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Should I Switch Life Insurance Companies After 60?

Milind

Milind Vadjikar  |680 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 12, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Nov 12, 2024Hindi
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I want to which life insurance company may be given better benefit after 60yrs

Ans: Hello;

Request you to kindly rephrase your question.

Thanks;
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 18, 2024

Asked by Anonymous - Aug 22, 2023Hindi
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If it is good to get the life term insurance plans from private companies like HDFC , SBI life or ICICI. If they have the good track record on providing amount during death of the insured person like LIC
Ans: Private life insurance companies like HDFC Life, SBI Life, and ICICI Prudential Life have established a strong presence in the insurance market and have a good track record of claim settlement. They are regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and adhere to the guidelines set by the regulatory authority.

Here are some points to consider when choosing a term insurance plan from private companies:

Claim Settlement Ratio: Check the claim settlement ratio of the insurance company. A higher claim settlement ratio indicates that the company has a good track record of settling claims.
Financial Strength: Assess the financial strength and stability of the insurance company by checking its solvency ratio, profitability, and credit ratings.
Policy Features: Compare the policy features, benefits, riders, and exclusions offered by different insurance companies to find a plan that meets your needs and requirements.
Customer Service: Evaluate the customer service and support provided by the insurance company. Prompt and efficient customer service can make the claim settlement process smoother and hassle-free.
Premium Rates: Compare the premium rates of term insurance plans offered by different companies to find a cost-effective option without compromising on coverage and benefits.
Reviews and Feedback: Research online reviews, testimonials, and feedback from policyholders to gauge the reputation and reliability of the insurance company.
While LIC (Life Insurance Corporation of India) is a trusted and government-backed insurance provider with a high claim settlement ratio, private insurance companies also offer competitive term insurance plans with attractive features and benefits. It's essential to do thorough research, compare different options, and choose a reputable insurance company with a good track record of claim settlement to ensure financial protection for your family in the event of your untimely demise. Consulting with a Certified Financial Planner can help you make an informed decision and select a term insurance plan that best suits your needs and budget.

..Read more

Moneywize

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2024

Asked by Anonymous - Feb 06, 2024Hindi
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I am 30 and looking for a term insurance for a term of 40 years. Which company offers the best term plan in terms of lower premium and best cover? Could you kindly suggest one?
Ans: One cannot recommend a specific term insurance plan or company as it depends on various factors like your health condition, lifestyle habits (smoking/drinking), income, budget, and family situation. However, here’s a guide on how to choose the best term plan.

Here are some key factors to consider when choosing a term insurance plan:

• Sum assured: This is the amount your beneficiary will receive in case of your death during the policy term. Choose a sum assured that is sufficient to cover your outstanding debts, living expenses for your family, and future financial goals of your dependents.
• Policy term: This is the duration for which the life cover is valid. Since you are 30 and looking for a 40-year term, you have a wide range of options to choose from.
• Premium amount: This is the amount you pay annually or monthly to maintain the policy. Generally, younger individuals have lower premiums compared to older individuals.
• Riders: These are additional benefits that can be attached to your base plan, like accidental death benefit, critical illness cover, and waiver of premium rider. Choose riders that suit your specific needs and budget.
• Claim settlement ratio: This ratio indicates the percentage of claims settled by the insurance company. Opt for a company with a high claim settlement ratio.

Popular insurance companies often change, and new products may be introduced, so it's essential to check the latest offerings. Additionally, individual factors such as your health, lifestyle, and occupation can affect premium rates. Make sure to disclose all relevant information accurately to get the most suitable coverage.

Remember, it's crucial to disclose all your health conditions and lifestyle habits accurately while applying for term insurance. Withholding information can lead to claim rejection in the future.

Remember that buying ‘best’ term insurance plan is subjective and depends on your specific needs and circumstances.

..Read more

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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 22, 2024

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My age 62, male, getting rental income Rs. 90k nett. Already subscribing 12.5k in PPF for the past 2 1/2 years. No other investments. My target is 5 crores in 10 years. I already have Mediclaim Rs.50 lakhs for me & wife . Please advice me what to do.
Ans: Your current financial foundation is strong and shows promise:

A rental income of Rs. 90,000 per month provides consistent and predictable cash flow. This stability can serve as the backbone for your investment strategy.

PPF contributions of Rs. 12,500 per month for 2.5 years reflect disciplined saving. However, its returns may be insufficient to achieve a high-growth target like Rs. 5 crores in 10 years.

A robust Mediclaim policy of Rs. 50 lakhs for you and your wife ensures adequate health coverage. This safeguard allows you to focus on wealth-building without worrying about medical emergencies.

Despite these positive factors, achieving Rs. 5 crores in 10 years requires a carefully crafted and growth-oriented strategy.

Defining and Prioritising Your Financial Goals
Achieving Rs. 5 crores is ambitious yet achievable with a focused approach:

Define this target as your primary financial goal over the next decade.

Break it into manageable milestones: for example, Rs. 50 lakhs every 1-2 years in cumulative investments and growth.

Prioritise high-return investments that align with your risk tolerance and financial capacity.

