Manoj Aswani is VP at MyInsuranceClub.com
I have 2 sons aged 14 and 11. I want to insure them for their education and future. Which is the best plan and what should be the term?
Typically child plans are taken for 2 purposes, either for maturity at age 18 for higher education or at age 23 for marriage or estate planning, etc. Now, if you are looking to build a corpus at 18 years of age, i.e. only 4 and 7 years away, then you need to invest in pure investment tools since insurance is a long term tool and short term returns would be low as insurance products are front loaded with charges and it takes quite a while to break even. Thus you need to opt for Mutual Funds, Bank Fixed Deposits, Gold, PPF, etc. for short term returns according to your risk appetite.
However, if you wish to invest for a period of at least 10-15 years, then insurance policy makes sense. Now, before you opt for a child plan, you must have optimum coverage for yourself, so that if anything were to happen to you, then your children would not suffer financially at least. First take a Term insurance plan. Check out the popular online term plans such as Aviva iLife, HDFC Click 2 Protect, Aegon iTerm and buy one immediately. Take a minimum cover of at least 15 times your annual salary and for the longest available policy term.
Then choose a Child Plan according to your risk appetite. Also allocate some money into pure investment products like Mutual Funds as well, to beat the inflation and yet get positive returns after considering the time value of money
If you need a Child Plan with School Fees protection, then DLF Pramerica Fee Protect Plan is a good option. If you need Money Back Plan for your child then LIC Komal Jeevan, ICICI Prudential Smart Kid Regular Premium Plan, etc. are good options. If you need a child ULIP India First Young India Insurance Plan, Tata AIG Life United Ujwal Bhavishya Supreme Plan, etc. are plans that you can choose. In fact the new LIC Jeevan Ankur Plan is also a good Child Endowment Plan that you can consider.
I want to renew my car insurance but this time I want to take a Zero Depreciation Insurance coverage. However, I came to know that many insurance companies only partially pass the claim stating that the rest of the damage is from previous injuries to the vehicle. So, in that case will I get the zero depreciation insurance as my car also has some pre-existing scratches on bonnet?
Zero Depreciation Cover means that if your car is usually taken for 10% depreciation every year, then that would not be considered by the insurance company if you have this rider. Also, say you have a policy worth Rs 5 lacs and you have filed a claim 8 months after the policy was issued, then the insurance company will evaluate your claim post deduction of depreciation say of 10% for 8 months. Thus, the insurance company will calculate the claim on Rs 4.67 lacs approximately after deduction of 10% of Depreciation on a pro-rata basis for 8 months. Thus, all parts would be calculated after depreciation and hence the claim would never be upto the full amount.
However, if you opt for Zero Depreciation Rider, then this depreciation valuation would not be considered and your claim would be calculated from the Initial Declared Value as is mentioned on the policy document of Rs 5 lacs in the above example. That has nothing to do with pre-existing scratches. However, it would be better if you repair the same in the existing Car Insurance before you change the insurer then there would not be any trouble.
What is a Whole Life Plan? And what plan would be good for me?
A Whole Life Insurance Plan is basically a Term Plan with unlimited term. Thus, it is also a pure protection plan like a Term Plan, where the nominee gets the Death Benefit on the death of the Life Insured and there is no Maturity Benefit. The basic difference between the two plans is that in Whole Life Plans, the nominee gets the money whenever the life insured dies till the age of 99 years whereas in Term Plan, the nominee would get the death benefit only if the Life Insured dies within the policy term and nothing is payable beyond that period. Thus a Whole Life Plan is another version of a Term Plan where the policy term is unlimited.
The Sum Assured is paid on death whenever it may occur. i.e. coverage for whole life. Usually the term is considered as 99 years, as human mortality is less than that. In some policies, if the life assured reaches the age of 99, then sum assured is paid as Survival Benefit.
There are various types of Whole Life Policies. The most common type has a tenure which can be chosen at the inception of the policy of about 30 years. Thus, premium needs to be paid till the policy expires after 30 years. If the life insured is alive, then the maturity benefit is paid out at the end of the 30 years, but the insurance policy continues till death. As in his life cover continues till he dies and then the sum assured would be paid to his nominee.
Hence the premium paying term entirely depends on which policy you have opted for and what are the terms and conditions of the policy.
You can opt for LIC- Whole Life Policy, LIC Jeevan Anand - which a whole and an endowment plan combination or Max Life Whole Life Participating Plan, whichever plan suits your needs.
(The author is Vice President at www.MyInsuranceClub.com, insurance comparison website in India. You may write to him at