Financial planning by traditional plan is better or not

POSTED BY Pritam Sonavne ON March 13, 2013 7:56 pm COMMENTS (9)

Thanks a lot for helping us in financial planning.
I read your LIC saral anand policy article in which u have given some figures and mentioned having investment in mutual funds and PPF and term, insurance having 50L rather investment 70k in LIC policy.But i read you article late.

I have one question:-
I purchased two policies :-
First policy :-
ICICI Pru life guaranteed saving insurance plan
Premium amount :- 35000 /- anually
Premium paying term :- 7 years
Policy term :- 15 years
Sum Assured :- 245000
Purchased :- Dec 2011

Second Policy :-
Birla sun Life Vision Plan
Premium amount :- 42000 /- annually
Premium paying term :- 27 years
Policy term :- Lifetime (2088)
Sum Assured :- 1134000
Purchased :- March 2012

Currently i have loan of 12 Lakhs with tenure of 25 years having an EMI :- 10500.My salary is 22K per month.
As u mentioned everyone should invest in Mutual fund and PPF as a long terms for high gain.
Have 3 questions :-
1. So please suggest me what should i do now ?
shall i surrender this 2 policies or not ?
Please suggest me what should i do now i am feeling i have wasted my money.
I like you long term investment trick :- Mutual Fund + PPF + Term Insurance.

2.If i need to purchase term insurance(should have best claim settlement ) which one should i buy ?

3. In April i am thinking to buy policy to protect my family in term of medical operation and surgeries and health illness which one policy should i buy?

9 replies on this article “Financial planning by traditional plan is better or not”

  1. Dear Pritam, please read again my original reply. I asked to take insurance cover of 15 times multiple of your yly income. I never asked for 15Y term. Your term should match with your age when your financial liabilities ‘ll be getting over.

    Regarding the surrender procedure – It looks fishy to me what you have told. Please visit local IPru life office. Fill the surrender application form, submit it along with your policy bond & that’s it. To check your surrender value, please check it online if you do have access for your policy.

    Thanks

    Ashal

  2. Pritam Sonavne says:

    As you said in previous answer insurance cover calculated of salary for 15 years around 45Lkahs.From that i assume i should take cover for 15 years.But let me know how much years is good.

    One more thing i want to share:-
    I got a service call from ICICI prulife as i am happy with GSIP policy.I said NO to him and said to him “I want to surrender this policy as the guy miss sold the policy at time of buying”. He suggested me following procedure:-

    1.Form to be filled which will given by ICICI pru for surrendering GSIP policy.
    2.As my yearly premium is 35K and i paid half in DEC 2012 and 2nd half is due in June 2013.He said i need to pay this half yearly premium (Rs. 17861 /- )in advance or I need to show an investment in government fund (He suggesting ING Birla DHFL) for six months of amount 17861 /- which is same amount as of my half yearly premium.
    3.The boy from ICICI pru will collect the form along with my documents(address proof etc.)
    4.A team from insurance department will visit home for verification.

    After 6 months from the day on which i submit surrender form.I will get surrender value as follows:-
    Premium paid from my side :- 52861
    Commission paid to agent :- 2000
    Bonus :- around 50000

    Total amount said by executive :- 106000 /- (Approximate).

    Shall i go ahead with this surrendering procedure.

  3. Dear Pritam, Yes surrendering is the right choice at the moment. You still not answered my basic query, Why are you going for only 15Y term for your term plan?

    Thanks

    Ashal

  4. Pritam Sonavne says:

    Hey Ashal,
    I want to correct my mistake and it will correct by surrendering this policies right ?
    And start with mutual fund?
    Sorry for asking again and again because i am to make sure my money should be in right path for great future.

  5. Dear Pritam, why you are looking for 15Y only in your term cover? anything special to this 15Y trm selection?

    If you think, continuing with these policies is god for your financial health, please continue. if there is a wrong choice/decision, we should accept it & corect the mistake. in the fear of loss, we should not carry on with mistakes to convert the small losses into bigger ones.

    Thanks

    Ashal

  6. Pritam Sonavne says:

    Are you sure i should surrender 2 policies which i am holding b’coz it is of worth 1 Lakh ?
    Investment in mutual fund for long term will yield higher returns as compare to these policies right..?
    i don’t want to go in wrong direction because it is question of future as well as the money which i have earn till now :(.
    Please help me out ashal.

    And you are write i am having an extra income of 6000/- per month.through i can fulfill my monthly expenses.

    So my future plan would be as follows :-
    1. Term insurance of 60 Lakhs for 15 years (in future can i increased my cover).
    2.Investment of 6000/- in mutual funds.
    3.Family health cover of 5 Lakhs.
    4.home loan of 10500 monthly.
    Am i right ?
    Waiting for reply.

    Thanks
    Pritam

  7. Dear Pritam, 22K mly salary translates into yly income of around 2.75L Rs. So 15 times multiple of your yly salary ‘ll be 42L Rs. Add the home loan amount to it & some more cushion, in my personal view, your term cover should be around 60L Rs. Instead of 15Y, please opt the term which ‘ll fulfill all your financial liabilities. Say age 55 or age 60.

    If 22K is mly salary, nearly 11K is home loan EMI, & if you are going to invest 6K into MFs, how w’d you survive with merely 5K into your pocket? Am I missing something here or you do have some extra income which you are not reporting here?

    Keeping the inflation in mind, the starting health cover should be around 5L Rs. at least.

    Thanks

    Ashal

  8. Pritam Sonavne says:

    Hey Ashal,

    Thanks for your opinion.
    So I should surrender both these 2 policies right ?
    And i should take a new start as follows :-
    1. Term insurance of 50 lakhs cover (15 years)
    2. Mutual fund investment monthly Rs.6000 /-
    3. Family Health cover of 3 Lakhs.
    4. Current Loan emi : -10500 /-.

    Please let me know asap.

  9. Dear Pritam, I’m trying to answer your queries.

    1. So please suggest me what should i do now ? shall i surrender this 2 policies or not ?
    Please suggest me what should i do now i am feeling i have wasted my money.
    I like you long term investment trick :- Mutual Fund + PPF + Term Insurance.
    As you have not completed 3Y, please check what may be the surrender amount in each of your policy. Please surrender now & relax. Stopping right n ow ‘ll be far more beneficial than continuing these policies.

    2.If i need to purchase term insurance(should have best claim settlement ) which one should i buy ?
    In place of answering your question, I want to know from you, which company has 100% Claim settlement ratio? If no one is @ 100%, why?

    3. In April i am thinking to buy policy to protect my family in term of medical operation and surgeries and health illness which one policy should i buy?
    Please read past discussions here in the forum & chose what’s best for you, on your own.

    Thanks

    Ashal

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