Urgent Request for Financial Planning Guidance

POSTED BY Srinath Chandrasekar ON January 26, 2012 11:28 pm COMMENTS (14)

I am 27yrs old (Single), starting from this year, i would like to do proper finanical planning.My proposal are as follows,

“Preferred Pure Term Insurance”
-> Aviva i Life Term Insurance Plan (Age 27 || Preferred Online Term || Cover 50L || Term 35Yrs).
-> Is online term better? or should i go for offline.

“Proposed Pension Plan”
-> Open Two PPF accounts (Self & in Mother’s Name || Combined – 2L p.a || 15Yrs extended to 5 more Yrs).
-> Currently holding this policy HDFC Unit Linked Endowment (G) (Annual Premium – Rs24000 || Current Fund Value – Rs 103659.43 || Term 10Yr || Started Yr 2007).
-> Should i hold my current HDFC ULIP?.
-> Need to start SIP on each one of the Large Cap, Mid Cap, Small Cap, Flexi Cap MFs & ETF (Budget – 10k p.m). But I have no idea on how to choose the best MFs & ETF in each sectors.

“Preferred Accidental Insurance”
-> Future Generali Accident Suraksha (Age 27 || Cover 20L).

“Preferred Health Insurance”
-> Currently my company provides me 4L cover for myself & 2L for my parents. But in addition I have decided to choose one of the following below plans for safety but could not able to decide the best one.
-> Apollo Munich Easy Health Individual Standard (Preferred Individual Plans|| (Age ->> Self – 27 || Father – 54 || Mother – 46 || Sister 20) || Cover 3L).
-> Apollo Munich Easy Health Individual Exclusive (Preferred Individual Plans|| (Age ->> Self – 27 || Father – 54 || Mother – 46 || Sister 20) || Cover 3L).
-> Apollo Munich Optima RESTORE (Preferred Individual Plans|| (Age ->> Self – 27 || Father – 54 || Mother – 46 || Sister 20) || Cover 3L).

Please guide me with your valuable feedback.

14 replies on this article “Urgent Request for Financial Planning Guidance”

  1. Dear Srinath, please feel free to ask more & more queries. Keep visiting forum for your own queries as well as to read others’.

    Thanks

    Ashal

  2. Dear Srinath, let me clarify you. Invest 10K in the first month in HDFC High Interest Short Term Plan. this is a debt fund. Apply for weekly 1K STP in HDFC Top 200 fund. This way in a month 4-5K Rs. ‘ll be invested in the Eq. fund i.e. HDFC Top 200 & balance ‘ll remain in the Debt fund. Similar set up can be done for the other 2 funds as discussed by me. But in this case, the debt funds ‘ll be from respective AMC.

    Hope it’s clear to you now.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal,

      Thanks a lot 🙂

      Regards,
      Srinath

  3. Dear Srinath, Here is my input –

    1. HDFC’s online product is a new kid on the block so can’t comment on it right now for the servicing issues & prem. loading issues. Also please do not assume that offline plans claim settlement figures are good, hence the online ‘ll also be good. The things may turn otherwise as the risk is higher for insurer due to lower prem. for online policies.

    2. IPru’s prev. online cover – I-Protect’s the biggest complaint was lack of co-ordination among the departments of the insurer & specially the medical reports non updation. To overcome all these things, Ipru has come up with a non medico policy (up to cover 1.5Crore). Obviously the prem. is higher in this case than a normal online policy yet cheaper than offline ones. One may opt this policy but as the cheaper alternative in the form of Aviva’s I-life is available, chose wisely & importantly as per your own comfort level with the insurer.

    Regarding MFs, Invest your 10K money in HDFC High Interest fund Short Term Plan & initiate weekly STP of 1K Rs. in HDFC Top 200 fund. This way you ‘ll invest around 4-5K mly in Eq. fund & balance amount ‘ll remain in debt fund (HDFC HI STP). Keep investing 10K at the start of every month in that debt fund. This way – you are by default creating an emergency fund from the excess amount getting accumulated in the debt fund as well as earning a bit higher return than SB account. Please keep doing it for next 1Y or so.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal,

      Earlier you suggested me to invest in the below following funds
      Franklin India Bluechip Fund
      HDFC Top 200
      Quantum Long Term Eq.
      And now in HDFC High Interest fund,HDFC Top 200 fund & debt fund.
      So I couldn’t clearly understand your suggestion and by the way what do you mean by weekly STP ?

