Money Matters- Business News

Money Matters

Managing your money can be tricky. Send your queries, and personal finance experts will help you resolve any issue

Money Matters

Health Insurance

Satyendra Bhaskar: I am a 35-year-old married man with two children. Four years ago, I bought a family floater plan worth Rs 5 lakh and the cover has now increased to Rs 10 lakh as there was no claim. Should I increase it further?

Shreeraj Deshpande, Principal Officer and Officiating CEO, Future Generali India Insurance, replies:

As you get older and opt for higher sums, pre-insurance health check-ups will be applicable. Also, people are more likely to fall ill or suffer major injuries as they grow old. So, it is advisable to increase the sum insured at your age. You can also buy a top-up plan to increase the cover. This is a deductible health insurance plan and covers extra cost at a lower premium when a certain threshold is reached.

Life Insurance

Suresh Mahajan: I am planning to buy an insurance cover of Rs 2 crore. In case of my death, will insurers provide a fixed monthly payout to my family instead of giving a lump-sum amount? Which one is a better option?

Harish Kurudi, Head of Product Development and Management at Aegon Life Insurance, replies:

Traditionally, a nominee receives a lump-sum amount when the policy benefit is paid at one go. But there could be families lacking in-depth financial knowledge, especially when it comes to utilising large sums. In such cases, the money might be exhausted soon either because the assets purchased would not yield a regular income as anticipated or it would be locked in fixed deposits and might not provide required returns. So, the basic purpose of buying an insurance, that of ensuring complete financial security for the family in the absence of the breadwinner, could not be met in these cases.

To overcome these concerns, a different approach is adopted wherein proceeds are paid as periodic cash outflows. Most insurers offering term plans provide several payout options. A beneficiary gets the proceeds either as a one-time payout or as periodic incomes over a fixed duration or as a combination of both. Many people like to receive part of the total benefit as a lump sum and the rest as periodic payments to ensure income continuity. One must calculate how much is required to narrow down on payout options and protect insurance proceeds from being eroded before it fulfils its defined purpose.

Mutual Fund

Lakshya Arora: I am planning to buy a car after five years and need a corpus of Rs 5 lakh for the down payment. Which are the mutual funds to invest in and how much should I save?

Vivek Ranjan Misra, Head of Fundamental Research at Karvy Stock Broking, replies:

The best option is to start investing in an equity fund to grow your wealth. But equities are more volatile, and one should switch to a debt fund after three years to protect downside risks. If you have a lump sum to start with, the investment amount should be about Rs 2.9 lakh. In case you want to opt for a five-year SIP, we would still advise the same. But in this case, you should set aside Rs 6,500-7,000 every month for systematic investment.