Psychology of an Indian when it comes to Life Insurance

Why life insuranceThe moment someone wants to talk about life insurance to you, what comes to your mind?

–         Not again! I am already having many life insurance policies with me. How much more should I invest in Insurance. I need some other investment option.

–         I really don’t need insurance now, I can plan for it during the last quarter of financial year or my limit of Rs. 1 lac is over. Now I don’t need insurance policy.

–         How should I ignore this Insurance agent? Now he is going to chase me day and night

–         How much commission will this agent give back to me?

–         I am too young to have insurance

The above-mentioned are just few of those thoughts that come to an average Indian who has been asked to buy an insurance policy. The fact of the matter is that Indians have not understood purpose behind insurance.

Indians have understood Insurance as a Investment planning tool which combines the benefit of tax planning under section 80C and the maturity amount/ claim proceeds is tax free under section 10(10D).

Such policies are typically pushed by an agent,  who happens to be some relative/ friend/ acquaintance or he is some banker who chases him until he is forced/  under obligation to buy a policy. The main point is that agent is a sales person and is not really advising the client after knowing his full situation. Agents many times suggest what gives them the best commissions.

Many agents typically give the client, some part of his commission back as a sweetner because the commission in the first couple of year’s are high which the investor is ultimately bearing. The investor feels happy to have got some money back at the time of investment.

This is very normal for Indians and there is nothing which is amazing here. The sad part is that the questions which actually should arise in the mind of an investor at the time of taking insurance are just not asked. Typically, one should ask himself the following question:

–          What would happen to my family in case I am not there?

–         Are my disposable assets more than my liabilities?

–         Will my family be able to maintain the standard of living which they are living right now?

–         Will all financial goals of my family will be met if I am no more ?

These questions just don’t arise in investor’s mind. This has much to do with their  psychology. We keep reading sad stories every day in the news papers that such and such family has lost bread earner at a very young age and now deceased’s wife and small kids are left alone. Many a times, within our friends and relatives, we see that the family is in financial distress after an unforeseen bad incident happens to the bread earner.

We do feel sad and scared but after some time, these all remain just a story to us. We are just thankful that such bad incidents have not happened to us. But who knows, such an incident with you could be news for others!

This is what one needs to understand.  There are things which is beyond our control and we should be prepared for such untoward incidents and always have a PLAN B with us. By the way, most of the people don’t even have Plan A. but let us explain both

Plan A : Everything goes well and one is able to fulfill his financial goals out of his regular income and investment.

Plan B: If something goes wrong which we can’t foresee today, Insurance takes care of our Plan A.

So insurance basically is for eventuality and not for certainty.  The fact is that insurance is most needed by persons who have to travel the maximum distance and not for people who have reached their destination.

And here we would say that insurance is most needed by a youngster who has many dreams to fulfill but has miles to go. Just imagine, what would be the financial impact if a retired person dies at the age of 65 whose kids are settled with their own families. At this age, he would have achieved all he could achieve in life. Though the social vacuum cannot be compensated, financially the family is not affected.

On the contrary, just imagine what would happen to the family if a young person aged 32, dies due to unforeseen circumstance leaving behind a family of two very young kids and wife.

Now, here we would like to explain an equation which would clarify the actual need for insurance. Calculate the value of your Disposable Assets and your liabilities. Disposable assets are those assets which are not for your personal use and which can be converted into cash as they are treated as an investment by you. Your own house in which your family and you reside is an Asset but not disposable asset. Liabilities would not only include financial liabilities like home loan etc. but also social liabilities as daughter’s marriage, kids higher education, aging parents etc. Now you need insurance if “Liabilities are more than disposable assets” and one does not need insurance if “Disposable Assets are more than Liabilities”.

So when you are young, your liabilities are more or less known to you and you have yet not created disposable assets for you and your family. So one must take insurance when he is young. But what type of insurance? This is a big question. Manufactures (insurance companies) and distributors (agents) would always sell you what they want to sell. Though it sounds rude and tough on them, that’s the reality.