      This is my MF goal – To create corpus in Emergency Fund and Long term Pension Corpus through MFs

      Regards,
      Srinath

  4. Dear Srinath for the 35Y term you may opt Aviva’s I-life or the one where you are comfortable. Regarding Accident policy, If you are comfortable @ future generali, go for it.

    As you are already covered for 4L Rs. health cover from your employer, you may opt to go for Standard plan at this point of time. By the way as the prem. for your Exclusive policy is around 20K Rs. & you are paying that 5K extra (15K eligible for your section 80D tax benefit), that 5K ‘ll be calculated for parents health cover & accordingly you can save additional amount of tax 1K Rs. @ 20% slab. So practically your prem. for exclusive ‘ll be just 19K Rs.

    Take your own pick.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal,

      I am planning to opt for Aviva i- life. Certainly i would like to know your feedback on these two below plans for information? (Best Claim Settlement Ratio after LIC)
      – HDFC Life Click 2 Protect
      (Cover 50L- Rs5901 (Annually) || Cover 75L- Rs8107 (Annually) || Cover 1C- Rs10368 (Annually) || Term 30Yrs)
      – ICICI Pru iCare
      (Cover 50L- Rs7170 (Annually) || Cover 75L- Rs10010 (Annually) || Cover 1C- Rs12795 (Annually) || Term 30Yrs)

      On accidental insurance, I have opted for future generali

      On Medical Insurance, I have opted for Apollo Munich Easy Health Individual Exclusive Individual Plan

      Now, could you kindly suggest me on MFs front

      Regards,
      Srinath

  5. Dear Srinath, I did not discuss more for other things as the reply was getting long.

    What’s the term of the plans you are looking in AR & Aviva?

    As per review available online – Bajaj Allianz’s Personal accident policy is one of the best in terms of claim settlement & that’s the most important point I feel. Also on features count it’s no less than others.

    Regarding the Health insurance, My take ‘ll be to go for Easy Health Individual Exclusive from Apllo Munich.

    Please provide your inputs on the above points. Please do share how you are going to create your emergency fund?

    Not discussing MFs again to know your views till this point. Hope you w’d not mind.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal,

      I am looking for term cover around 35yrs.Suggest me which company should i opt for from above premiums?

      Will definitely look into Bajaj Allianz Personal Guard policy but my heart goes to future generali

      As I already have 4L health cover from my office, should i go for Easy Health Individual Standard? or Exclusive? or Optima Restore? (Optima has better features than Exclusive plan but both are expensive)

      Apollo Munich Optima Restore
      Father || Age-54 || Cover 3L || Premium – Rs11556
      Mother || Age-46 || Cover 3L || Premium – Rs7800
      Sister || Age-20 || Cover 3L || Premium – Rs4487
      Self || Age-27 || Cover 3L || Premium – Rs4487

      Base Premium :Rs. 28,330.00
      Gross Premium :Rs. 28,123.00
      Discounted Premium :Rs. 25,497.00

      Apollo Munich Easy Health Individual Standard
      Father || Age-54 || Cover 3L || Premium – Rs7455
      Mother || Age-46 || Cover 3L || Premium – Rs6000
      Sister || Age-20 || Cover 2L || Premium – Rs2530
      Self || Age-27 || Cover 2L || Premium – Rs2530

      Base Premium :Rs. 18,515.00
      Gross Premium :Rs. 18,380.00
      Discounted Premium :Rs. 16,663.50

      Apollo Munich Easy Health Individual Exclusive
      Father || Age-54 || Cover 3L || Premium – Rs8600
      Mother || Age-46 || Cover 3L || Premium – Rs6300
      Sister || Age-20 || Cover 3L || Premium – Rs4095
      Self || Age-27 || Cover 3L || Premium – Rs4095

      Base Premium :Rs. 23,090.00
      Gross Premium :Rs. 22,921.00
      Discounted Premium :Rs. 20,781.00

      I have no idea on emergency fund, will implement your above suggestion.

