ASK US: On investments – The Hindu

December 19, 2021 by No Comments

Take the term policy first before discontinuing your endowment so that your security is, well, secure.

Q. I am a 40-year-old central government male employee married and with two children. I was lured into a life insurance plan that makes me pay about ₹8,500 per month (since 2019) for a not-so-lucrative sum assured. Having learned about investments recently, I wish to discontinue the endowment plan and switch to a term plan that has a much higher sum assured for a lesser premium. Please advise. I have a home loan. So, I am not in the plan for tax benefit

A. This is the sad story one hears all the time. Taking the wrong policy due to a combination of pressure from the salesperson, insufficient research at the right time and maybe, time pressure to catch a tax deadline is common. Mixing risk cover and investment is inefficient and your idea of discontinuing the endowment and going in for a term policy is a sound strategy. Here are some inputs for you to carry this out:

Understand the term policy concept first. You get only death cover, there is no maturity value at the end of the policy term. Miss a single instalment and the policy is gone. You will get a higher premium commensurate with your age if you start a new policy.

Take the term policy first before discontinuing your endowment so that your security is, well, secure.

If you have paid a pre-determined number of premium instalments, your endowment policy would be eligible for surrender/ becoming paid up. The former means your coverage ceases and you can get a residual value of your premium back. The latter means you need not pay any more premiums but the coverage continues for the policy period at a proportionately reduced sum insured. Consider paying premiums till the policy acquires this status. If not you lose the premiums already paid. Whatever you lose, please don’t lose the lesson that research is better done before buying a policy rather than after.

Q. I work in a PSU bank and have corporate health insurance for ₹3 lakh provided by my employer. I have purchased family floater health insurance for ₹10 lakh for me and my younger brother and have a separate individual top-up of ₹10 lakh from same insurance company with a deductible of ₹3 lakh. Please clarify the following:

1) How to claim for top-up if ₹10 lakh sum insured of primary insurance (family floater) gets exhausted

2) As under both the policies (top-up and family floater), claim should be intimated …….



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