The needs should also factor in financial liabilities such as home loans, car loans etc and the funds required to support the dependents taking into consideration the time horizon
I am 35 years old, married and have a child of three years. I have life two endowment plans of Rs 25 lakh each. In addition to this what other life insurance do I need? My salary is Rs 15 lakh and my wife's salary is Rs 12 lakh
– Rohit Kadam
First of all, I would like to compliment you for taking insurance plans during your prime earning stage. The plan which best suits your need is dependent on your life stage, current and planned liabilities, other savings and your risk taking ability. It may be advisable to consider a term plan on priority for pure insurance to sustain your family's lifestyle in case of any untoward incident. The basic objective is that the insurance coverage should be sufficient to provide for the dependents' needs in case of premature demise of the primary income provider. To start with, you can go by the thumb rule of '10 times the annual income' to decide the life cover for term plan and then keep enhancing with every increase in your income, inflation and changing lifestyle. Your wife may also consider adding financial security to her investment portfolio aligned to her future goals.
The optional approach to identify life insurance need is the financial need analysis approach. This is an approach which can not only take care of specific needs of an individual but prioritise financial goals as well. The needs should also factor in financial liabilities such as home loans, car loans etc and the funds required to support the dependents taking into consideration the time horizon. It may also include money required for specific family needs such as child's education or marriage, support for parents, retirement and legacy planning.
A child plan to secure your child's education should be added to the portfolio. You have to look for value added benefits before purchasing a child plan, such as, parent and not the child should be the life assured; premium funding feature to ensure flow of funds by the insurer in the absence of the parent to create the planned corpus for the identified goal; staggered payments to fund professional education; liquidity option in the form of loan or partial withdrawal to help you fund unexpected expenses for your child.
My driver's mother had purchased a life insurance policy in his name when he was a kid. Now it has matured. The name in the policy document is spelt differently from his license. The insurance company is refusing to release the money and my driver's mother is no more. What can he do?
– Subiraj Shankar
Based on the information, provided by you, I am assuming that the life assured's age proof would have been taken at proposal stage. Therefore, at the time of claiming the maturity he should produce the Identity proof with present name with family tree, which should substantiate that the name mentioned in proposal form and the proof (for example, driving license) are one and the same person.
You can also check his policy bond for the name of the agent with contact number for further assistance.
The writer is MD and CEO, Canara HSBC Oriental Bank of Commerce Life Insurance
Send your queries related to life insurance to personalfinance@dnaindia.net.
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