      Regards,
      Srinath

  6. Dear Srinath, Thanks for providing the additional info. For 63K mly income, your Term cover should be around 10-12 times of your yly income at least i.e. 70-85L Rs. sum assured. So please review your term cover from proposed 50L to 75L or even 1C. Please do note, within next few years, your cover requirement ‘ll increase due to increase in family size (read your marriage) as well as financial liabilities in the form of home loan, car loan etc. Online is better for the fact that it’s cheaper than offline. Please guide your parents & one more person outside of the family may be a relative or a close friend to file a claim. Few years down the line, share the same info to your wife.

    PPF is good for the debt part of your portfolio meant for retirement. My take ‘ll be to go for 50+50K in 2 PPF accounts & invest remaining 1L Rs. Diversified Eq. funds as age is on your side & over the next 30-35Y to your retirement, you ‘ll earn a decent return from Eq. Please do note that the investment done in mother’s PPF account ‘ll not be considered for your tax benefit under section 80C.

    As the policy term of that HDFC Ulip is 10Y & you have already paid 5 prem. my take ‘ll be to pay remaining 5 prem. to get the benefit of low charges applicable now to your policy.

    Instead of running here & there, start with following 3 funds only. All investments are to be done in growth options.

    Franklin India Bluechip Fund
    HDFC Top 200
    Quantum Long Term Eq.

    By the way, your query is silent on emergency funds. In my view you should have at least 6 months expenses, including your ins. prem. etc. as an emergency fund.

    As the reply is getting long, I’m stopping here to know your reaction, views, inputs on the things discuss till this point.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal, thanks for providing your feedback. But still I need few suggestions on below proposals

      Term Insurance Proposal
      – Agree with you on increase in term cover to 75L or 1C
      – But still confused on choosing between these two companies Aegon & Aviva. Which one to choose from the below?
      – Aegon Religare i-term insurance has top class product features but with very low settlement ratio due to its new existence
      (Cover 50L- Rs4246 (Annually)||Cover 75L- Rs6204 (Annually)||Cover 50L- Rs7500 (Annually))
      – Aviva i-life term insurance only drawback is in product features compared to Aegon but they have very good settlement ratio
      (Cover 50L- Rs4184 (Annually)||Cover 75L- Rs6276 (Annually)||Cover 50L- Rs7402 (Annually))

      Pension Proposal
      – Agree with you on PPF & HDFC ULIP
      – Can you list out some best diversified MFs based on my portfolio

      Emergency Proposal
      – You are spot on, i didn’t plan for this.. will start implementing

      Accidental Insurance & Medical Insurance Proposal
      – You had forgotten to review my proposals on these fronts

      Regards,
      Srinath

    2. Srinath Chandrasekar says:

      Dear Ashal, Sorry I had misspelled on the premium cover for 1C

      – Aegon Religare i-term insurance
      (Cover 50L- Rs4246 (Annually)||Cover 75L- Rs6204 (Annually)||Cover 1C- Rs7500 (Annually))
      – Aviva i-life term insurance
      (Cover 50L- Rs4184 (Annually)||Cover 75L- Rs6276 (Annually)||Cover 1C- Rs7402 (Annually))

      Regards,
      Srinath

  7. Dear Srinath Chandraekar, may I know your mly or yly income as well as the mly expenses figure. Please do quote the status of your father & mother’s income also.

    Thanks

    Ashal

    1. Srinath Chandrasekar says:

      Dear Ashal,

      Currently living in Bangalore but my parents are at my native town.
      My monthly living expense – 12k
      My monthly Income after income tax – 63K
      Father’s monthly Income after income tax- 25k
      Mother Income – NIL

      Thanks,
      Srinath

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