The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
I am 29 years old and I plan to invest in whole-life insurance. I already have a life-term insurance for which I pay Rs8,000 in annual premium for a cover of Rs30 lakh. What are whole-life plans? Do they have a savings element?
A whole-life policy has an element of savings built into it, whereas a term plan provides pure life cover. A whole-life policy provides a guaranteed death benefit in addition to which it also builds a “cash surrender value”. This cash surrender value that accumulates in the policy can be accessed even while the policy is in existence to meet any unforeseen need.
It offers tax-deferred cash values that, as they accumulate, can be used to help purchase a home, help pay for a child’s education, or supplement retirement income.
Of course, one could also allow cash values to grow to help meet an unexpected emergency or seize an unanticipated opportunity.
A term policy provides cover for a shorter term, normally till age 70 or 75. A whole-life policy typically protects you till 100. The most important feature of whole-life insurance is its versatility. It is like an expandable umbrella, it can help buffer you and your family from life’s unforeseen events.
I have been advised by my life insurance agent to buy insurance for my grandchild. Please tell me the benefits of buying a policy for a child.
Buying a life insurance plan for your grandchild is a thoughtful, practical and valuable gift that could help your grandchild take the first step towards financial freedom. There are specific children’s insurance plans meant to save money for critical milestones in their life. A good child plan could ensure peace of mind and risk-free financial future for your grandchild.
Readers are welcome to write in with their queries to firstname.lastname@example.org. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Rajesh Relan, managing director, MetLife.