• In the story on estate planning (Rites of Succession, 28 May), you have mentioned that a will can be challenged in court. Could you please enumerate the most common premises for contesting a will? Is there a way to pre-empt such charges?
Ravi Kishore, Patna
Most wills are challenged on two grounds — that the document is forged or that the testator made it under duress or in an unstable mental state. There is no way to make a will so foolproof that it cannot be contested. However, you can reduce the chances of misuse by asking a doctor to sign as one of the two witnesses, stating that you are in sound physical and mental health. You can also have a thumb-print in addition to your signature so that it is easy to negate any claims of forgery.
• Recently, I applied for a credit card with a limit of Rs 50,000 from one of the reputed private banks. My request was rejected. This, despite the fact that I am repaying a car loan from the same bank and have never defaulted on the EMIs. The loan tenure will be over in July 2009. What could be the reason for the bank turning down my application even though I ought to have a good credit score?
Sanchit Varma, Hyderabad
According to the recent RBI guidelines, the basic grounds for rejecting a credit card have to be conveyed to the customer. So you should ask the bank for an explanation. Often, people think that they have a good credit score because they repay on time. But there are other factors to be considered. To know more, read the story How High is your Score? on our website. If it was to be your first credit card, the bank could have been questioning your ability to handle more debt. If not, maybe you regularly revolve credit on other card/s, which makes you a high-risk customer for the bank.
• In the Rule Reversal section of the latest issue (When a Ulip is Better than a Mutual Fund 28 May), you have explained the advantages of a Ulip, but have not considered the cost of investment for both the Ulip and mutual fund. I think that in the long run, Ulips are more cost-effective than SIPs.
Roopak Banerjee, Kolkata
The Rule Reversal was meant to bring out the difference in the taxability of gains from mutual funds and Ulips. The cost of investment in funds and Ulips is different. Though the allocation charges for a Ulip are very high in the initial years, they taper off after six-seven years. Mutual funds don’t levy allocation charges. There is also no entry load for a direct investment. However, the annual fund management charges of an equity mutual fund may be higher at 2-2.25%, compared with 1-1.5% charged by Ulips.