Insurance – Protect yourself from Miss-selling & Purpose of Insurance

In the context of Insurance the golden rule is Never mix Insurance with investment. Which means that insurance is basically meant to protect against an unpleasant (and unforeseen) happening. If it is a insurance policy that pays at an event that you look forward to than it is an investment um insurance policy and in all likelihood has been miss-sold. Another way to find out is a simple test – Was the concerned sales person overeager to sell the product – that is a fairly reliable sign of a miss sale in progress.

Zee Business Money Guru Insurance Special: I want to surrender my Insurance Policy

Dear Sir, my son has been investing Rs 60,050 p.a. premium against Jeevan Saral
Policy since 5 years, now he wants to stop it without loss and to be benefited what he has to do? pl. suggest and give advice hence forth.

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Firstly, you should never mix insurance with investment since an insurance product is designed to provide protection to the dependent after the demise of Policyholder/earning member.

LIC money back & Jeevan Saral are traditional plans. These kind of traditional plans do not fetch returns more than 5% -6% and are unlikely to beat inflation. Since the data provided by you is insufficient as regards the age and Sum Assured, it will not be possible for us to review the same. You should review the policy based on the current surrender value, future premiums payable and expected maturity value. If the IRR is more than 8% then you should continue as debt portfolio or else you should surrender.

You should buy an Online Term Plan for a cover equal to 12 times of your annual income, before discontinuing the current policy. Disclose all facts correctly while buying the policy including existing insurance plans and health history.
Assuming your son is earning and someone is dependent on him, he should buy an online term insurance policy from Aviva i life.

Zee Business Money Guru Insurance Special: I want to purchase an Life insurance policy?

What to do for my insurance cover. My age is 20 years and has a govt. Job.
What to do for making my insurance for long term.

It is advisable to buy Life insurance cover only if you have dependent on yourself. Life insurance policy will provide protection to your family in case something happens to you.
You should never mix insurance with investments. Assuming you have dependents, as per thumb rule you should buy an Online Term Plan equal to 10 to 12 times of your annual income.

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