Which insurance policy to Buy? Term insurance is a pure insurance policy which covers your life risk at the lowest possible cost. The premium collected goes towards Mortality charges and there is no element of investment in this policy. Hence this policy is not only cheap but also helps you to buy large insurance coverage for a small amount. Insurance is a foundation of your Financial edifice. Without a proper foundation, there is always a danger of the superstructure collapsing and the entire family suffering in the bargain. We want to avoid that, don’t we?

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Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.

70 COMMENTS

  1. Hi Hemant

    Very nice article.

    Please tell me which term plan shoul I buy my age is 33 & I earn 2.2 lakh every year. Should one consider death claim settlement ratio while choosing term plan.

    • Hi Ankit

      Selection of term plan depends on 3 things first claim settlement ratio, second comes companies financial strength or brand and the least important part is premium. I have seen many people who just concentrate on just premium part but you have very smartly raised point of claim settlement. LIC tops the chart in claim settlement with more than 90% rate. According to your age & Income you should have approximately 20-25 lakh sum assured. LIC have 2 term plans Jeevan Amulya & Anmol Jeevan – in Jeevan Amulya minimum sum assured is Rs 25 Lakh but premium is comparatively less. At age of 33 if you take a sum assured Rs 25 Lakh & if your term is 27 years – Premium will come around Rs 9900. If you think this premium is on higher side split your policy in 2 parts Rs 10 Lakh LIC Anmol Jeevan & Rs 15 Lakh Kotak Term Plan; this strategy will reduce your premium.

      Keep Visiting 🙂

      • Hi Hemant,

        Me and my friend started reading your blog around 1 month back and let me say the way you put it , is orderly and precise.
        We are regular visitor of TFL and find these article as eye opener for ourself.

        I am planning to get a term Insurance , My age is 29 and My sal is 7 L.
        Recently I came to know abt one risk coverage plan from Aviva( Not sure abt the plan name). It was kind of term plan but with one advantage.
        lets say that nothing happened in next 30 Yr then they will return that premium that we paid for this plan after 30 yr.

        So my first quetion – Is it worth it to take this plan from aviva or should i split it as lic + aviva.

        2nd thing is Aviva settlement % is around 88 % so can I go for it ??

        Thanks
        Satya

  2. 2 years back one insurance agent sold me ‘Jeevan Anand’ policy. It’s term is 20 years & Rs 5873 yearly. What kind of returns I can expect on this.

    • Hi Hardik

      This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival. So at the end of 20 years you will get approximately Rs 1.4 Lakh for this you will pay a premium of Rs 1.17 lakh in whole term; it means you are actually getting a return of less than 2%. But there is an added benefit that even after the term your death benefit continues. You have not mentioned your sum assured but I think it should be Rs 1 Lakh in your case. God forbid but if something happens to you in 21st policy year & your family gets that amount – means total cash flow of 2.4 lakh(1.4 maturity benefit & 1 lakh death benefit); still your return on your investment will be close to 6%. This makes it neither a good investment nor a good insurance.

  3. Good article Hemant.
    Indians are conservatives, who will not wish to spill out money. For this very reason, they will not spend money on anything which does not provide any return. So in case of insurance, they will only spend on the one having attractive(?) returns after policy period or in between or whatever. And LIC and other junks have managed to produce some idiotic products and sharp advertising and marketing make people to purchase these products. I really don’t know how many Indians are aware of why should one take insurance or what should be the sum assured. And our great insurance agents have succeeded in ‘educating’ the people that insurance is safest and best investment. Of course they are clever enough that they will market only something which will give good commissions. But what the hell is IRDA doing? My understanding is that IRDA’s role is to regulate insurance domain. Not investment domain. What were they doing till SEBI came up with ULIP issue?
    I strongly suggest that government should come up with financial literacy programs. (Don’t delegate this to IRDA, please…) School curriculum should have basic financial literacy. Only then Indians will survive.
    Thanks and Regards,
    Shinoj Jose

    • Hi Shinoj

      I really appreciate your views – if each one of us start thinking on your lines we will not need any help from govt.

