I am 26 years old and have taken a unit-linked insurance plan (Ulip) for which I have paid two instalments. A recent statement for the same shows that the value has gone down tremendously. I am not very confident if the returns will be good after five years. Is it wise to close the plan and get a better life cover? What kind of cover should I opt for since I don’t have any?

—Abhishek Singh

Insurance by definition is a long-term protection and savings instrument. Now that you have paid two premiums, it is worth your while to stay invested for the entire premium-paying term. Your returns are likely to improve with time. The best kind of insurance at your age is a term insurance. This insurance provides a large cover at a lower cost. Since you are 26, it is unlikely that you will be asked to undergo medical tests. Your age will also help in locking in a good premium. You can also go online and calculate the required insurance amount and even buy a policy online.

My wife and I are 31 years old and we have a four-and-a-half years old daughter. My parents are dependent on us. My net salary is Rs18 lakh per annum and my wife’s Rs15 lakh per annum. Both of us have term insurance of Rs50 lakh each. I have an endowment plan of Rs7 lakh and she has an endowment plan of Rs5 lakh. Are our insurance covers sufficient?


On the face of it, given your net salaries, the insurance cover for both you and your wife appears to be inadequate. The simple thumb rule of calculating your correct insurance amount is 8-12 times your gross salary. However, the best way is to factor in expenses and large liabilities, such as a home loan, to calculate the correct amount. There are many websites that offer good calculators. Use one of these to do a calculation and add on any large secured loans to the amount you reach.

I am 50 years old and have only one life insurance policy for Rs1 lakh. Do I need to have more insurance cover? If yes, what should I buy?

—Samiksha Bose

Your life cover appears to be inadequate. The best way to increase your life cover is to buy a term insurance policy for the required amount. Given your age, you will almost certainly have to undergo medical tests. A number of term plans are also available online now and you could consider those as the premium is likely to be less.

I am 30 years old and want to know what kind of an insurance plan should I opt for.

—Sumana Singh

If you are working, the first insurance plan that you should opt for is a term insurance. This allows you to get adequate life cover at lower cost. Once you have bought a term plan, you could look at your financial goals and invest accordingly.

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