Hi Sreekanth garu,
I have been following your blog since one month. Nice articles. I am at an important stage of life. I need your advice.
I am married, 31 years old and have a 1 year baby. I am working in BSNL. I have an endowment policy of Rs.5 lakhs with PLI (Post Office) for which I am paying Rs.1400 per month (upto 2039). I have also taken LIC Term Plan through agent for Rs.25 lakhs for half-yearly premium of Rs.3600 (approx.) which is due for renewal.
But I am worried now reading few articles online regarding Insurance premium paid by Smoker and Non-smoker. I was a smoker from 2008 to 2014, used to have 1-3 cigarettes per day. I stopped smoking for one year, before taking LIC Term Plan. I was unaware of the Smoker/Non-Smoker criteria and not sure what agent has written on the form. Recently, due to some personal tensions, I smoked during Jan & Feb of 2016 but stopped now and I am confident that I will never ever touch a cigarette.
However, I found that the Insurance Company will consider me as a smoker. I want to purchase a flat in Hyderabad which costs around Rs.20 lakhs. Now, I started thinking how my wife & child life would be without me. My gross salary is around Rs.53000.
I have few questions.
- Shall I continue PLI Endowment plan? (I am not sure about the Smoker/Non-smoker part of this policy)
- What should I do regarding LIC Term Plan for Rs.25 lakhs? I doubt that the agent might have mentioned non-smoker and not sure about the medical tests, whether they have done any tests smoking or not. Its just been 6 months that I have taken this policy and is due for renewal. Can I simply discontinue the policy and take new policy for higher Sum Assure from other Insurance companies.? Do they ask for existing insurance plans (running/discontinued etc.). Please elaborate or redirect me any useful article on this. Will thereby any problems if I take new policy from LIC in future.
- How much should be my "Sum Assured" ideally and practically? (Considering loans etc.) and suggest me best Company and Plan.
- Is it better to have riders with the Term Plan like Accidental Death/Disability etc. or separately? I am very much concerned with Death and Disability as it will really affect my family. Any suggestions on this part.
- I do not have any Health Insurance plan. We have few hospitals empaneled with BSNL which provide free treatment, but not sure about the limit as of now. Please provide me your valuable suggestions.
5 Answers
Dear Sanjay,
Suggest you to apply for one more term plan by disclosing all the details honestly in the proposal form. It is advisable that you fill the proposal form by yourself. You may also take a Personal Accident insurance plan (instead of a rider). You have to provide details about the existing life insurance polices in the proposal form but don't worry about this. You may take a term plan for atleast 10 to 15 times of your annual salary.
Once you get the new term insurance policy bond, you can discontinue the existing endowment plan and invest this money for your other long-term goals.
Kindly read below articles;
Best Term insurance plans.
Best Personal Accident Insurance plans.
Financial Planning pyramid.
Do you & your family have adequate health insurance cover?
Hi Sreekanth garu,
Thanks for your reply. Its been a long time and I have been postponing purchase of Term Plan. I have decided to take Rs.50L Term Plan from HDFC with Income Plus option and Disability Raider upto 60 yrs. and another Rs.50L Basic Term Plan from ICICI without any options and Raider (they have waiver of premium on Disability) upto 75 yrs.
Now, while filling the proposal form online, I have been asked about my parents health status. My father has undergone Lung operation in 1997 and a some part of lung is removed. My mother had a stroke due to blood plotting in brain in the year 2012. Both are fine now. My father is not taking tablets but doctor advised my mother to take some tablets for life long. As my mother's treatment is very recent and expenses borne by the company, I must disclose it. However, my father's operation was done in 1997, do I need to mention it as well in the proposal form.?
Also, it was asked something like whether I was away from work for more than one week due to illness. Not sure about the question. We, in Govt. sector take Medical Leave casually for any personal emergency work. Will thereby any problem.?
Hi,
Kindly do not postpone taking term plan.
Regarding, Smoking & life insurance policy, kindly read below article, can be useful to you.
http://www.relakhs.com/smoking-impact-life-insurance-policy/
Also, do check if the Disability rider (HDFC) provides risk coverage for Permanent disability. If not, then you may consider buying a stand-alone Personal accident insurance plan.
Read:
http://www.relakhs.com/best-personal-accident-insurance-policies-in-india-details-comparison/
Suggest you to disclose about your father's medical treatment as it is a major treatment I believe.
In case if you have really taken medical leave due to sickness or for any medical treatment then do provide the details, else it should be ok.
Hi Sreekanth garu,
With your valuable suggestions and great 'unbiased' articles, I am planning my finances wisely.
I have finally taken Term Policy of Rs.1 crore from ICICI without any riders by disclosing all the details. By God's grace, there was no extra premium charged.
Now, I need your advice for Postal Life Insurance (PLI) Endowment Policy. Below are the details:
Plan : Santosh
Sum Assured : 5 Lacs
Installment Premium : Rs.1375/Monthly (Rs.1401 with Service tax)
Issue Date : 30/10/2012
Maturity Date : 30/10/2039
Last Premium Paid Till : 31/08/2016
Paid up Value : 72530.86
Gross Surrender Amount : 24370.00 1) Should I make this "Paid Up" or surrender the policy.? 2) If I make it paid up, can I claim Tax Benefit under 80C for the premium paid in this FY.? 3) If I surrender this policy, do I need to show Surrender Amount received as Income or this FY.? And does Tax Benefit applicable under 80C for the premium paid in this FY even if policy is surrendered.? 4) I haven't planned what to do with the Surrender Amount & Premium that I stop paying. Next Year, I am planning to purchase House with Home Loan which will take care of most of the Tax Benefits. I also need suggestions for PPF / ELSS / SSA which I will write as separate thread. Kindly suggest me.
Sum Assured : 5 Lacs
Installment Premium : Rs.1375/Monthly (Rs.1401 with Service tax)
Issue Date : 30/10/2012
Maturity Date : 30/10/2039
Last Premium Paid Till : 31/08/2016
Paid up Value : 72530.86
Gross Surrender Amount : 24370.00 1) Should I make this "Paid Up" or surrender the policy.? 2) If I make it paid up, can I claim Tax Benefit under 80C for the premium paid in this FY.? 3) If I surrender this policy, do I need to show Surrender Amount received as Income or this FY.? And does Tax Benefit applicable under 80C for the premium paid in this FY even if policy is surrendered.? 4) I haven't planned what to do with the Surrender Amount & Premium that I stop paying. Next Year, I am planning to purchase House with Home Loan which will take care of most of the Tax Benefits. I also need suggestions for PPF / ELSS / SSA which I will write as separate thread. Kindly suggest me.
Dear,
Considering your Age and long-term goals, you may consider Surrendering your Policy and re-invest this amount in equity oriented funds.
Even if we assume rate of return @ 10% for next 10 years, investing this Rs 24,370 can fetch you around Rs 1.6 Lakh. Whereas, if you make it PAID-UP your nominee will receive Rs 72k on any unfortunate event.
Yes, you can claim.
As you have paid the policy premiums for more than 2 years then no tax is applicable on Surrender value amount.
Kindly read:
http://www.relakhs.com/8-ways-you-could-lose-your-income-tax-benefits/
http://www.relakhs.com/top-6-best-elss-tax-saving-mutual-funds-invest-2016/
http://www.relakhs.com/sukanya-samriddhi-account-govt-scheme-girl-child/
http://www.relakhs.com/sukanya-samriddhi-scheme-vs-ppf-account/
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