      Just to update govt. has started financial literacy programs in schools. Right now it’s at very initial stage & they have chosen Banglore & few other cities of south.(Just to test it) Even RBI has started few financial literacy cells in their branches but again they have very limited reach.

      Financial Illiteracy is a Global Problem:
      In Australian survey, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.

      Shinoj what do you think – how many Indians understand concept of compounding?

      • I think most Indians are aware of compound interest, as they are taught from school. But if given simple maths problem based on compound issue, i doubt how many can solve. But this does not means that they don’t know the concept. But the dangerous part is Indians understand compound interest as a type of calculating interest only. Not the actual need and power of it. Like the power of compounding.
        Thanks and Regards,
        Shinoj Jose

  4. Sir

    I regularly read your articles, they are really good.

    I just compleded reading term plan artince & I would like to buy. Can you share some details regarding return of premium term plans.

    Also tell me what should be my sum assured.

    • Hi Mukesh
      It’s good to hear that these day people are seriously thinking about taking term plan. Insurance and financial planning are base of anyone financial life. Buying term plan should be the first thing that someone do once they start earning – even before you start thinking on any other goal or investment. But Mukesh there are many gaps in your question – First important think for suggestion of a plan is your age(which Is missing here); your premiums depend on age & term. My suggestion in don’t go for return of premium term plan as actually they are very expensive in comparison to normal term plans. It’s only a thing of psychology that I will not get anything back if I don’t survive – do you get something back on your vehicle insurance. But we are happy to pay vehicle insurance premium as if someday something will happen to my vehicle; I will get my money. This is the same purpose of life insurance if you are not there your family will get money – if you will survive you will be building your portfolio through savings & investments.

  5. dear all !
    Thanks for this very good work.Kindly remember the number of persons visiting these financial blogs are very very nominal.
    Ordinary or innocent middle class people are now confused due to too much of products available with attracting words like guarnateed nav/value, secure and child education etc…
    Hope the true message reaches the needy,
    thanks in advance

    • Hi Srinivasu,

      Ya you are right “number of persons visiting these financial blogs are very very nominal.”

      We are doing our efforts by building this platform & promoting it with our limited time & resources. Now it’s on readers that how they can take it further.

      If you read something good must share it with you friends. Someday we will definitely reach bottom of the pyramid.

  6. Hi Hemant

    Nice to see statistical information along with your review comment.
    It is important to understand how Insurance and stock market works.

    You have different views on policy in the market. and i am now confused….. how these companies make the customer foool?…

    But still we neeed to build corpose for our future.What is the best way to do that?

    I am not sure if you have already writtent any article on this? But
    Can you share your views ?

    regards

    swanand

  7. Thanks Hemant for the useful information.

    I am planning for good insurance policy and my agent explained me about LIC Jeevan Saral policy with Rs. 5000 p. m. option.

    Not sure if I go for it (Jeevan Saral) or simply take any Term plan from Ageon or others.

    or divide into Jeevan Saral and Term plan from low cost.

    Please suggest.

    • Hi Kishor,

      Its good that you are aware of term plans.I will like to suggest you that do take term plan from any other company and the remaining amount you can invest through sip in mutual funds by doing this you will not have to pay a sum of Rs 60000 yearly.
      Buy a term plan which should be 10-15 times of your income.For ex:- If you buy a term plan from XYZ company for SA of Rs 50 Lakh for a term of 20 years it will cost you Rs 850o. so in that case you can save Rs 51500 yearly and that amount you can invest in Mutual fund through SIP which will help you in future goals.

  8. Hi Hemanth,
    Thanks a lot for your clear blogs about term plans which give a deep understanding . The part of your blogs which i like most is the use of diagram, which helps us to understand the things within a second.

  9. Hi ,

    In LIC – Jeevan saral realy gives 10 % returns end of the 10th year.

    What is the link in lic to check current lotalty addition for each policy.

    Appreciate your help in advance.

    • Hi Manjunath,
      10% return from an endowment plan is impossible in current scenario.
      You can visit LIC website to check loyalty additions but there is no single link which provides all information at one place.

