Is it worth to buy Child and pension Plans ?

[URPradhan]

Hi Friends

As we move on in life the dependency upon us increases and we have to secure the better life of our children and for us. Be it children education or marriage or higher study. Also we need a better planning for our retirement life. There are lots of products available from insurance companies targeting the above needs. At home we also hear Shyam babu ( ) has already bought child insurance and has done pension plan and when we will do for ourselves

But the bigger question is: Is it worth to buy such products from insurance companies ? or Can we stick to disciplined investment in MFs ?

I request the investment gurus/experts here to share their view comparing those insurance products Vs MFs via SIP/STP/etc ...

Here are few links/articles which is also worth reading. But we need your valuable comments also to the topic.

http://news.in.msn.com/moneyspecial/savingsandinvestment/article.aspx?cp-documentid=3864588
http://www.mutualfundsindia.com/images/mfithoughts/20090330.pdf

 

[yodlee99]

If you have dependents on you, you should have a life insurance plan for yourself. No need to have a insurance policy for the child, until the child has grown up. Instead invest via good diversified equity mutual funds... where in a growing market like India, there is a lot of fuel in store for more growth.
I just wish the Indian politics settles down and these guys work like what I see happening in Gujarat.
The New Pension scheme is open for everyone now.. did you consider that for yourself. I have not read much, but it seems good from what I hear. Can you share more on that?

 

[URPradhan]

Yes ... Every state MUST learn from Gujurat model and there should be a Modi for each state. I'm aware of NPS, but hurt that its not TRUE pension what we have understood from our childhood.

The earlier pension plan was TRUE pension. The employee was getting pension TILL DEATH and in case of his death his wife will also get the pension. Means once you have joined a govt job your life will be secured until death

As per NPS, now you will decide when you will retire, what amount you want per month, and upto how many years. Means lets say I'll say I want to retire at 55 and I want 20K per month upto my 70 years then I have to pay the premium accordingly. But if I'll survive after my 70 then I'll get NOTHING, when I need it most So in a sense its not true pension, its just an investment. correct me if I'm wrong.

 

[pkgmtnl]

Yes these plan is must.
But be sure to get it from LIC only.

Otherwise U may be like this
http://www.traderji.com/mutual-fund...cy-forged-signatures-premium-another-pol.html

 

[comm4300]

Insurance is for pure protection, and so Term policy is a must.

For other needs like children's education, retirement etc - Mutual Funds are better suited in term of cost and historic returns point of view.

 

[URPradhan]

Yes these plan is must.
But be sure to get it from LIC only.

Thank you.
Hope you are referring to children and pension plans. But as I have read somewhere its wiser to invest in MFs instead of these aggressive advertised insurance schemes.

Whenever you think of insurance, get it from LIC ONLY. Having said that, LIC MUST change their policies. Why the HELL the agent will get % from my premium throughout my premium paying period ??? The agents should only get ONE TIME commission for the policy not life long. IRDA must change this practice, which will have a benefit to the consumer with reduced premium.

And about NPS, Open your account before 31st march 2011 and get Rs 3,000/- (Rs 1,000/- for 3 years) for FREE from govt of India. This FREE 3K is only available to non-govt NPS subscribers to lure them

 

[yodlee99]

Sure, its a good idea to get a term life insurance policy for yourself/spouse. For kids, investing a good managed diversified equity makes more sense. No need for life insurance for someone in the family until he/she has someone dependent on him/her.
Never get ULIPS for the same reason, why should you pay so much of commission? Infact, for my term policy from LIC, I went through a known agent who would get 1% commission the first time and he gave back half to us, just because we told him to. He was not willing to give it himself, but we requested and he was fine with it. I think, they live off of the yearly bonus (that starts from the 2nd year) which is smaller and they keep it. Go through a good agent.

I wonder at times, even though, its not convenient to get a full check up with a certified doctor, how do they fix a premium amount without one.. it does not make sense to me. In any developed country, u cannot get a life ins policy without their own listed doctor doing a full check up.... just my personal opinion.

 

[URPradhan]

Sure, its a good idea to get a term life insurance policy for yourself/spouse. For kids, investing a good managed diversified equity makes more sense. No need for life insurance for someone in the family until he/she has someone dependent on him/her.
Never get ULIPS for the same reason, why should you pay so much of commission? Infact, for my term policy from LIC, I went through a known agent who would get 1% commission the first time and he gave back half to us, just because we told him to. He was not willing to give it himself, but we requested and he was fine with it. I think, they live off of the yearly bonus (that starts from the 2nd year) which is smaller and they keep it. Go through a good agent.

