Change in Plans

It is clear that the government is pushing individuals to buy life insurance policies in its true term rather than the insurance-cum-investment plans such as Ulips and endowment, which are more popular. Due to mandatory higher life cover, higher premiums will be diminished, as Ulips and endowment insurers will be left with a relatively small amount for investment.

“A person not looking for a pure protection cover need not buy a life policy at all. Instead, if their objective is wealth-creation, they can direct their funds to instruments like public provident fund (PPF), tax-free infra bonds and highly-rated non-convertible debentures (NCDs). In terms of equity, depending on their risk appetite, they can invest either directly in stocks or through mutual funds. Based on their risk-taking ability they can choose from large-, mid- and small-cap funds,” advises Suresh Sadagopan, Certified Financial Planner of Ladder7 Financial Advisories.