November 20, 2013 12:57 pm
I am a insurance agent and a mutual fund distributor. I want to know your opinion about having a whole life plan as a part of your financial portfolio.
Thank you very much.
‘How the future ‘ll pan out in next 30-40-50 years is uncertain and hence the planning should also be like that.’
I ll keep it in mind while planning for my clients hereafter.
Dear Swapnil, no product should be purchased for the guarantee. How the future ‘ll pan out in next 30-40-50 years is uncertain and hence the planning should also be like that.
Is there any other product which can take care of the points I mentioned?
Dear Swapnil, the very basic problem, you are taking granted the current bonus rates for next 40-50 years. Should I say more?
Dear Swapnil, what purpose a whole life plan may fulfill?
Consider a scenario where a person lives more than 80 yrs and he has no money left with him, in this case this money will come to his rescue.
even if he requires money at age 70 and and above, he can take out loan available in this policy.
If a person and his wife are all on their own at older age and the only support they have is of each other. Now if the man dies, his wife will be in a miserable situation at that age.
With this plan at least she will have some financial support when she will be alone at that age. She will never have to depend on her children for money all her life.
Even if this is not the case having this plan is like creating a liquid property which will grow in value throughout its term and nominee will get the money irrespective of at what age the person dies before 80.
No insurance will give you risk cover at that age.
if a person takes this plan (table no 5, LIC) at age 27 for 30 years for 10 lakh SA,
His premium will be roughly 2100 per month.
With 75 Rs. Bonus rate and 3550 FAB/1000SA,
this plan will grow to above 80 Lakh value till age 80.
It has been my personal experience that the retirement corpus is never used properly and vanishes within few years of retirement.
If such thing happens then this plan can definitely be of some help to the person.
With a term insurance, this plan will also keep increasing the riskcover.
It will be argued that Term insurance + MF or PPF will also do the same but not all people are disciplined enough not to withdraw or use PPF or MF money which was initially invested for long term goals.
Theoretically Term insurance + MF will definitely do better but most of the people are just not disciplined enough to use it as it needs to be used. And we have little control over people as a financial adviser.
I would love to hear your opinion about it.
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