Ask Mint | Ulip is not meant for the short term

Ask Mint | Ulip is not meant for the short term
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First Published: Mon, Feb 16 2009. 01 15 AM IST

Updated: Mon, Feb 16 2009. 12 55 PM IST
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 have a 10-year-old son and I want to invest in a child plan for his future education. I want to know how a child plan works.
Four simple steps define how a child plan works:
Step 1: Decide the corpus you wish to provide for your child’s future and the time when this should be available. This will define the premium and policy term.
Step 2: Choose the level of protection you require. This should be reflected in the sum assured and the riders (such as income benefit, comprehensive health benefit and accidental death benefit) that you choose. This would ensure that no matter what happens to you, your child’s future is secure and his education is not affected.
Step 3: Choose the premium, premium payment term and frequency.
Step 4: Choose the funds you want to invest in based on your risk appetite.
I have a unit-linked insurance plan (Ulip), which I purchased last year. As the markets are not performing well, I was considering surrendering the plan. What would you recommend?
First, insurance is a long-term savings and protection financial instrument, and we strongly advice that customers should not look at it for short-term investment. As per regulations, a unit-linked insurance plan typically cannot be surrendered for three years. We would recommend that you retain the policy over the long term.
Readers are welcome to write in with their queries to askmint@livemint.com. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is T.R. Ramachandran, managing director and CEO, Aviva India.
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First Published: Mon, Feb 16 2009. 01 15 AM IST