  10. HI Hemant,

    I found your website few weeks back and have been spending a lot of time in reading thru various articles. You are really doing a great job in spreading the Financial Literacy. Your articles are straight and to the points. Thanks a lot for such an initiative.

    I have a question about the insurance cover. You said, as a rule of thumb, insurance cover should be about 15 times of your annual income. But as one grows in career, income keep increasing. Does that mean from time to time, you need to keep increasing your insurance cover?

    Thanks again for wonderful job of spreading the Financial Literacy.

    • Hi Vijay,
      Thumb rule is:
      Young person – 30 years – 13-15 times of your yearly income.
      Middle Aged – 40 years – 8-10 times of your yearly income.
      Near to retirement – 50 years – 4-5 times of your yearly income.
      As you said “as one grows in career, income keep increasing” so try to apply above rule at different levels of career or age.

      • Dear Hemant

        I am 29 year old and wanted to save a sum of 100000 Per Am . Kindly suggest some good insurance plan with higher return and good risk cover.

  11. Hello Sir, what are benifit of buying jeevan vridhi my age is 50 yrs wife 40 yrs,my son 15 yrs, dotr 8 yrs right now all r insured, but want to go for tax benifit for every yr/ rs.50,000.
    Thanks Regards
    Rajinder

  12. Hi Hemant,
    I have came across about TFL, when i was trying read about the LIC lauched child plan. I really appriciate the reviews, information shared and it is indeed educative. I need advice from you.
    Keeping in mind about Retire benefits & insurance, i have following insurance policy.
    1) Jeevan Saral policy (agent cal Magic plan -Retire & enjoy in his illustrative sheets!!), The sum assured is Rs.41,83,900, premium; monthly – Rs.10208/-.
    My idea for taking the plan is to have regular good income in the form of pension at the earliest, utilize the tax benefit under 80C & getting the insurance cover. As per th illustrative sheets of the agent, it works like as below.
    Age : 37 (at the time of starting of this policy ie., Nov 2010)
    Premium: Rs.10208/- monthly (yest it is monthly).
    Sum assured (as on the policy) : Rs.41,83,900/-
    I need to pay the premium till the age of 53 ie., for 15 years till year 2025 ( i will end up in paying Rs. 18,73,568). From 2026 onwards, i will start getting returns of Rs.2,84,986/-annually) upto age of 75years – yr 2048 (the last 6 years ie., from age 70 to 75, no accident cover)
    But the at the maturity, no amount will be given.
    Death benefits sum assured under mail plan is Rs.25,00,000/- , Accident benefit sum assured is Rs.25,00,000/-.

    Basically i wanted to have a good pension plan which gives atleast Rs.25,000/-month & with best of information i can get that time have selected the above.
    1) I have plan to go for home loan buying home this year.
    2) I have assets of 2x sites worth total appx.8lac.
    3) No fixed deposit
    4) Have a son of 8 years of age , so need to plan for his education.

    Now pl advice me is it a good choice? or should i close this & go for some other pension plan.

    • Hi Hemant,
      Even I have the same question as Mr.Prakash. Even I was proposed this “Magic plan -Retire & enjoy” by an agent. But the monthly premuim and sum assured are different but the policy wordings remain same.
      Can you please let me know if that is a good instrumetn for retirement planning ?

    • Hi Prakash,

      Any investment should be planned keeping in mind inflation and other factors.
      Any product will be good if it matches your requirement. The expenses at retirement will be higher then what you incur today because of inflation.Hence you need to identify your exact requirement i.e. what you will need tomorrow then only viability of any product can be analyzed.
      Moreover, evaluate the alternatives i.e. NPS and mutual Funds. Since the pension is based on the corpus you accumulate, analyze on the latter objective.

  13. Hallo Sir,
    most of people suggest for buying Term Insurance Plan
    but no one give details of reasons of Claim Reject Case in Term Insurance……
    Please guide this

  14. hello sir,
    it was really informative to read your articles. i need some help.
    my age is 26 years, will be getting around 17000 rupees/month in hand.
    right now my monthly expenses are about 7000-8000 rs..i.e i will save round 8000rs/ month.
    plz advice me as to where i should invest this amount, and also if possible name some schemes under each category. thanx a lot

  15. Hi Hemanth,

    This blog is very informative 🙂

    I am planning to buy a term insurance. From your experience please suggest me the two good compines from which i can take the term insurance.

