posted by whitesquall

What do you mean? Can you please elaborate??

Dunno about others, but I took child policies for my kinds to as a means of savings, to ensure that a sum of X is available at certain events. It is very tough deciding on dates of these events and amounts. Worse is the fact that these policies are endowment policies, and count for very low bonus. The tradeoff between an ensured amount and low returns is very painful, from the pure investment PoV.

[carboy]

Originally Posted by whitesquall

What do you mean? Can you please elaborate??

What do you want me to elaborate?

The only reason to take life insurance is as if there are other people depending on a person's income & if the person dies then the other people who are dependent on him will suffer a really bad hit on their lifestyle. Life insurance is to compensate for this. The best life insurance to buy for this is a term life insurance - one where you get ZERO money UNLESS you die during the term.

If a person's death has no financial impact on others, then there is no reason to insure the person's life.

Insurance isn't investment. Don't look to make money from insurance. In an insurance policy you are essentially gambling against the insurance company. You benefit if insured person dies early. The insurance company
benefits in the insured person dies late. So you are not taking insurance looking to benefit from it.

[alto99]

Originally Posted by carboy

What do you want me to elaborate?

The only reason to take life insurance is as if there are other people depending on a person's income & if the person dies then the other people who are dependent on him will suffer a really bad hit on their lifestyle. Life insurance is to compensate for this. The best life insurance to buy for this is a term life insurance - one where you get ZERO money UNLESS you die during the term.

If a person's death has no financial impact on others, then there is no reason to insure the person's life.

Insurance isn't investment. Don't look to make money from insurance. In an insurance policy you are essentially gambling against the insurance company. You benefit if insured person dies early. The insurance company
benefits in the insured person dies late. So you are not taking insurance looking to benefit from it.

Although what you say about term policy and insurance not being an investment is valid, remember that in "any" child policy the insured is always a parent. A child is not the insured.

[ghodlur]

Originally Posted by carboy

What do you want me to elaborate?

The only reason to take life insurance is as if there are other people depending on a person's income & if the person dies then the other people who are dependent on him will suffer a really bad hit on their lifestyle. Life insurance is to compensate for this. The best life insurance to buy for this is a term life insurance - one where you get ZERO money UNLESS you die during the term.

If a person's death has no financial impact on others, then there is no reason to insure the person's life.

Insurance isn't investment. Don't look to make money from insurance. In an insurance policy you are essentially gambling against the insurance company. You benefit if insured person dies early. The insurance company
benefits in the insured person dies late. So you are not taking insurance looking to benefit from it.

Frankly Carboy this post is too confusing.

Plain and simple - If you want to go for child plan then the Insurance still remains of yours and not of the child. If you as an income earner were to die, then to take care of the child's future requirment such as education, marriage etc some amounts will be paid to the family. If the child were to die (sorry for saying so) what use would be the Insurance amt to you.

For eg I had Kotak 30 SIP MF with star kid Insurance option which was given free with the mutual fund. Now if I were to to die during the SIP payment period, then the balance SIP would be taken care by the MF house and pay the lumpum amount equivalent to the unit value after the end of SIP to the family.

[carboy]

Originally Posted by alto99

Although what you say about term policy and insurance not being an investment is valid, remember that in "any" child policy the insured is always a parent. A child is not the insured.

If you want to insure the parent's life, why not insure the parent's life?

Originally Posted by ghodlur

Frankly Carboy this post is too confusing.

What exactly is confusing?

[alto99]

Originally Posted by carboy

If you want to insure the parent's life, why not insure the parent's life?



What exactly is confusing?

Insured means the person whose life is insured. These child plans insure parents life and not childs life. I am out of words now on how else this could be explained to you.

[carboy]

Originally Posted by alto99

Insured means the person whose life is insured. These child plans insure parents life and not childs life. I am out of words now on how else this could be explained to you.

The only economically sound life insurance is a term insurance policy. If you get any amount at maturity without you dying then it's not a term life insurance policy.

So if you want to protect your child's future in case of something happening to you take a term insurance policy on your life - this will be far cheaper than an any child plans. Take the remaining premiums & put it in a SIP for a mutual fund or a FD or RD or whatever. You will come out much ahead.

[whitesquall]

Originally Posted by carboy

What do you want me to elaborate?

The only reason to take life insurance is as if there are other people depending on a person's income & if the person dies then the other people who are dependent on him will suffer a really bad hit on their lifestyle. Life insurance is to compensate for this. The best life insurance to buy for this is a term life insurance - one where you get ZERO money UNLESS you die during the term.

If a person's death has no financial impact on others, then there is no reason to insure the person's life.

Insurance isn't investment. Don't look to make money from insurance. In an insurance policy you are essentially gambling against the insurance company. You benefit if insured person dies early. The insurance company
benefits in the insured person dies late. So you are not taking insurance looking to benefit from it.

@carboy: Thanks for your views.

