[faustus77]

Hi everybody
As posted earlier about indexation being of great help in giving post tax returns on debt funds here is an article from the Times of India(15/10/2012)"Invest to beat inflation"
Do note about the point of indexation.
Regards
http://epaper.timesofindia.com/Defau...&ViewMode=HTML

[S_U_N]

Originally Posted by S_U_N

There are two brokers in Pune who are listed in the NSEL website.
However, I am not sure how safe it is to invest through them.

What are the risks in this platform?

Earlier there was a discussion on buying gold from NSEL.
This requires a commodity trading account. I checked with one agency (perhaps broker) in Pune.
The charges are:
Rs. 750 towards account opening/ franking.
Then Rs. 350 annual maintenance charges.

On a transaction of Rs. 50000, I would have to pay around Rs. 250 as transaction charges.

Overall, if I were to buy gold worth Rs. 50000, then I land up paying Rs. 1000 more using NSEL. So, this does not make it suitable for those who are interested in low value transactions.

Probably buying Gold ETF from a regular demat account is a better option in this case.
At least I don't see how NSEL is cheaper than FundsIndia equity platform.

[Oxy]

Ok, I am in a bit of a dilemma. Need some advice.

I am 33 years old. I took a 20 year term insurance policy recently (on the advice of my financial planner) from Birla Sunlife (cover of Rs. 1 crore plus an accidental death and disability rider worth Rs. 30 lakhs, the premiums of the remaining policy term get waived off in case I get permanently disabled). This is going to cost me some Rs. 21,500 a year. The medical has not been done yet, so I can get this policy cancelled if I wish to.

My wife is working and we live in our own home in Bangalore. I also have a six month old son. My parents have a property in Delhi (currently valued at almost Rs. 1.1 crores), which will be split between me and my brother. Apart from this I have a term insurance cover from my company (currently valued at around Rs. 23 lakhs) which will keep increasing every year with my annual salary hike.

Now my parents say that, if anything untoward happens to either me or my wife, they will sell their property in Delhi and come to Bangalore. The property is in a prime location in Delhi and will sell very easily.

Looking at all this, my wife says that we really don't need life insurance. But my financial planner is hell bent to convince me that I should not be compromising on a term cover. He is telling me that my relationship with my brother may not be in great terms over a period of time, and my wife may find it tough to get the share of my parents' property after my death. Plus why would I want my wife to work after my death he says.

I am confused. Do I really need this policy?

PS: This guy has tried to sell me the Birla Sunlife Classic Child Plan earlier (which is a ULIP). Here he wanted me to invest Rs. 1.3 lakhs every year till my child turns 18, and this money is locked for 18 years, I cannot take it out. I was not at all comfortable with this and I politely refused to take it.

[ghodlur]

Originally Posted by Oxy

Looking at all this, my wife says that we really don't need life insurance. But my financial planner is hell bent to convince me that I should not be compromising on a term cover.

Since you have dependants, you have a life insurance cover, more preferably a simple term plan. Ideally you should be insured to 10-12 times your net annual salary. Disability cover along with term plan is OK, but no need of an accident rider. Your Co term insurance plan will always be temporary till the time you are with the firm. Dont let the Financial planner emotionally fool you. Suggest you to go for online policies after doing a comparison of term policies available.

Suggest you to advise your parents to make a will and specify clearly the arrangements.

[S_U_N]

Originally Posted by Oxy

Ok, I am in a bit of a dilemma. Need some advice.



I am confused. Do I really need this policy?

PS: This guy has tried to sell me the Birla Sunlife Classic Child Plan earlier (which is a ULIP). Here he wanted me to invest Rs. 1.3 lakhs every year till my child turns 18, and this money is locked for 18 years, I cannot take it out. I was not at all comfortable with this and I politely refused to take it.

@Oxy:
The premium for 1 cr should be a little less than 22K.
I (age 32) took two policies - 1 Aegon Religare and 2. HDFC, and the total is 15K premium for 1 cr. This includes all available riders from Aegon.
Do you have any liabilities like home loans?
I still would suggest take term cover (maybe reduce it to 50-75lacs range. That will make the premium in the 8-12K range).

Looks like your advisor has a tie up with Birla.
Invest Rs. 1 lac per year in your wife's PPF account. This will be locked for 15 years by default and the returns after compounding will be good (and completely tax free).

[carbookie]

Originally Posted by Oxy

PS: This guy has tried to sell me the Birla Sunlife Classic Child Plan earlier (which is a ULIP). Here he wanted me to invest Rs. 1.3 lakhs every year till my child turns 18, and this money is locked for 18 years, I cannot take it out. I was not at all comfortable with this and I politely refused to take it.

Bullet dodged. You should feel happy.

Regarding the term insurance you are planning to buy: I believe you are should buy that. You need it. Maybe if you gave more details like you salary, assets/liabilities and savings, we can suggest you better. But my gut feel from what I read about your case is that you should go for the term insurance.

Oh, and follow ghodlur's advice: Ask you parents to make a will.

[Marlon]

Originally Posted by Oxy

Ok, I am in a bit of a dilemma. Need some advice.

I am 33 years old. I took a 20 year term insurance policy recently (on the advice of my financial planner) from Birla Sunlife (cover of Rs. 1 crore plus an accidental death and disability rider worth Rs. 30 lakhs, the premiums of the remaining policy term get waived off in case I get permanently disabled). This is going to cost me some Rs. 21,500 a year. The medical has not been done yet, so I can get this policy cancelled if I wish to.

