Insurance is simply a risk cover.Don't consider it an investment.Policies sold in the name of investment prove very costly.If you want to invest go for MFs,FDs,RDs,PPF,NSC KVP,Bonds etc. For Insurance,buy a simple term plan.
IF ALL MONEY PUT IN PPF OR NSC, AND UNFORTUNATE DEATH OF THE FATHER, WHAT WILL BE THE FUTURE OF THE CHILD? SO THERE ARE GOOD POLICY WHICH COVER FAMILY AND CHILD'S FUTURE, LIKE LIC'S JEEVAN CHAYA, MARRIAGE ENDOWMENT ETC
Re: CHILD INSURANCE
by gegong apang on Sep 04, 2011 07:40 PM
Use Term insurance for the breadwinner of the family. It has least premium and high coverage. This is the best insurance. But insurance agents NEVER sell this because they get negligible or no commission on it.
I am really not sure why this column is only against child insurance. Arguments put forth by the author also holds very good for all ULIP plans. This can be generically called "Say NO to ULIP plans"
Author is absolutely correct, all ULIP linked plans are simple loot of hard earned money. The allocation chares are so high that you can't expect returns upto 5 years or more. Agent commission is high so he/she will do every thing to convince you.
Best way to invest is mutual funds and there are variety of products available to staisfy risk appetite.
Although I agree with a lot of things that the author has written about; he seems to be slightly biased against child plans as a whole. One important benefit that such plans provide is insuring the life of the breadwinner and in the event of any unfortunate event happening, the insurance amount is paid immediately to beneficiary and rest of the benefits of the policy continue - meaning that rest of the premiums are paid by the company and the child would continue to get the benefits. It is because of this benefit that child plan charges are higher than other insurance plans. The other options mentioned by the author are only child INVESTMENT plans and not child INSURANCE plans. There is a fundamental difference between the two. Having said that, I agree with the author's statement that you have to look at a mix of 2 or 3 products - but you can still consider a child insurance plan as a part of the mix for the benefits mentioned above.
Re: Say NO after understanding the product
by gegong apang on Sep 01, 2011 01:34 PM
How does a child plan insure the life of breadwinner? Surely child is not the bread winner. There is no case for child insurance. It is fraud/scam.
Re: Re: Say NO after understanding the product
by Praveen Saseedharan on Sep 01, 2011 01:46 PM
If you examine child insurance plans from leading life insurers, the life insured is usually the breadwinner and the child is only the nominee or beneficiary of the product. If on the contrary, the life insured is the child, then the insurance agent is indeed cheating the customer by marketing a normal insurance plan as a child insurance plan. Beware of this.
Re: Re: Re: Say NO after understanding the product
by B Mohan on Sep 02, 2011 09:00 AM
There are variety of Plans with Insurance Companies. Children Plans are basically on the life of child itself, But the proposer has an option to take PWB (premium Waiver Benefit) under such policies. If PWB is taken, in case of unfortunate death of the proposer, the future premium of the policy will be waived. There are Plans that covers proposer life and child will be the beneficiary (They sounds like children plans, but they are not). These Plans are good policies.
Re: Re: Re: Say NO after understanding the product
by SUJEESH NARAYANAN on Sep 02, 2011 10:38 AM
It is not possible to insure a childs life...even if some policies allow this the amount is a pittance.Policy coverage of an adult is also determined by the taxable income he earns and a child does not have one.
Re: Say NO after understanding the product
by Shaikh Wahab on Sep 02, 2011 09:23 AM
I agree with the article. Child Plans are not very usefull as compared to other investment options. They merely gives you 5%-6% returns and that too you are bound to pay till maturity. As far as insurance is concern you can buy a ontime Term insurance, which will cover till maturity of child or for yourself. I am also regretting by taking Jeevan Tarang policy for my child. I find it useless now.
or a child plan. Do not mix insurance with investment because you do not get best of both. You end up with a a product which is low in return and low in insurance and if you surrender in between, you lose substantial portion of your money.
The best insurance is TERM insurance. As far investment, you can diversify among real estate, debt instruments( fixed deposit, PF e.t.c) and equity(diversified equity mutual funds, stocks, balanced funds e.t.c) depending on your financial goals, risk appetite e.t.c.
Re: Never go for a ULIP
by CH SRINIVAS on Sep 02, 2011 10:55 AM
kindly remember one ulip from HDFC life insurance, young star plus. After 6 policy years innocent policyholders are yet to see their principle amount as present fund value due to very high in built charges.
Understand the hidden charges before taking any ULIP . every one once high lighted the fund managers role, most of them failed. Best ex. see hdfc fund performance.
does a child need insurance? The answer is NO. It is the breadwinners of the family who needs insurance the most. Child insurance plans are big scams/gimmicks played out by powerful insurance companies for looting the money from parents. They play on the emotions of the parents of the child. With blessings of IRDA they continue to cheat and loot the innocent public.
Child insurance is just emotional blackmailing...NOTHING else. It doesnt answer the basic question - Why does a child need an insurance cover?? Is the family dependent on a 3/6/9 year old child?
Most people have excessive greed & mix up risk cover with returns expectations. It is hightime that we realize this fine point and separate the two.
And mind you, the sum assured on a policy taken just 6-8 years ago (say 2 or 4 lakhs), doesnot cover even 3-4 months of household expenses today. With time, what people get on maturity is peanuts.
The only useful insurance product is - Term Insurance for the earning member of the family and that too, if the family has loan obligations and not enough savings.
I wish this was substantiated with a comparison table.. Though I am not insurance agent, Child Plans do provide security to the child in the absence of the guardian. If this is the logic then all insurance plans are still having a yield of 6-8% PA. SIP is a devious scheme wherein hard earned middle class money is diverted into the volatile stock markets.. stock markets which do not follow any economic principles, changes its colors merely on sentiments and are prone to cause heavy losses to the innocent investor.
I think all these plans benefit the insurance companies only. Not all the insurance companies give importance for TERM INSURANCE in their marketing which is the best method for coverage of insurance with a miniumum amount of premium and maximum coverage. It is good to have a term insurance for a big amount for life coverage then we can invest the balance amounts in other money yielding instruments for future which is the best method of financial planning. If one does some study on this and invest, lot of us will agree with this concept. Mohiddin
