I got a call from my bank AXIS to get Medical Insurance. Axis bank has tied with TATA AIG insurance they are providing low premium for the policy. They said this premium amount will be till my age 55. In this period i have to keep bank transactions with Axis bank. If not you can withdraw from policy or you can transfer the policy to TATA AIG. If i take the policy, what will happen to policy seniority? Can I take direct policy with the insurance company? I am confused help me.

Ans: Switching to National Insurance Company for your Mediclaim Policy can be a good option if they offer competitive premiums, comprehensive coverage, and efficient claim settlement. Compare the policy features, benefits, and premiums with Tata AIG to ensure it meets your needs and provides value for money. Review the policy details, network hospitals, and exclusions before making a decision. Consult a Certified Financial Planner for personalized advice.

Ans: Financial Overview
Current Status

You are single and retired.

No family or loan commitments.

Insurance Policies

Health insurance: Rs. 10 lakhs with Royal Sundaram.

Life insurance term plan: Rs. 50 lakhs.

Traditional insurance plans from LIC: Rs. 25 lakhs.

Annual insurance premium: Rs. 50,000.

Appreciating Your Efforts
You have a well-structured plan.

Health and life insurance cover your needs.

Insurance Review
Health Insurance

Your health insurance cover is Rs. 10 lakhs.

Consider increasing it to Rs. 20 lakhs.

This ensures better protection against rising medical costs.

Life Insurance

Your life cover is Rs. 50 lakhs.

Since you have no family commitments, this is sufficient.

Traditional Insurance Plans
Jeevan Tarang and Jeevan Amrut

These plans provide survival benefits.

Use these benefits to pay your annual premium.

Surrender Option

Consider surrendering these policies if needed.

The surrender value can be reinvested in mutual funds.

Investment Strategy
Mutual Funds

Actively managed funds can offer higher returns.

Consider SIPs in large-cap and balanced funds.

PPF and NPS

Continue with PPF and NPS investments.

They offer safety and tax benefits.

Disadvantages of Index Funds
Lower Returns

Index funds mimic the market.

They often yield lower returns compared to actively managed funds.

Lack of Flexibility

Index funds have less flexibility.

Actively managed funds adapt to market conditions.

Disadvantages of Direct Funds
Lack of Guidance

Direct funds lack professional advice.

Regular funds provide support through MFDs with CFP credentials.

Higher Risk

Direct funds can be riskier.

Professional guidance helps mitigate risks.

Emergency Fund
Maintain Liquidity

Keep an emergency fund.

Ensure it's equivalent to 6-12 months of expenses.

Liquid Mutual Funds

Consider liquid mutual funds for this purpose.

They offer better returns than savings accounts.

Action Plan
Increase Health Cover

Increase your health insurance to Rs. 20 lakhs.

Review Traditional Policies

Consider surrendering LIC policies.

Reinvest the proceeds in mutual funds.

Continue SIPs

Increase SIP contributions.

Focus on large-cap and balanced funds.

Maintain Emergency Fund

Keep a sufficient emergency fund.

Use liquid mutual funds for better returns.

Final Insights
Your current insurance and investment strategy is commendable.

Consider increasing your health cover for better protection.

Reevaluate traditional policies and focus on mutual funds.

Maintain an emergency fund for financial stability.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Your father had a home loan of Rs. 15 lakh with Tata Capital. He also had insurance from Tata AIG, with a total premium of Rs. 2 lakh. Unfortunately, due to a critical illness, your father had to claim the insurance. The outstanding loan amount of Rs. 15 lakh was transferred to Tata Capital, thanks to the insurance claim.

Clarifying the Insurance Claim Process
When your father claimed the insurance, the outstanding loan amount was settled by the insurance company. This means that the insurance policy covered the loan, and your father is no longer liable to pay the Rs. 15 lakh loan to Tata Capital. This is one of the primary benefits of having a loan protection insurance policy.

Important Points to Note:

The insurance company paid the outstanding home loan amount directly to Tata Capital.
This settlement clears the debt, and Tata Capital should close the loan account.
Understanding the Outstanding Insurance Premium
Now, the question arises about the Rs. 2 lakh insurance premium. It's important to understand that the premium amount is what your father paid for the insurance coverage. This premium is typically paid upfront or in installments over time.

Here’s what you need to know:

If the premium was already paid, there is no further payment required.
If there were any unpaid installments of the premium, the insurance policy might have detailed conditions.
Responsibility for Outstanding Premium Payments
If your father had not completed the premium payments, the insurance company might have a clause that requires the completion of these payments. However, in most cases, once the insurance claim is settled, no further payments are required.

Key Points to Consider:

Check the insurance policy documents to understand if there are any remaining premium payments.
If the policy was paid in full, no further action is needed.
Action Steps to Take
To ensure everything is in order, follow these steps:

1. Review the Loan Account:
Confirm with Tata Capital that the home loan is fully settled and that there is no outstanding amount.

2. Check the Insurance Policy:
Review the insurance policy documents from Tata AIG. Look for any clauses related to outstanding premium payments after a claim is settled.

3. Communicate with Tata AIG:
If there is any confusion, contact Tata AIG customer service. Ask for clarification regarding any outstanding premium payments.

4. Document Everything:
Ensure you keep a record of all communications and confirmations from Tata Capital and Tata AIG.

Final Insights
Your father’s home loan should be fully settled by the insurance claim. There should be no outstanding loan payment. However, if there are any unpaid premium installments, it’s essential to clarify with Tata AIG. In most cases, no further payments are needed once the claim is settled.

This situation highlights the importance of understanding insurance policies and their terms. It's crucial to ensure all payments are completed and that the loan account is closed properly.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Recently GOI announced 100% FDI in the insurance sector.

Allianz had non-controlling stake in Bajaj Finserv owned insurance companies.

It may have plans to re-enter Indian Insurance sector either on its own or through tie-up with some other partner but retaining controlling stake.

However these developments do not have any impact on the policy holders of Bajaj group insurance companies.

The companies are well capitalized and earning profit so you shouldn't worry about these aspects.

Previously Exide Life was taken over by HDFC Life and honoured all policies of Exide without any issue.

Hope this helps.

Best wishes;