Home loan and life insurance: Check out how you can benefit

My wife (age 35) and I (age 39) are co-owners and co-borrowers of a resale flat. Value of loan is approximately Rs 50 lakh. We are having term insurance of Rs 1 crore and Rs 1.75 crore respectively. We are not going ahead with plan provided by lender. Will you advise to take fresh term policy of around Rs 50 lakh? If yes, any recommendations please? - Prasad K, Snehal K

Yes, I would advise you to opt for an additional cover of Rs 50 lakh for the loan liability. Your existing term insurance covers are for the financial support of the family in your absence. Utilising these for the pending loan repayment will reduce the planned family benefit. Ideally, to cover a housing loan, you should opt for a Group Credit Life product wherein the cover reduces proportionately with every loan repayment. If for some reason you do not wish to opt for the Group Credit Life Plan, there are several online term plans available. You can choose any one of these basis premia and need considerations.

If I want to save for my daughter's college education after 12 years, what kind of insurance plans should I buy? If I want to get Rs 30 lakh how much should I invest now? - Abhay Mohan

Most life insurance companies offer a Child Plan, which aims to ensure the payment of the target amount in all circumstances. In other words, you should opt for a Child Plan that matures in 12 years and has an illustrated maturity amount of Rs 30 lakh. What differentiates a child plan from any other endowment plan is that even if something untoward happens to you, the insurance company will continue to pay the premium for the remaining period and the child will receive the maturity amount [ Rs 30 lakh in this case] on the due date as was originally planned. The amount to be invested would vary from insurer to insurer and would be primarily arrived at basis the plan features and the premium payment term.

By, Rushabh Gandhi
(The writer is deputy CEO, IndiaFirst Life Insurance)

Source: DNA Money