Buying Right Life Insurance

Pranav,25 years,was looking to purchase right life insurance after having attended a personal finance session in his organization and realized that he was holding a wrong life insurance policy.

Pranav’s father had bought LIC endowment plan for 10 Lakh sum assured for a term of 20 years with annual premium of Rs 50,000 when he was 15 years. Pranav was now paying premium every year for his LIC Endowment Plan after having started his job.

During the session, Pranav realized his current policy was providing inadequate risk coverage (Low Sum assured of only 10 Lakhs, lower term), was expensive and giving low returns. He also got to know if he bought a term plan and invested in Mutual fund through SIP he would be adequately insured and also expect higher returns on his investment compared to existing life insurance policy (LICs Tech Term online plan for Rs 50 Lakhs sum assured would cost him only Rs 5500 annual premium for a 35 year term. In addition balance of Rs 44,500 could be invested in mutual fund through SIP route)

Author:
Nityanand Jha, Assistant Professor, Unitedworld School of Law (UWSL)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.