Money Matters

Money Matters
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First Published: Mon, May 04 2009. 12 30 AM IST

Updated: Mon, May 04 2009. 11 50 PM IST
I have lost my policy document. How can I get a duplicate?
—RAKESH SRIVASTAVA
You will have to apply for duplicate policy papers in the prescribed form of the underwriting life insurance company. Companies usually charge a nominal fee for issuing duplicate policy documents. In addition, as proof, you may be required to give the premium receipt, the policy number, your identity proof, the photocopy of the original policy (not mandatory) and an indemnity bond. In cases where the policy papers are torn or partially destroyed for any reason, whatever remains of them must also be returned to the insurer as evidence.
I took a loan recently to construct a house. Which policy should I take to cover the home loan liability?
—SUJIT K.
You can go for a term insurance plan or a mortgage redemption plan to cover the loan liability. While the cover will remain constant in the term plan, the mortgage redemption plan will cover the liability that remains outstanding if the borrower dies before clearing the loan. The extent of cover or the sum insured in this plan equals the outstanding loan amount and reduces as the loan is repaid. Under this plan, the premium can be paid in lump sum, or periodically.
A friend has suggested that I buy SBI Unit Plus Child Plan for my children. What are the features of this plan?
—MOHAN BABU
SBI Child Plan is a unit-linked investment scheme for children in the age group of 0-15. The policy runs till the child attains 18 years of age. As it is a unit-linked insurance plan, the premium amount after deduction of the annual charges is invested in the funds chosen by the policyholder as per his risk appetite. The policy has benefits such as payment of the sum assured and waiver of the premium obligation in case of death of the parent during the tenure of the plan.
In a way, this ensures that your aim of funding goals for your child, such as education and marriage, would be fulfilled even if you’re physically absent from his life. If you survive the term of the plan, the value of the fund will be paid to you on maturity. When the child reaches the age of 18, free loyalty units based on the average of the fund value of the last 24 months will be added to the corpus. One can choose to take the fund value as annual payments for a maximum of five years or as a lump sum. The policy allows four free partial withdrawals after the completion of the third policy year.
I am 27 years old and unmarried. What should be the duration of any endowment plan that I take: 15, 20 or 25 years?
—RAMESH SINGH
The duration of a life insurance policy depends on a number of factors, such as the income and age of the individual buying it and the ages of his dependants. Therefore, the policy term should be determined on a case-to-case basis. You can opt for the longest term, say, of 25 years, because you are very young and yet to start a family. Age also determines the earning life of a person. A person aged 30 has an effective earning life of at least 25 years, whereas a 40-year-old has about 18 years of effective earning life left (subject to other factors also). Ideally, the term of your policy should be equal to the number of years your family is likely to be financially dependent on you. Another aspect one has to see is how long one can support a policy in terms of premium payment.
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First Published: Mon, May 04 2009. 12 30 AM IST