I wonder at times, even though, its not convenient to get a full check up with a certified doctor, how do they fix a premium amount without one.. it does not make sense to me. In any developed country, u cannot get a life ins policy without their own listed doctor doing a full check up.... just my personal opinion.

Exactly ...

1. Have sufficient term insurance policy
2. Also bargain with the lic agent for the term insurance 1st premium (he also gave me suitable amount, saying in term insurance they get very less commission)
3. For > 50L SA term insurance ordinary LIC authorized doctors are not eligible they have their own list of doctors with high value (and they have done various tests before the policy)

 

[HariSeldon]

Yes ... Every state MUST learn from Gujurat model and there should be a Modi for each state. I'm aware of NPS, but hurt that its not TRUE pension what we have understood from our childhood.

The earlier pension plan was TRUE pension. The employee was getting pension TILL DEATH and in case of his death his wife will also get the pension. Means once you have joined a govt job your life will be secured until death

As per NPS, now you will decide when you will retire, what amount you want per month, and upto how many years. Means lets say I'll say I want to retire at 55 and I want 20K per month upto my 70 years then I have to pay the premium accordingly. But if I'll survive after my 70 then I'll get NOTHING, when I need it most So in a sense its not true pension, its just an investment. correct me if I'm wrong.

Prev it was defined-benefit. That means that you were told how much you will get irrespective of your contribution. This is not sustainable in long run. Current is defined-contribution. Here your employer (Govt) \urself is making a contribution. Based on where this money is invested and returns from this will define the pension you will get. If I am not wrong, than in current form also you can decide if your wife will get pension after you. Also, I am not sure If you can decide for how long this will be paybale. But I may be wrong.

Insurance is for pure protection, and so Term policy is a must.

For other needs like children's education, retirement etc - Mutual Funds are better suited in term of cost and historic returns point of view.

Yes these plan is must.
But be sure to get it from LIC only.

Otherwise U may be like this
http://www.traderji.com/mutual-fund...cy-forged-signatures-premium-another-pol.html

Lets wait to see the outcome of case you quoted in msg. My feeling is that agent might be cause here.
Believe me, LIC or prvt comp agent, 99% of them don't know a thing abt timevalue of money or compound Interest. Have you ever meet agent who tried to sale you term insurance which is basically true insurance.
I have basically hedged my bet by going with multiple comp.

Thank you.

Whenever you think of insurance, get it from LIC ONLY. Having said that, LIC MUST change their policies. Why the HELL the agent will get % from my premium throughout my premium paying period ??? The agents should only get ONE TIME commission for the policy not life long. IRDA must change this practice, which will have a benefit to the consumer with reduced premium.

Well India is still under-insured country while taking Life Insurance is not mandatory by law. In this scenario you need to have mechanism to reward the agent for trying to bring more ppl in the net. Have meet anyone selling MF anymore since entry load is scrapped. We can live without MF but not with Insurance.

Infact, for my term policy from LIC, I went through a known agent who would get 1% commission the first time and he gave back half to us, just because we told him to. He was not willing to give it himself, but we requested and he was fine with it. I think, they live off of the yearly bonus (that starts from the 2nd year) which is smaller and they keep it. Go through a good agent.

I am LIC agent and my policy is no commission sharing. Period. I provide service. I help them in understanding need for insurance and the right sum for them. I help them subsequently with reminders and some time depositing their prem. Secondly in term prem is genrally not very big so commission is also very avg sum. If agent has to share this amt than he better sell you some non-term plan which req min 10-20K per year prem. Do you see how not asking for commission can help you. And btw its commission 25% + 15% for first year. Also, IRDA does not allow sharing of commission with customer. Agent can lost his license for this.

I wonder at times, even though, its not convenient to get a full check up with a certified doctor, how do they fix a premium amount without one.. it does not make sense to me. In any developed country, u cannot get a life ins policy without their own listed doctor doing a full check up.... just my personal opinion.

This tells me that you have taken policy of 10L or less. For 10l or less generally agent go to LIC's empanneled doc and give the measurement of customer and get this done on his behalf. Illegal but this is how things work. For 10l and more med check become stringent with 25l+, you have to undergo prescribe test and need to meet the LIC's med refree.

Sorry for the long post

 

[URPradhan]

Well India is still under-insured country while taking Life Insurance is not mandatory by law. In this scenario you need to have mechanism to reward the agent for trying to bring more ppl in the net. Have meet anyone selling MF anymore since entry load is scrapped. We can live without MF but not with Insurance.

Got your point. But why the hell an agent will get % from my premium throughout my premium paying period ??? Any justification ? To bring more ppl into insurance net they should get reward one time not life long. In fact there is already a move started to scrap this mode of % giving to agents. But agents are crying foul. And I'm sure one day it WILL be implemented.