Hi.apart from the features of the product one really needs to look at claims processing.How good is the company in claims processing when the situation really demands.Any idea which is the best company in hassle free claims processing?How about LIC?
Hi, I don't know why so many people are taking insurances? I'm aged 23 years and have no dependent till now... Can anybody tell me why I should take insurance cover?
Re: Why Should I take Insurance?
by Ipsita S on Oct 24, 2009 09:45 PM
if u have no dependents, do not take life insurance. Do not worry about tax breaks - you can get that in a different way (ELSS, PPF etc)
Re: Why Should I take Insurance?
by srinivasan mv on Oct 26, 2009 12:21 PM
Look at two things. You may get married and then have Children. Otherwise, you may have parents, whom you may help when they retire. If you have a housing loan, you may require a mortgage insurance. So, instead of waiting till you have a family of your own, if you take insurance when you are young, the premium will be small.
Better take one Mediclaim Policy and Life Insurance Policy at the earliest. No one can foresee emergencies in their lives.
Re: Why Should I take Insurance?
by Ipsita S on Oct 24, 2009 09:46 PM
if u have no dependents, do not take life insurance. Do not worry about tax breaks - you can get that in a different way (ELSS, PPF etc)
There are a lot of people who talk without having the requisite knowledge. End result is they are doing a great lot of disservice to the public.
1. There is a general misconception in the minds of the people that to get a high life cover, insurance companies charge a hefty premium. Nothing can be farther than truth here. Insurance companies decide on the life insurance cover based on one's age. For instance, if a person is aged less than 25 years, he/she can opt for a life cover upto 120 times the premium paid. So if the premium paid is Rs.20,000/-, the life cover would be maximum 120 * 20,000 = Rs.24,00,000/-.
2. Different ULIPs charge different administrative charges. But remember, ULIPs are LONG term products. The emphasis here is LONG. Over a period of time, the charges levied by the ULIPs even out. Let us look at the same example again. If a person is paying a premium of Rs.20,000/- per annum for five years, the total charges deducted by ULIPs for these five years would be Rs.Rs.7,900/-. This is less than the first year term premium paid for the same amount of insurance cover!!!
3. Since ULIPs are long term products, the focus of the investment manager is not to generate the Highest return. The focus here is capital preservation with a reasonable growth. For instance, one of the ULIPs which I am tracking, has given an average rate of return of 28%-32% since 2001. This may not be very high, but not meagre also!
Re: Lack of knowledge...
by asad hgjkf on Oct 21, 2009 11:36 AM
Lets talk about ULIPs here, and not insurance. ULIPs normally provide you a maximum coverage of upto 20 times the annual premium. So, for an annual premium of 20,000, the face amount is only 4 lakhs. This is IRRESPECTIVE of the age of the insured. If the insured is older,the mortality charges will be higher. ULIPs may be good for investing in the long term. But most often, they do not provide sufficient coverage in the event of death of the insured.
Please visit the web sites of Indian insurers and check out the various plans.
Re: Re: Lack of knowledge...
by Manoja on Oct 21, 2009 11:44 AM
Precisely the reason why I said that people with no knowledge should do the others a favour by keeping quiet!!!
Check with ICICI Prulife Lifetime plan. The plan provides for insurance cover as a multiple of premium paid based on the age. This is true in the case of ULIPs offered by other companies too.
You have said " Most often, they do not provide sufficient coverage in the event of the death of the insured". What exactly is meant by this? If a person has a life insurance cover of 20 lakhs, irrespective of term plan or ulip, if his/her death happens, the insurance company will pay that insured amount to the nominees. Where is the confusion here??
Re: Re: Re: Lack of knowledge...
by asad hgjkf on Oct 21, 2009 11:58 AM
What i meant was: As in the previous example, insured pays 20,000 as annual premium for a coverage of 1 lakhs. The insured dies in the 2nd year of the policy being in force. His family gets a meagre 1 lakhs. Had he used 20,000 to buy a term insurance, his family would have got a lot bigger amount in insurance.
Re: Re: Re: Lack of knowledge...
by asad hgjkf on Oct 21, 2009 11:54 AM
Let me quote frm ICICI pru wealth advantage plan's brochure. sum assured: choice of 125% or 500% of premium. If premium is 20,000, the sum assured is 500% of 20,000= 1 lakhs. Don't argue for the sake of it. NAME a ULIP plan which gives u sum assured of 120 times the premium.