    Even let me know should I go online mode or offline mode for this one

    Thanks a lot in adance.

    Thanks for educating everyone through the blog

  16. Hi Hemant,

    Please tell me which term plan should I buy my Date or Birth 27.9.1979 & I earn 1.50 lakh every year.I Have 3Depends (Wife And 2 Daughters ) Should one consider death claim settlement ratio while choosing term plan.

  17. Hi Sir,

    My Name is Manjunath(31), I would like to start SIP in Mutal fund for my child(age 1) education and to have a corpus for marriage also.

    I can able to pay monthly 2500 in mutual funds. Kindly view my portfolio and let me know do i need to change. After your comments, will start my SIP(each 500) 5 funds.

    Appreciate your advice in advance.

    ELSS
    Canara Robeco Equity Tax Saver (G)
    ICICI Prudential Tax Plan (G)
    Sundaram Tax Saver (OE) (G)
    IDFC Tax advantage Fund

    Large Cap
    ICICI Prudential Focused Bluechip Equity Fund (G)
    DSP-BR Top 100 Equity – RP (G)
    SBI Magnum Equity Fund (G)

    Balanced Fund
    HDFC Balanced Fund (G)
    Reliance Regular Savings Fund – Balanced Option (G)

    Small & Mid Cap
    HDFC Mid-Cap Opportunities Fund (G)
    SBI Magnum Emerging Businesses Fund (G)

    Can I invest in FMG funds, i am not aware how it will perform in future, pls advice.

    Thanks
    Manjunath.C

  18. Hi Hemant,

    Really I found a good article about insurance.
    I am little bit confuse about insurance company I will go with.
    As per ratio of settlement LIC and HDFC is in top.

    Can you suggest me what should I prefer in above .
    Age :30Yr
    Status : Married
    Wife :Working with salary 4.5 lack/anm
    My Salary: 6.8lack/anm

    Thanks,
    Nawab Ansari

    • Hi Nawab,

      Claim settlement should not be the only criteria as there are many factors for choosing a term insurance. Mortality rates is one of them. LIC has not revised its rates and so the premium rates are very high. Comparing, HDFC will be quite cheaper.So you can go ahead with the company.

  19. Hello Hemant,
    I have few Questions on Term Insurance.

    Lets say. today I am buying a Term Insurance for Rs.7000 which covers 50 lacks. Total Tenure is for 30 years. So, Total Amount I would be paying is 2.1 lacks

    Now the Questions is what if after 1o years, the term insurance becomes cheaper(due to competition and other factors). Rs.3500 which covers 50 lacks.

    I would be in paying Rs.7000 in that moment when people are buying for Rs.3500. So, Should I stop the Old Insurance and get the new Insurance?

    By this I feel, Term Insurance should be Yearly as we dont get any returns anyhow. What are your views and How we need to plan term insurance considering the future value of money and insurance.

    Thanks
    Suresh

    • Hi Suresh,

      Life Insurance are always long term contract even worldwide. Thats why hey are cheap since unlike health insurance your premium remains same irrespective of increase in your age.The rates of insurance gets revised due to change in mortality and experience of companies.. But also consider that you will grow in age so difference will not be to large if compared with premium rates at that age. Alternatively, the benefit of term is that you can always change your policy if you desire to.

  20. Excellent Information Hemant. Keep up the good work.
    A lot of people will benefit from this information.

  21. hi Hemant…
    your article is very revolutionary bcoz many agents makes the Indians fools out here.
    I have join your e-course and discuss it in my friend circle..two friends and myself decided to take term plan from two different company..
    thanks GURU ji..

  22. Hi,

    I hold a policy from ‘ICICI Prudential’ – Premier Life Gold Type U42 for a sum assured of Rs 50 laks and 20 year term starting from 15/01/2010. I have completed the prenium term for 3 years. I am NRI and my current age is 43 years. I wish to start a new term insurance for Rs 1 crore from another insurance company. Do you think this is recommended when I already have a poilicy in force?. If yes which is the best term insurance and what should be the term period.