Optimising Existing PPF Contributions
While PPF is a secure investment, its growth potential is limited:

Returns: PPF currently offers an interest rate of approximately 7-7.5%, which barely outpaces inflation.

Contribution Review: Consider capping your PPF contributions at Rs. 1.5 lakh annually (to utilise the Section 80C benefit). This ensures that excess funds are redirected to higher-return investments.

PPF can serve as a low-risk component of your portfolio but should not dominate your investment strategy.

Building a Diversified Investment Portfolio
A diversified portfolio will provide a balance of risk and reward. Include the following components:

1. Equity Mutual Funds for Growth
Equity mutual funds are essential for achieving high returns over the long term:

Large-Cap Funds: These invest in established companies and offer stability with moderate growth. They are ideal for a portion of your portfolio to reduce risk.

Multi-Cap or Flexi-Cap Funds: These provide exposure to companies of all sizes, offering growth and diversification.

Sectoral and Thematic Funds: Avoid these unless you have a high risk tolerance and understand market dynamics.

ELSS Funds: These not only provide tax savings under Section 80C but also deliver market-linked returns.

Why Avoid Index Funds?

Index funds may offer simplicity and lower expense ratios, but they lack flexibility. They cannot adapt to market conditions or capitalise on outperforming sectors. Actively managed funds, on the other hand, have the potential to outperform the market, especially in a developing economy like India.

Start with a Systematic Investment Plan (SIP) in selected funds to build wealth steadily.

2. Debt Mutual Funds for Stability
Debt funds add stability to your portfolio and reduce overall risk:

Choose funds with low credit risk and moderate duration to ensure safety and predictable returns.

Debt funds are suitable for short- to medium-term goals or as a fallback during market corrections.

Taxation Note: Both LTCG and STCG on debt funds are taxed as per your income tax slab. This should be factored into your planning.

3. Balanced Advantage Funds
Balanced advantage funds (BAFs) dynamically allocate assets between equity and debt. They:

Provide exposure to equity while minimising downside risk.

Offer a suitable option for someone nearing retirement but seeking growth.

4. Gold Investments for Diversification
Allocate a small portion (5-10%) of your portfolio to gold:

Gold serves as a hedge against inflation and currency depreciation.

Choose gold ETFs or sovereign gold bonds for ease of liquidity and better returns.

Emergency Fund Creation
Having an emergency fund is non-negotiable:

Maintain at least 6-12 months of expenses in liquid investments like liquid mutual funds or high-interest savings accounts.

This ensures liquidity for unforeseen events without disturbing your long-term investments.

Focus on Retirement Planning
At 62, balancing growth and safety becomes critical:

Estimate your monthly retirement expenses, considering inflation over the next 10-15 years.

Your target of Rs. 5 crores should primarily serve as your retirement corpus.

Allocate assets thoughtfully:

60-70% in equity funds for growth.
30-40% in debt funds for stability.
Periodically rebalance your portfolio to maintain this allocation.

Strategic Tax Planning
Tax efficiency can significantly impact your returns:

Continue using Section 80C to its full potential, including ELSS funds and PPF.

Consider the National Pension System (NPS) for an additional Rs. 50,000 deduction under Section 80CCD(1B).

Be mindful of the new taxation rules for mutual funds:

Equity Mutual Funds: LTCG above Rs. 1.25 lakh is taxed at 12.5%; STCG at 20%.
Debt Funds: LTCG and STCG are taxed as per your income slab.
Consult a Certified Financial Planner to optimise your tax strategy.

Regular Portfolio Monitoring and Rebalancing
Investing is not a one-time activity:

Review your portfolio every six months or annually to track performance.

Rebalance your asset allocation periodically to align with your financial goals and risk appetite.

Stay committed to SIPs even during market downturns, as this ensures cost-averaging.

Additional Suggestions
Avoid Over-Reliance on PPF
While PPF is safe, it is not sufficient for wealth creation. Shift excess contributions to equity-based investments for better returns.

Avoid Direct Stocks
Direct equity investing requires time, expertise, and constant monitoring. It carries higher risk and may lead to losses without proper research. Instead, rely on equity mutual funds managed by professionals.

Avoid Mixing Insurance and Investments
Do not invest in ULIPs or endowment plans, as they offer suboptimal returns. Stick to pure insurance products for protection and mutual funds for growth.

The Role of a Certified Financial Planner
To achieve Rs. 5 crores, a well-crafted financial plan is essential. A Certified Financial Planner (CFP) can:

Analyse your current investments and recommend improvements.

Design a customised strategy tailored to your income, expenses, and goals.

Provide periodic reviews to ensure you stay on track.

Finally
Achieving Rs. 5 crores in 10 years is a realistic goal if you adopt a disciplined and diversified approach.

Optimise your PPF contributions and channel excess funds into higher-growth investments.

Build a diversified portfolio with equity and debt mutual funds.

Include a small allocation to gold and maintain an emergency fund.

Stay consistent with your SIPs and review your investments regularly.

Work with a Certified Financial Planner to create a personalised roadmap.

By following these steps, you can secure your financial future and meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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