Re: Re: Re: Re: Lack of knowledge...
by Manoja on Oct 21, 2009 12:37 PM
I mentioned ICICI Lifetime, you are quoting Wealth Advantage. Different plans have different features.
In ICICI Lifetime Gold, the premium multiplier is 120 times for a person aged upto 25 years. This means this person, by paying a premium of Rs.20,000/- can take a maximum life cover of Rs.24,00,000/-. Check this fact by calling up the ICICI office directly.
Let us look at this scenario, if this person pays the premium for 5 years & discontinues the payment. Taking the average rate of return to be at a very minimum of 10% also, there will be enough money in the policy to cover the life till the age of 60. Please note that like a lot of people in the forum I am not stating these figures out of thin air. These are backed by calculations.
Since I have clarified that the insurance cover can be upto 24 lakhs, the second argument what you have put forward has become pointless.
Re: Re: Re: Re: Re: Lack of knowledge...
by asad hgjkf on Oct 21, 2009 01:09 PM
The online brochure of ICICI lifetime gold mentions only the minimum sum assured. It does not mention either the maximum sum assured, or the premium muliplier for the poliy. Care to tell me where you got the premium multiplier information from?
Re: Re: Lack of knowledge...
by asad hgjkf on Oct 21, 2009 11:38 AM
Quite a few people deride others to prove their point, without actually having any substance in what they are saying.
Re: Re: Re: Lack of knowledge...
by Manoja on Oct 21, 2009 02:07 PM
That is the reason why I said check with the company!!!
In any case, let me assure you this. The premium multiplier is 120 times the premium paid. Therefore a person aged less than 25 years can get the kind of life cover we are talking about. Nothing secretive about this.
Also, please understand this. A good financial portfolio is one which is well diversified. And a good investor will look at several aspects before investing rather than only the rate of return. It may be true that mutual funds give a higher rate of return than ULIPs. But the focus of these two products is different. If a person invests in ULIP for five years, then he has taken care of his insurance needs for the rest of his life. Post this period, the investor can divert his/her money in any other mode of investment.
Heard about mortality charge? This is the pert of the premium charged by the insurance company to account for the policy owner's untimely death. In term insurance, the insurer charges the mortality charges admin expenses. In ULIPs, insurer charges mortality charges admin expenses expenses for fund allocation etc. So, investing in ULIPs does not give the insured any advantage, because the mortality charges are still being deducted from the premium paid.
I took a LIFE LONG POLICY - Growth during 2004. I paid premiums for 5 years, the market aprreciated and the AViVA fund fact shows 25-50% CAGR however my fund value has become 50% of what the premium I paid till date. THIS IS DAY LIGHT ROBBERY
It is very surprising to see well read people passing comments like what they are passing here!!!
1. No one will put their life savings in ULIP or endowment plans. It is only one part of the investible surplus they have which is channelised into these investment vehicles.
2. ULIPs, at the end of the day, invest in the same stock markets where mutual funds are putting in the money. They are managed much like the mutual funds manage their money. Therefore it follows that if mutual funds are able to generate a return better than the sensex, then ULIPs too will do that.
3. In the earlier example I had given, a term plan for 20 lakhs for a 23 year person for a period of 37 years costs Rs.333,000/-. There is no return on this. This is a written off cost. And people are comfortable with this. But not putting in Rs.90,000/- which also gives them a fair chance to get back about Rs.9.30 lakhs. Isn't this surprising???
4. Ignorance may be bliss. But not in these matters!!!
Re: Lack of knowledge.
by beopen on Oct 25, 2009 09:31 PM
1. that doesn't mean that YOU people are eligible to rob it. 2. whatever it makes extra will be taken as administrative charges. 3. inappropriate and sourceless comparisons. In ULIP too, insurance charges are there. 4. absolute ignorance is better in these matters. Otherwise you will be fooled.
Re: Lack of knowledge.
by asad hgjkf on Oct 21, 2009 12:08 AM
1. Difference between ULIPs and MFs is the amount invested in the stcok market. Most ULIPs deduct commission and other charges in the initial years, leaving very small amount to be invested in the stock market.
