Ask Mint | Prudent management can cut Ulip risk factors

Ask Mint | Prudent management can cut Ulip risk factors
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First Published: Sun, Mar 15 2009. 09 52 PM IST

Updated: Sun, Mar 15 2009. 09 52 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 bought a term plan three years ago and paid a single premium of Rs50,000 for it. Now, while going through the website of some insurance firms, I realize there are more competitive products in the market. If I surrender my policy today, will I get my money back?
Some companies do offer the flexibility of surrendering the single-premium term policy after completion of the first policy year. You may choose to surrender such a policy and invest in a new plan. However, it is advisable to do a cost-benefit analysis first.
I am 22 and get paid Rs15,000 per month. I want to take life insurance of Rs10 lakh and nominate my father as the beneficiary. Which policy should I take?
It is good to see that you are thinking about insurance at a young age. Before deciding on any insurance plan, it is advisable that you undergo a financial health check. This is a need-based analysis that helps you determine your liabilities and income so you and your family can benefit from the best advice and plan your insurance investment wisely. You could either opt for a term plan, which provides only a death benefit, or you could apply for an endowment plan, which will give you a cash benefit on maturity as well as the death benefit in case of premature death before the policy term lapses.
I have invested in a unit-linked insurance plan (Ulip) with growth fund. With the current fluctuations in the stock market, which fund should I switch to?
Ulips offer a wide range of fund options from debt funds, with minimum or no exposure to equity, to growth funds, with high equity exposure. Depending on your risk appetite, you can choose which fund to invest in and switch between funds. Keeping in mind the current market situation, you could look at switching over to a debt fund or a secure fund with low exposure to the equity markets. Ulips are extremely transparent and, with prudent management, one can significantly reduce the market risks related to Ulips and also gain during a bull run.
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: Sun, Mar 15 2009. 09 52 PM IST