Ask Mint | It is advisable to opt for a policy as early as possible

Ask Mint | It is advisable to opt for a policy as early as possible
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First Published: Mon, Sep 03 2007. 12 56 AM IST

Updated: Mon, Sep 03 2007. 12 56 AM IST
The insurance business in India isn’t just growing, it is 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.
My wife and I both currently work with a private manufacturing company. We have a two-year-old son. My age is 35 and wife’s age is 32. Do I need to go in for an insurance policy for my child at this stage itself or should I wait for a longer period?
It is always advisable to opt for an insurance policy as early as possible to provide financial security to your son in the form of savings combined with life insurance.
The way to go about this is to discuss the options available with a financial planning adviser, keeping in mind your income, expenses, investments, liabilities and then choose the right policy which will give you multifaceted advantages you are looking for and will best meet your needs. As a long-term investor, one of the options is to go in for unit-linked income plans (Ulips) where the structure of the policy is such that the funds are invested partly in debt instruments and equities.
Also, most Ulips allow you to switch between funds which can be very useful as your needs and/or risk appetite change.
Also, as your child is a minor, a policy bought by you in your child’s name will entitle you to avail tax benefit under section 80 C and Section 10(10D).
I work with a non-governmental organization in Kolhapur and the dependents in my family include my wife and two daughters aged 10 and 12 years, respectively.
I am currently 38 and my wife is 35. So far, we have made substantial investments in fixed deposits and equities. My main concern is that my daughters and wife should be financially secure after I am not there. How do I go about this?
Currently, there are several insurance policies designed such that they not only provide protection to your family but are also used as a savings tool.
One such option is to go in for an endowment plan that will give you the dual advantage of protection and savings. Term plans which are pure protection plans can also be an alternative you can choose. Look at all your options before you finally decide on any one plan. If you are in any doubt, then I suggest that you seek expert advice of the type given by a trained financial advisor.
I plan to buy a motorbike and will be taking a loan for it. Is it advisable to take an insurance cover for the loan?
Life can be unpredictable and the risks keep increasing, it is thus both prudent and sensible to be adequately insured against all known liabilities. It is advisable to go in for such an insurance policy at this stage itself. Currently, some insurance companies offer creditor life insurance policies.
The cover will then depend upon the financial exposure you have against the loan. This helps reduce the burden to pay monthly instalments on your dependents in case of your unforeseen death. The policy term and the premium will depend upon the amount and the duration of the loan taken.
Readers are welcome to write in with their queries to The questions will be answered by senior executives from leading insurance firms.
This week’s expert is Bert Paterson, managing director, Aviva India.
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First Published: Mon, Sep 03 2007. 12 56 AM IST