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Understand the market risks before buying a Ulip

Ulip is, typically, equity-oriented. Such schemes have over 65% or a majority portion of the funds in equity. The remaining is in government and corporate debt instruments

I am 25 years old and planning to buy a unit-linked insurance plan (Ulip). Should I go for the growth option? What are the risks associated with such plans?

—Sameer Kumar

Buying a Ulip is an investment decision and you should understand the market risks. You can also consider other non-insurance investments. The growth option in a Ulip is, typically, equity-oriented. Such schemes have over 65% or a majority portion of the funds in equity. The remaining is in government and corporate debt instruments.

Equity entails higher risk of market volatility and investment returns. For intervals, it can have negative returns. However, over a long 10- to 15-year period, equity has been known to deliver relatively better returns. Ulips also have the option of debt and balanced funds. Choose the fund based on your investment horizon and target returns.

Please suggest good health insurance plans and providers for my senior citizen parents? Also, how much cover is required?

—Name withheld on request

You could either opt for regular health plans, in case your parents do not have any chronic ailments, or you could explore a senior citizen plan. Most regular health plans offer comprehensive benefits with no room rent capping, disease capping or co-pay. You could refer to Mint SecureNow Mediclaim Ratings, for persons 60 and above, for a detailed comparison. Regular plans generally have strict underwriting guidelines. Cases with chronic ailments such as diabetes or hypertension can be rejected or counter-offered with a higher premium.

In such cases, a senior citizen plan could be a good option. Such plans more readily accept chronic ailments and offer lower waiting periods for pre-existing diseases. However, these plans come with some benefit limitations such as co-pay and rent limit. You should consider a sum assured of 10 lakh or more. A general rule of thumb is to get coverage equal to your annual income.

Abhishek Bondia is principal officer and managing director, SecureNow.in

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