    • Hi Nilesh,

      Firstly the policy you have is a ULIP in which you are paying higher charges because of high SA you have taken. This will impact your returns in the long term. If insurance is your requirement then viable option is to avail a term insurance policy. You can consider Kotak, Birla,ICICI or HDFC for buying the required amount of coverage.

  23. Hi Hemant! Good Morning!
    I shall try to explain in short of my requirement and mindset to help you arrive at the best available Plan suited for me……

    I wish to invest on a Health Plan (Medi-claim type) by this month end before I turn 45yrs on the 07th Dec 2012.

    I heard that the yearly premiums are low if you take a policy at a younger age.
    My D.O.B. is 07-Dec-1967, i.e. 44yrs 11+months.
    I’m residing at Kolkata and will be travelling on a foreign assignment next month for a duration of 2 yrs. Hence eager to take a policy while I’m still in India.

    Though presently I’m covered by my Company’s (private ltd. Co.) policy, I wish to have one Policy of my Own for my post retirement yrs.

    Following are my specific requirements to select a suitable Health Plan viz.:

    (1) A single Plan covering only two Adults (i.e. Self and Spouse)
    [I’m excluding our son from the plan intentionally to reduce my premium amount. He will be however covered by his Company when he starts working].

    (2) The Mediclaim/Health Plan has to be 100% CASHLESS transaction
    [No administrative/financial fuss should arise at the time of hospitalisation].

    (3) Maximum Hospitals must be covered under such a Plan.

    (4) The Plan which gives the maximum age cover like upto 85 yrs or more.

    (5) Plan should have an online Top-Up facility (i.e. if I want to increase my Sum Assured any time in future whenever I have spare funds).

    (6) The Plan should also keep increasing my Sum Assured by a certain percentage each year while keeping my premium fixed/unaltered. This is to nullify the impact of inflation.

    (7) For a family cover of 5 lakhs combined (either of two) each year, what will be my best premium and with whom?

    Kindly send me your expert advice of which Health/Mediclaim Plan you recommend that takes care of all my above mentioned 6(six) points.

    Eagerly awaiting your email response as I do not have much time on hand.

    Best Regards
    Bapp

    • Hi Bapp,

      Although its a bit late but here is few suggestions:

      1. In Basic Health Plans you get cashless facility with a good hospital network

      2.There is life long renewability.

      3.The SA increases every year through NO Claim Bonus (5-20%)when you do not claim. However, there is a limit to increase of upto 50% of SA but no fixed increasing SA in any health plans.

      4.You can increase the SA if you want to but only at renewal.

      You can consider Apollo Munich or Max Bhupa if you haven’t gone for your health plan uptil now.

  24. Hi Bapp,

    Although its a bit late but here is few suggestions:

    1. In Basic Health Plans you get cashless facility with a good hospital network

    2.There is life long renewability.

    3.The SA increases every year through NO Claim Bonus (5-20%)when you do not claim. However, there is a limit to increase of upto 50% of SA but no fixed increasing SA in any health plans.

    4.You can increase the SA if you want to but only at renewal.

    You can consider Apollo Munich or Max Bhupa if you haven’t gone for your health plan uptil now.

  25. Hi,
    I am 34 yrs married and have 1 year old daughter. My salray is 10+ lakh per annum.
    what should be the term of my term insurance? should I buy one or split it into 2 companies? which company is better. please suggest

  26. SIR,
    PLEASE LET ME KNOW ABOUT THE SCHEMES IN WHICH I CAN INVEST IN 2012-2013 TO GET TAX BENEFITS UNDER 80-CCG(RAJIV GANDHI EQUITY SCHEME)

  27. Dear Hemanth,

    With your guidance, i have selected a term insurance plan before one month, I have selected “AEGON RELIGARE” i term policy & applied for 1 crore term policy for which the premium is around 22,000 PM as i am aged 34 years & a tobacco user.