2. ULIPs have never bettered MFs in generating returns. It is not about "investing in the same stock market". It is about investing wisely in the stock market.
3. There is no ULIP in the Indian market that gives 20 lakhs life cover for 18,000 per annum. If there is one, please disclose the name of the provider and the scheme. And therefore, if a person wishes to take ULIP for face value of 20 lakhs, his premium will be a lot higher than 18,000 per annum.
4. Let's assume that a person stops making payment after 5 years.The life cover will expire if the policy cash value is not sufficient to cover the premium costs. If the person now dies, his family won't get anything.
Any endowment or ULIP policies are farce. In long run they don't even give as much as a simple FD. Endowment policies and ULIPs are a way to cheat the public who don't understand inflation and compound interest. Its always a better idea to go for a combination of term insurance and FD/MF. Insurance should NEVER be used for investment, because there is no return. In recent years the returns promised by the insurance companies had been because of the Stock market boom, which has busted now. But still these companies are selling their policies based on the older data which is no more relevant. Unless and until the stock market rises from 17000 to 25000 in 2-3 years period, none of the promises being made by these insurance companies are going to be fulfilled.
Re: Endowment and ULIPS
by Manoja on Oct 20, 2009 04:34 PM
Dear Udipta,
Are you aware that interest on FDs today are taxable? IF yes, look at this. On a return of 8%, if the depositor has to pay 30% as income tax, then the real rate of return is only 5.6%.
LIC's Komal Jeevan policy offers 7.5% rate of return. And this is tax free.
Re: Re: Endowment and ULIPS
by Vineet J on Oct 20, 2009 06:12 PM
Have you ever read the new tax code, in which they are planning to put tax onreturns of ULIP and endowment plan too... so I am agreeing with Udipta. I wont go for ULIP's
ULIP and endowment plans are good only for those who have excess money and no idea where to put it.
Manoja... it seems like you are insurance agent .. and wants sell ULIPs... and not ready to accept anything against it..
Re: Re: Re: Endowment and ULIPS
by Manoja on Oct 20, 2009 07:07 PM
Vineet, in the new tax code EVERYTHING will be taxed on maturity. Be it PF, PPF or returns from the insurance product. Therefore tax will no longer be used as a tool to decide the investment product.
In this entire forum, I have not come across anyone putting forward numbers and arguing the case. While some say ULIPs are high cost products, there are others who say ULIPs are sold only to cheat people.
Answer this question. If I have the option of buying a life insurance plan in which I have to pay a limited premium, with a very realistic opportunity of getting a much larger return at the end of the plan period, why should I chose another option in which I only pay the premium without getting anything in return? After the mandatory period of premium payment, I will divert whatever premium I was paying on the insurance product to such other investment products which will fetch me a market linked return. Also, since I have made my premium payment as is mandated by the company, I will also not have the fear of policy lapsing at all.
Re: Re: Re: Re: Endowment and ULIPS
by Sivaraman Viswanathan on Jan 30, 2010 01:45 AM
The fallacy in your argument is the "very realistic opportunity of getting a much larger return". When I pay the premium and not get anything in return, i pay only a very negligible amount as premium. Instead, when i pay for the imagnary market-chasing returns of a ULIP, the differential premium for the same cover is huge, duly diluted by the admn fee, asset mgmt fee, mortality charges, etc. Although ULIPs are the present flavour, any smart person would not consider it as an investment option. I, for one, would go in for a good cover under a term insurance plan, after which i would decide to invest my money in any of the other investment options, including mutual funds, which would be better under any circumstance. Viswa
Re: Re: Re: Re: Endowment and ULIPS
by srinath rao on Oct 25, 2009 12:30 AM
every person (irrespective of whether he has dependents or not must buy a term insurance becoz today he may not have any body depending on him / her but tomorrow there may be) for the simple reason that the premium is very very low. once u buy the Term insurance forget that you even bought it. use all the balance investable amount to invest in various instruments like MF, Stocks, Gold, Liquid funds, FD's, Post Office, PPF etc depending on your age, risk taking capabilities & liabilities etc.. the returns tht you will get will definitely be more than what u will get if u buy an endowment insurance policy..