If you are a Non-Smoker you can get Rs 1Cr term cover for premium between 10 - 15K.

I have a 35 yr term cover of 50Lacs from Aviva. I pay a premium of 9K since I smoke.

Aviva , HDFC , ICICI term insurance can be bought online at a real cheap premium . Check it out.

When you go for term cover ..go for 30 - 35 yrs..nothing less than that.

[abeerbagul]

I would prefer a term cover for only 15 to 20 years. The premium is really cheap, and risk is covered for the time period when you need it the most, i.e. when you are cash poor.

You anyways need to plan your investments such that you are financially free in the next 20 years, at which time you dont need risk cover to cover loss of primary income.

A term plan extending for 35 years is a waste of premium.

Does the premium really vary that much between a smoker vs. a non smoker? And how does insurance company verify that you are a non smoker?

[Oxy]

@godhlur, SUN, carbookie, Marlon: Thanks guys, your viewpoints really helped.

So basically I think I need to cancel this current policy which I have taken since the premium seems too high. Then I can probably look into the ones being offered online.

@abeerbagul: I second that. I don't intend to be working beyond 50, so taking a 30 year term cover at this stage doesn't make sense.

[ghodlur]

Originally Posted by abeerbagul

I would prefer a term cover for only 15 to 20 years. The premium is really cheap, and risk is covered for the time period when you need it the most, i.e. when you are cash poor.

Does the premium really vary that much between a smoker vs. a non smoker? And how does insurance company verify that you are a non smoker?

+1 to that, as the term increases the premium also increases. You should take cover for the time till your earning age.

On an average the premium for a smoker & non smoker differs by 10K. The Insurance co will ask you to undergo a medical test for any SA of more than 50L, during the tests if they find anything not correct they would straight away refuse the policy issue. If at any later stage they find out that you have not very upfront in declaring things they can even refuse the claim. So a small lie today can be disastrous tomorrow when your family will need the most. Also the definition for smoker is different for different Insurers.

[S_U_N]

The blood tests would reveal that you are smoker. I think there is a test for nicotine present in blood (not 100% sure though).
Let's say you hide the fact, and if you die and post mortem reveals you were a smoker, then your claim would be outright rejected.
I don't somehow agree with the shorter duration of term cover.
If I am 30 and I die at 60, then I would be glad that I took 35 year term. At least my depends get money at that stage.

[Technocrat]

Originally Posted by abeerbagul

I would prefer a term cover for only 15 to 20 years. The premium is really cheap, and risk is covered for the time period when you need it the most, i.e. when you are cash poor.

You anyways need to plan your investments such that you are financially free in the next 20 years, at which time you dont need risk cover to cover loss of primary income.

A term plan extending for 35 years is a waste of premium.

Hmm I somewhat disagree, no matter how cash rich you are, the premium you pay for the unseen eventuality is much lower. Also there is no harm in having extra cash(than what you have saved) for your family in case of a death or disability.

Not to forget, if you have secured your future you should be fine paying the paltry insurance premium.

Its like you do have car insurance even if you have enough money to carry out the repairs, right?

Originally Posted by Oxy

@abeerbagul: I second that. I don't intend to be working beyond 50, so taking a 30 year term cover at this stage doesn't make sense.

Hold on, you are mixing up things here Besides this statement that I keep hearing from a few folks(Mostly from folks who have recently done their MBAs) "I don't intend to be working beyond 50" is something that I find very naive.

[carboy]

Originally Posted by S_U_N

If I am 30 and I die at 60, then I would be glad that I took 35 year term. At least my depends get money at that stage.

Assuming you retire @60 & don't die, what would you & your dependents do?

If you die @60, your dependents would have your insurance money + your savings.

If you don't die @60, your dependents would have only your saving and also the extra burden of your expenses because you are still alive.

If they did need that extra money if you died @60, it would be much worse if you didn't die @60 because the extra expense of 1 person.

One doesn't take insurance to make money. One takes insurance to prevent financial problems in case of unexpected death. When you take life insurance you are betting against the insurance company - if you don't die during the term - you lose, the insurance company wins. If you die during the term, you win & the insurance company loses. The earlier you die in the term, the more you win. Do you really want to win that way?

[Technocrat]

Originally Posted by carboy

One doesn't take insurance to make money. One takes insurance to prevent financial problems in case of unexpected death. When you take life insurance you are betting against the insurance company - if you don't die during the term - you lose, the insurance company wins. If you die during the term, you win & the insurance company loses. The earlier you die in the term, the more you win. Do you really want to win that way?

Very Well said, lot of people think of insurance as if its an FD which will mature one fine day or that they are wasting money on a Term Policy as there are no returns.

[abeerbagul]

The reason why I chose a short term of 15 years, is that insurance is supposed to be essentially a risk cover, not an extra benefit.

The risk is that if you, as the primary earning member, die young, your family will be left without a financial buffer which can provide regular income, equal to what you would have provided.

I anyways plan to save enough that we would be able to run the monthly household expenses from investments, adjusting for inflation. The estimated time for this to materialize is 10 years.

After that, if my family can anyways live on investments without any issues, even if I konk off, what is the need for insurance? I certainly dont look at it as a windfall benefit to provide if I die, over and above the investments adequate enough for the rest of their lives.

Lets say I have a 6 year old car which has depreciated down to a negligible amount, but still has a lot of mechanical life left in it. At this point I would like to stop taking comprehensive insurance, and just keep third party insurance for legal compliance. Because the risk cover part of comprehensive insurance is no longer needed.