    Understood from above discussions that we should also concern of claim settlements, came to know up on inquiring Aegon religare is having a very poor ratio of claim settlement. Please advise if there is any other option or substitute to over come ??.

    Regards.
    Subhani.

  28. Hi Hemanth,
    I am 27yrs old. I am plan to buy a term insurance and my annual income was 3.5lakhs. comparably HDFC AND LIC have good settlement ratio which i seen through online. Now i have four questions follow the below,
    * I planning to buy rs 50 lakhs term policy & it’s was right chosen for my annual income?.
    * Can i buy a one policy for 50 lakhs or split into 2 polices. if i choose one insurance means which one is better HDFC CLICK 2 PRODUCT LIFE or LIC .
    * If any other good insurance companies rather than this means pls advice me which one is best company….
    Thanks & Regards,
    RAJKUMAR

  29. hi Hemanth….

    thanks a lot for a very nice and useful article…

    please suggest me a term plan .. my age is 27 y and my annual income is about 1.7 L..

  30. Hi Hemant,

    3 years back one insurance agent sold me ‘Jeevan Anand’ policy. It’s term is 21 years & Rs. 15,878 yearly, Sum assured is Rs.3,00,000. What kind of returns I can expect on this. Also planing to take term insurance for my Husband, his age is 30years, annual income is 2.5lacsP.A. please suggest the best term plan or combination of plans with best advantages & insurance company.

  31. Hi Hemant,

    I advocate that one needs to go ahead and buy a term insurance policy that matches or covers the goals one needs to achieve. This is a point of view of the financial planners like you and me. however, if any agent goes ahead and tells the client “if anything happens to you then your heirs will receive this much of money” the client gets angry. NO ONE likes to hear that one day HE/SHE is going to die (though its a known fact) And probably this is the reason why the variants of term insurance plans that is the various participating policies were introduced.

    As far as i understand the purpose of these policies was to encourage people to buy the insurance and now people are looking at insurance as a tax saving mechanism (more than 70% people) or as an investment tool.

    Correct me if i have misunderstood anything

  32. Dear Hemant,
    Term plans are good products if you have loans amounting to crores and have to pay large EMIs. Most Home loanproviders would ask for your life insurance profile before they give you the cheque. Hence it is some sort of a collateral. But I will more love to read about Health insurance plans offered by LIC and other Pvt Insurers because it is important to make you live without letting the large chunks of money siphoning off your wallet when you are bed ridden in a hospital- life insurance is when you cease to exist. Do write articles on that( health products). It is seen that people opting for Term plans offered by Insurers are not covered by any Health Insurance- in USA it is more important to have a health cover than a life cover- even bloggers like Hemantji, who advise their readers to go for term plans – do not at all advise ‘us’ to have a health cover-Sir….looking forward to read about health products from YOU at the earliest. We will be benefitted a lot Sir…Thanks and happy writing Sir!!!!!!!!!!!Awaiting your guidance……

  33. Hi,

    I have LIC Endowment Assurance Policy – Magic Plan Retire and Enjoy, since 2004 where I have been paying premium Rs. 23377/Year and sum propsed is 950000. Last premium @ age of 57.

    So is this good to continue? Or shall I close this and invest in Term Insurance?
    If I surrender how much I will get?

    -Mayuresh

    • Mayuresh,

      The plan with such names are not any magic but simple combination of endowment plans with different maturity dates. So you need to look at what benefits you are going to receive form the product. In general endowment plan does not do well on providing a high insurance coverage and returns. For insurance you should look at term plans. For investments there are alternatives which will deliver you better results. Good to avoid any combo products.

  34. Hello sir , your psychology of an indian people is a very good article to learn about insurance planning ! Sir would you please tell me which is the best insurance plan for individual who earns 2 to 2.5 lac ( P.A )

  35. Hi Hemant ji,
    I recently joined TFL and articles which you are writing are very systematic and easy to understand.Firstly thanks for it.
    Currently I am looking for Term insurance plan for myself and spouse.
    Please let me know, In which term plan I should invest and why?
    My age is 28 and Sallery annually 6Lac
    Wife age 27 and Sallery annually 9 lac

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