Ulip is not a good option for short-term goal

I have Rs3 lakh and want to pursue further studies after five years for which I am interested in investing my Rs3 lakh in Ulip so that wealth gets multiplied over five years and I can easily pay my fees. Is it advisable to go for Ulip because my sole purpose is wealth creation and I already have sufficient insurance cover?
—Stephen Stanley
To begin with insurance and investment should be kept separately. For insurance requirement it is always advisable to take up term insurance policy which will give you adequate life cover for considerable lower premium. For you investment requirement, you can park your saving in various asset classes to earn good return. Ulip products are to be taken as long term investment (at least 10 years) and not for short term (in your case 5 years), as in the initial years the charges are quite high, which gradually reduces to marginal over a period of time. Any early redemption will lead to loss, due to lock in penalty. So, Ulip is not advisable for your 5 year goal.

Considering the time frame of your educational goal which is 5 year from now you can consider the asset allocation of 70:30 in debt and equity. Accordingly, you can park Rs90,000 in diversified equity mutual fund scheme and remaining amount in fixed deposits or fixed maturity plan or highly-rated corporate bonds of appropriate balance term. You can also consider putting Rs90,000 in a liquid/ultra short-term fund and transfer Rs7,500 per month from the liquid fund/ultra short-term fund into a diversified equity fund to avoid making a lump sum investment in equity. You should start systematically transferring a monthly sum from the diversified equity fund to a liquid/ultra short-term fund at least 12 months before your goal date.

I want to buy a flat for Rs60 lakh. Payment terms of the builder says 40% down payment (Rs24 lakh) and remaining amount (Rs36 lakh) in instalments of 1.75 to 3% on completion of each level of the 32 storey building over the next 2 years. I have Rs7 to 9 lakh which I can give towards the down payment which leaves me with a deficit of Rs15 lakh for the down payment. Can I take a personal loan of Rs15 lakh and also take a home loan of Rs36 lakh (considering the fact that home loan EMI will start only after possession of the flat which is at least 2 years from now). Will I be eligible for both the loans at the same time? And is this an efficient way to fund the purchase of the flat?
—Amar Verma
For a flat costing Rs60 lakh, you will need down payment amount of Rs12 lakh (of which you already have Rs9 lakh). The balance amount of Rs3 lakh can be arranged through any of the following alternatives:
1) Sale of any existing investments
2) You can look at withdrawing from employee provident fund (if eligible) or look for friendly loans from your family members/friends.
3) If neither is possible, you can look for secured loans against tangible movable security such as jewellery, NSC, bonds, shares, units of mutual funds, or life insurance policy with high surrender value. As a last resort, you could look at a personal loan, which is very expensive as compared to any other loan.

The balance down payment of Rs12 lakh can be funded by the bank provided the project is approved by and:
1) Your income is enough to justify with the home loan of Rs48 lakh and personal loan of Rs3 lakh (if you decide to use the personal loan route to fund the down payment) and
2) Your repayment track record or any prior loans/credit cards is good.

I have a query regarding the clause in most of the insurance companies on “treatment of illness/disease/sickness contracted by the insured person during the first 30 days from the commencement date of the policy”.  So what happens if a person is diagnosed with a disease after taking the policy and is also within the 30 day period, can he start claiming from 31st day onwards along with whatever treatment expenses occurred during 30 days.
—James Thomas
No, you cannot get any claim for a disease/ illness/sickness contracted/ diagnosed during the first 30 days of buying the first policy. This non-payment will include any claims that arise due to such illness/ sickness/disease that was diagnosed in the first 30 days but claims were incurred later.

— The writer is CEO, ApnaPaisa, a price & features comparison engine for loans, insurance and investments. He can be reached at hrdna@apnapaisa.com