My requirement out of an Insurance policy is four folds. First, the policy has to cover me as well as my child. If something happens to me,my child's future should not get affected. Second, if something happens to my child, I should have an option to retrieve the money that I have invested on her. Third, I would also like that insurance to continue till its maturity date even if something happens to me. And the fourth, the maturity amount has to be substantial considering the inflation rate over the insurance term.

I preferred Kotak Mahindra over LIC and SBI Life because it has lower premium in comparison and has all these characters in it and hence wanted to know if my decision is a good one or not.

Wanted suggestions from the knowledgeable team bhpians like you about right insurance policy for my child. I am ready to make a switch if there is any other better plan than the one that I have shortlisted.

Thanks in advance guys!

[alto99]

Originally Posted by carboy

The only economically sound life insurance is a term insurance policy. If you get any amount at maturity without you dying then it's not a term life insurance policy.

So if you want to protect your child's future in case of something happening to you take a term insurance policy on your life - this will be far cheaper than an any child plans. Take the remaining premiums & put it in a SIP for a mutual fund or a FD or RD or whatever. You will come out much ahead.

I think you are confused on what you want to say and creating more confusion. There are 2 points in this discussion
1 - The insured:
You asked "Why does a baby need life insurance?"- to which I and others replied that a child is never the "insured" in child plans. I hope this is clear to you now. If this is clear what remains is point 2 below.

2 - Pure Insurance vs Insurance+investment - I have already commented positively on what you had said and this is discussed in this thread and on TV channels 100s of times. If even then people ask questions about Insurance+investment products I assume they believe in those products and want to discuss others of similar type and there is no need to confuse them with pure term + independent investment products.

[carboy]

Originally Posted by alto99

I think you are confused on what you want to say and creating more confusion. There are 2 points in this discussion
1 - The insured:
You asked "Why does a baby need life insurance?"- to which I and others replied that a child is never the "insured" in child plans. I hope this is clear to you now. If this is clear what remains is point 2 below.

Yup. My bad. On reading in the first post about the child plan, I assume it was one of those plans where you can insure the child at an early age for a low premium - the parent pays for the premium till the child grows up & starts working & then the child continues paying. My dad had taken such a policy for me when I was a kid. The amount insured was reasonable for those days, but in today's context it's such a ridiculously low amount, that I let it lapse.

Originally Posted by alto99

2 - Pure Insurance vs Insurance+investment - I have already commented positively on what you had said and this is discussed in this thread and on TV channels 100s of times. If even then people ask questions about Insurance+investment products I assume they believe in those products and want to discuss others of similar type and there is no need to confuse them with pure term + independent investment products.

People believe in them because they don't do the calculations.
Insurance companies pay higher commision to agents on the whole life/endowment/ulip plans. Hence agents misguide consumers. I think it makes sense to point this to people when they are thinking of buying these products.

[ghodlur]

@whitesquall

These are my views. Better get an expert opinion on the same.

My requirement out of an Insurance policy is four folds. First, the policy has to cover me as well as my child

Only your life can be insured in the Policy and not your child's. Pls confirm in the policy document.

If something happens to me,my child's future should not get affected.

Depends on what you have opted for - either you get Sum Assured + bonuses if any immediately or the policy continues and on maturity the amout will be payable.

Second, if something happens to my child, I should have an option to retrieve the money that I have invested on her

This cannot be the case since you are insured and not your child.

Third, I would also like that insurance to continue till its maturity date even if something happens to me.

Insurance will not continue but policy will, depending upon your options

And the fourth, the maturity amount has to be substantial considering the inflation rate over the insurance term

This depends upon the premium paid, plan opted.

[whitesquall]

Originally Posted by ghodlur

@whitesquall

These are my views. Better get an expert opinion on the same.



Only your life can be insured in the Policy and not your child's. Pls confirm in the policy document.


Depends on what you have opted for - either you get Sum Assured + bonuses if any immediately or the policy continues and on maturity the amout will be payable.


This cannot be the case since you are insured and not your child.


Insurance will not continue but policy will, depending upon your options



This depends upon the premium paid, plan opted.

@ghodlur: Thanks for the response.

The insurance plan that I shortlisted covers both (Me and My Child) and meets all my expectations.

Just wanted to know if there are any better options than this.

[carboy]

Originally Posted by whitesquall

@ghodlur: Thanks for the response.

The insurance plan that I shortlisted covers both (Me and My Child) and meets all my expectations.

Just wanted to know if there are any better options than this.

In my opinion, you should do one thing before you actually sign a contract.

Check out the premiums you would need to pay for a 15 or 20 or 25 year term life policy on your life (till the time you think your child will be financially independent). Then compare the term life premiums you would pay for that as compared to what you are selecting. See if taking a term life policy & investing the remaining money in a Mutual Fund SIP or a Recurring Deposit or a Fixed Deposit would make more economic sense for you.